2020 US Presidential Election
The most divisive election in US history
The 2020 US Presidential Election has proved to be one of the most fiercely contested and politically explosive elections in history.
This article will answer the following questions about the 2020 presidential election:
- Pre-election: What are the stages of the US election process? What were the opinion polls showing? Why is this election so important?
- Election day: Who won? Swing states outcome? What was the reaction of the stock markets?
- Post-election: Which direction is the US heading now? Reaction of the financial markets?
The US election process is far from straightforward, and the race to decide the next president starts well over a year in advance before the main election day in November.
Nominees begin putting themselves forward a year before primaries and caucuses begin. Candidates are slowly whittled due to factors such as lack of funding, poor public support, and campaign infighting. This year, 28 people had put themselves forward as a nominee for the Democrats. The Republican nominee was Donald Trump and though he was technically a challenger, he was extremely popular among Republicans and therefore had a clear run ahead of him. For this reason, we will focus on the nominees for the Democrats for the time being.
Stage 1: Initial Primaries and Caucuses
- At the start of primary season, 11 nominees remained in the running.
- The first main event is the Iowa caucus, which took place on Monday 3rd February 2020. This year, Democrats are holding only four in US states — in Nevada, North Dakota, Wyoming and Iowa. Iowa is important as it is usually always the first caucus held and a win there for any candidate can help give them momentum and propel them to victory in the primaries. Although, Iowa is unrepresentative of the US as a whole. It is largely white, and therefore has not usually had a solid record of picking eventual final nominees.
- Next is the New Hampshire Primary. In a primary, voters are expected to turn up at a few limited locations at certain times and stick around for a while, primary voters can just turn up at a polling booth and vote in secret. At the NH primary, Joe Biden and Elizabeth Warren struggled and Bernie Sanders and Pete Buttigieg claimed the most delegates at this stage.
The more votes a candidate gets in a caucus or primary, the more “delegates” they are awarded, and all candidates will be hoping to win an unbeatable majority of delegates. This year any candidate needed to get at least 15% of the vote in any primary or caucus to be awarded delegates.
Stage 2: Super Tuesday
- This was held on 3rd March, and it is the day where 16 states voted for their preferred candidate in primaries or caucuses. A third of all the delegates available in the entire primary season were up for grabs on Super Tuesday. By the end of the day it became much clearer that Joe Biden and Bernie Sanders were the front-runners for the Democratic nomination. The two states with the most delegates voted on Super Tuesday — California (with 415 Democratic delegates) and Texas (228).
Stage 3: The conventions
Conventions finalise a party’s choice for presidential and vice-presidential nominees. To become the presidential nominee, a candidate typically has to win a majority of delegates. At a convention, if a candidate has won 8 delegates, for example, those 8 will vote for that candidate to become the nominee.
- Donald Trump was sworn in as the Republican nominee at the party convention in Charlotte, North Carolina in August.
- Through the Democratic primaries, there were 3,979 delegates available. If any one candidate wins more than 50% of those delegates during primary season, then they become the nominee in a vote at the convention. Biden secured 2,739 delegates at the convention in August.
Stage 4: Presidential Election
The president of the United States isn’t directly elected by American voters, but by members of what’s called the electoral college. Each state is given a number of electors based on the size of its population. There are around 538 electors, and to win the election, the presidential candidate needs a majority of these (270 or more). The candidate which wins the popular vote in each state, gets the support of all that states electors. This means it is possible for a candidate to lose the popular vote across the country, but gain a majority of electoral votes. This is the reason many candidates focus on swing states, which are key battlegrounds.
How were stocks reacting in recent days before the election and what were the polls showing?
Wall Street shares staged a rebound on Monday following last week’s rout, with investors repositioning their portfolios as Joe Biden holds a strong lead in national polling ahead of election day. The S&P 500 closed higher by 1.2%, having lost 5.6% last week in what was the index’s worst weekly performance since March.
According to the Financial Times, leading the index were stocks in the basic materials and industrials sectors, as investors bet these areas would benefit from the increased infrastructure spending pledged by Mr Biden, should he become president. Polls compiled by the FT’s election tracker suggest Mr Biden could count on at least 252 electoral college votes against Donald Trump’s 125.
Opinion polls undertaken between October 19th and 23rd showed Mr Biden ahead on 51%, while Mr Trump has 41%. The poll, undertaken by IBD and TIPP surveyed 1,029 likely voters.
This election, arguably, was one of the most important ones ever. This is because after 4 years of Trump’s presidency, America is extremely divided. The country is also suffering from a huge economic crisis, a public health disaster and police brutality. A victory for Biden would end the constant gut calls, staffing chaos and continuous assaults on truth, science, fact and evidence in every sphere of national life. It would see a return to a more traditional head of state who is vowing to unite the country, create a new spirit of hope and restore compassion to the White House. Trump made clear that becoming the first impeached president to win re-election would cause him to unleash a far purer form of his hardline nationalist ideology.
