2020 Election: The Key Economic Issues Explained

The big economic issues of the 2020 U.S. presidential election

Reviewed by Michael J Boyle
Fact checked by Jiwon Ma

The Associated Press called the presidential election for Joe Biden on Nov. 7, 2020. He became the official president-elect when the Electoral College’s vote was certified by Congress on Jan. 7, 2021 and he was sworn in as the 46th president of the United States on Jan. 20, 2021.

Georgians went to the polls to vote in two runoff elections for their state’s U.S. senators on Jan. 5, 2021. The election was of special importance because it determined who gained control of the Senate. Both Democratic candidates, Jon Ossoff and Raphael Warnock, won their races, handing control of the U.S. Senate to the Democratic Party.

Key Takeaways

• Joe Biden became the president-elect when the Electoral College’s vote was certified by Congress on Jan. 7, 2021. He was sworn in as the 46th president of the United States on Jan. 20, 2021.
• The COVID-19 crisis was ongoing when Biden became president and it was the core focus of the election and his administration.
• One of the key issues for voters in the election was the student loan debt crisis.
• Biden also proposed increasing taxes on the wealthy and corporations.
• Other key issues of the 2020 election included healthcare, climate change, trade, and housing.

Economics 

The COVID-19 crisis shook the U.S. economy to its core, making the role of government in the economy front and center. Exactly how much responsibility the U.S. government had to help Americans hurt by the pandemic was a huge bone of contention in creating the stimulus and relief packages, as well as whom to prioritize.

Stimulus Debate

Congressional Republicans largely pushed for more aid for businesses, believing that shoring them up would help people by broadly strengthening the economy and protecting jobs. Congressional Democrats pushed for more individual aid such as increased unemployment benefits to ensure that families could afford day-to-day necessities and that consumer spending stayed strong.

Another major economic issue at play was the role and purpose of the Federal Reserve. The Fed introduced a large number of monetary stimulus measures to try to prevent the COVID-19 crisis from causing a liquidity crisis.

There was one empty space on the Federal Reserve Board. President Donald Trump had attempted to appoint his nominee, Judy Shelton, to fill it before Biden took office. Shelton believed in returning to the gold standard and opposed the Federal Deposit Insurance Corporation (FDIC). Both positions are far outside the bounds of conventional monetary policy. Biden withdrew Shelton’s nomination after taking office.

Student Debt

Student loan debt was one of the most critical issues facing U.S. voters in 2020. About 45 million people carried a total of $1.54 trillion in student loan debt in the first quarter. That amount increased to $1.57 trillion by the end of the second quarter of 2023.

Student borrowers were graduating from college with a whopping $30,000 in debt on average which presented a major obstacle to beginning their postgraduate life on sound financial footing.

This debt overhang had major implications for the housing market upon which much of the U.S. economy is based. It was a major reason for lower rates of homeownership among millennials.

Presidential candidates including Senators Elizabeth Warren and Bernie Sanders presented plans for wiping out student loan debt entirely but they failed to gain their party’s nomination.

Important

The total student loan debt owed by Americans in the first quarter of 2020 was $1.54 trillion. That increased to $1.57 trillion by Q2 2023.

Biden was vague on his plans for student loan forgiveness after taking office but he said that canceling student loan debt does “figure in [his] plan.” Biden announced broad student loan forgiveness in August 2022.

The plan called for student loan debt cancellation of up to $20,000 for Pell Grant recipients and $10,000 for non-Pell Grant recipients. Individuals had to earn less than $125,000 or $250,000 for couples to qualify.

Federal courts blocked Biden’s plan to extend debt relief to student loan borrowers on Nov. 11, 2022. The Department of Education announced that it would work to overturn the block but stopped accepting new applications from those who were looking for relief. Applications that were already submitted were put on hold.

The Supreme Court ruled on June 30, 2023 that the Biden administration lacked the authority to cancel up to $20,000 in federal student debt per borrower. The administration announced on July 14, 2023 that it was canceling $39 billion in student debt, a move that impacted 800,000 borrowers. The measures were enacted through the Higher Education Act.

Climate Change

This is one of the most hotly debated topics in American politics and around the world. Democratic candidates released their own climate change policy proposals throughout the campaign after the U.S. pulled out of the Paris Climate Accord. The Biden-Harris administration proposed a $1.7 trillion green energy plan over the next four years and pledged to rejoin the Paris Accord.

Trade

The U.S.-China trade war dominated headlines during the first Trump administration. Trump pulled out of several trade deals in his first two years as president. He introduced a trade deal with Canada and Mexico and levied hundreds of billions of dollars in tariffs on Chinese companies.

The year 2020 started with trade tensions cooling off as President Trump worked to finalize the United States-Mexico-Canada Agreement (USMCA) trade pact and seemed to have set Phase 1 of his China trade deal in place.