ELECTION DAY — Tuesday 3rd November
Joe Biden becomes the 46th President of the United States, winning 290 of the Electoral College votes, against Trump’s 214. Kamala Harris, Biden’s win means that Kamala Harris will become the first female, first Black and first South Asian vice president-elect ever. Biden crossed the 270 threshold on Saturday 7th November, as Pennsylvania declared that its 20 electoral college votes would go to the Democrats. Nevada also turned blue after this.
Confirmation of Biden’s win finished an election that went down to the wire in key swing states, after neither Trump or Biden took a majority lead straight after the election. Hopes of a race yielding a definitive result faded as Trump won Florida, a swing state. This was a key indication that Trump was holding up better than expected on election night.
Hopes of a Biden win emerged when it was declared he had won the Rust Belt states of Wisconsin and Michigan, which were both key to Trump’s win in 2016. Biden also performed well in Arizona, which was a previously red state. The defining moment, however, was when Biden won the remaining battleground states of Pennsylvania, Arizona, Nevada and Georgia.
As it became more likely that Biden would clinch the presidency, stocks jumped on Thursday, the first time since 1982 that the Dow and S&P 500 rose at least 1% on four straight sessions, giving the stock indices their biggest weekly gains since April. The Dow up 7.1% week, the S&P 500 and Nasdaq up 7.4% and 9% in the week to date.
States Trump won: Idaho, Montana, North Dakota, Wyoming, South Dakota, Nebraska, Utah, Kansas, Iowa, Missouri, Arkansas, Oklahoma, Texas, Louisiana, Mississippi, Alabama, Tennessee, Kentucky, Ohio, Indiana, West Virginia, South Carolina and Florida.
States Biden won: Washington, Oregon, California, Nevada, Arizona, New Mexico, Colorado, Minnesota, Wisconsin, Illinois, Michigan, Virginia, Pennsylvania, New York, New Hampshire, Vermont, Maine, Massachusetts and Connecticut (at time of writing).
The 2020 presidential election recorded the highest voter turnout in 120 years. Current estimates suggest that 160 million people exercised their right to vote, with a turnout of 66.9%. This is the highest in twelve decades, since 73.7% of people turned out to vote in 1900. Individually, Minnesota and Maine had the highest voter turnouts this year, with 79.2% each. Biden won the majority of votes in both these states. Preliminary estimates suggest that Arkansas, won by Trump, had the lowest voter turnout, with 56.1%.
However, Donald Trump is refusing to accept the result: “The simple fact is this election is far from over. Joe Biden has not been certified as the winner of any states, let alone any of the highly contested states headed for mandatory recounts, or states where our campaign has valid and legitimate legal challenges that could determine the ultimate victor. Beginning Monday, our campaign will start prosecuting our case in court to ensure election laws are fully upheld and the rightful winner is seated. The American people are entitled to an honest election: that means counting all legal ballots, and not counting any illegal ballots.”
Although the final make-up of the Senate is still unknown at time of writing, a Joe Biden administration is likely to lead to wide-ranging changes to public policy.
These are some of the policy changes which can be expected:
- Biden made a campaign pledge to increase funding for coronavirus testing, contact tracing and measures to isolate and support those sick with the virus. The Democratic House passed the Heroes Act earlier this year, the latest version of which allocates $75 billion to those initiatives.
If Republicans retain control of the Senate, it’s unlikely that funding will be as robust, but with Biden in the White House, Democrats’ leverage will be significantly greater than during 2020.
2. Biden has proposed expanding upon the Affordable Care Act by increasing subsidies for individuals who purchase insurance on state-run exchanges and creating a government-run alternative insurance plan.
3. In 2017, Trump lowered the tax rate from 35% to 21%, delivering a major boost to US earnings per share (EPS) and stock prices. However, Biden has said he would like to partially reverse this policy in early 2021, which could have significant consequences for equity investors. Goldman Sachs estimates that corporate tax hikes and increasing social security taxes on high earners would reduce earnings for the S&P 500 index by 0.02%.
4. Biden has also proposed an ambitious $2 trillion plan to fight climate change. Biden also said he would push to cut subsidies in the tax code for fossil fuel companies and ban fracking on federal, but not private, land. This could have a significant impact on the oil and gas industry, and therefore oil prices.
5. With regards to foreign policy, according to Schroders, there is a high chance Biden will restore economic cooperation with Europe and Asia, while also easing up on tariffs. This would inject a degree of predictability and stability into global affairs, which would be a welcome relief for global markets after a volatile few years.
Joe Biden’s win has ended four tumultuous years under Trump’s leadership. It is no doubt that he will aim to restore political normalcy and bring about a spirit of national unity to confront America’s health and economic crises. Biden will be pressed to swiftly secure and distribute a safe vaccine for the coronavirus, revive an economy that may be in even more dire shape in January than it is now, and address racial justice and policing issues that this year prompted some of the largest protests in American history. The Biden-Harris presidency will be critical for the US and will hopefully lead to stability and prosperity for the country.