Trump threatened to place tariffs on Mexico in the lead-up to the USMCA but he backed down after a public outcry. He briefly levied tariffs on Canadian aluminum after the USMCA was finalized but he backed down when the Canadians threatened retaliatory tariffs. The North American trade situation largely cooled down.

Trump then demanded that Chinese firm Bytedance, owner of the TikTok app, must sell its U.S. operations. He also banned the sale of electronic components to Chinese telecom firm Huawei, threatened to delist Chinese companies from U.S. stock exchanges, and banned U.S. investors from investing in companies that he claimed had too many ties to the Chinese military.

Housing

The eviction moratorium and unemployment expansion provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act lapsed in late July 2020. President Trump ordered the Department of the Treasury, the Department of Housing and Urban Development, and the Federal Housing Financing Agency (FHFA) which oversees Fannie Mae and Freddie Mac to find ways to provide assistance to renters and homeowners to prevent eviction or foreclosure.

These instructions didn’t suggest any specific methods or remedies, however, nor did they yet produce any concrete policies.

The problem was so great and the remedies were so scarce that the Centers for Disease Control and Prevention (CDC) had to take the unprecedented step of using its authority to issue an eviction moratorium to stop the crowding and spread of COVID-19 that evictions would cause.

Housing was likely to be a significant issue during the election even in the absence of the coming eviction crisis considering that more than 50% of households in America pay more than 30% of their income on housing. This is the standard definition of affordability.

Presidential candidate Biden proposed a refundable, advanceable tax credit of up to $15,000 to help first-time homebuyers and to fully fund the Section 8 voucher program so the program could serve more than 25% of the eligible households it served.

Biden also proposed reinstating the Affirmatively Furthering Fair Housing rule which required “communities receiving certain federal funding to proactively examine housing patterns and identify and address policies that have a discriminatory effect.” That rule was meant to redress the long-lasting impact of discriminatory practices such as redlining that excluded people of color from purchasing houses in many suburbs throughout the 20th century.

Healthcare

The U.S. spent far more per person than other countries on healthcare in 2020 while having lower life expectancy and rates of infant mortality that were higher than most other rich countries. No one could agree on what would fix our system, however. President Trump and congressional Republicans proposed the American Health Care Act (AHCA) in 2017 during his first term but it failed to pass.

Biden was looking to expand on the Affordable Care Act (ACA) that passed when he was vice president.

The results of vaccine testing began emerging after the election. Pfizer Inc. and BioNTech announced on Nov. 9, 2020 that a vaccine that they were jointly developing not only worked but was 90% effective. That effectiveness was significantly more than expected. Moderna followed up with early results from its trials that found its vaccine was roughly 95% effective and could be stored at higher temperatures.

The struggle remained to manufacture and distribute the enormous number of these vaccines across the nation and around the world. They both required some level of cold storage.

Investing

The stock market returned to record highs while the U.S. economy was still deep in recession and the gap between the stock market and the rest of the economy was as wide or wider than ever. Only 61% of Americans owned stocks so that gap also increased wealth and income inequality that was also at near-record levels.

When Securities and Exchange Commission (SEC) Chairman Jay Clayton announced that he was stepping down at the end of 2020, this allowed President Biden to begin picking a replacement early. Biden nominated Gary Gensler to take over.

Taxes

One of the largest if not the largest pieces of legislation passed under President Trump during his first term was the 2017 Tax Cuts and Jobs Act (TCJA). The legislation consisted of a large, permanent tax cut for corporations and temporary cuts to individual taxes that threaten to expire at the end of 2025.

The provisions cut individual taxes largely for higher-income Americans but they also introduced some level of tax cuts across the board. Investors were a big winner because most of the corporate money repatriated under the law went to share repurchases and dividends rather than to wage increases or investments. This mirrored the effects of the repatriation holiday in 2004.

President Biden proposed a tax plan during his candidacy that would raise taxes for wealthy Americans and tax long-term capital gains at the same rate as normal income. This went completely in the opposite direction from Trump’s tax plan.

President Trump resisted releasing his tax returns to the public during his first term, breaking with a presidential tradition dating back to the 1970s. The New York Times published information from his tax returns beginning on Sept. 27, 2020.

Tech

The five tech titans, Apple, Amazon, Meta (Facebook), Microsoft, and Alphabet, made over 20% of the Standard & Poor’s (S&P) 500’s market capitalization. The outsized role that these companies had in our country would go on to become an issue for President Biden.

President Trump long railed against large tech companies for what he perceived as a bias against conservatives. These allegations had an effect when it was revealed that Facebook stopped enforcing its anti-fake news policies versus conservative outlets.

That’s not to say that these tech giants hadn’t come under attack from Democrats. Many Democratic politicians attacked these companies for their sale of users’ data and use of corporate inversions to avoid paying taxes. Politicians from both sides of the aisle accused many of these companies of being monopolies and proposed that they be broken up like Standard Oil Trust of old.

Remember that years are company fiscal years.

This idea was reinforced by an investigation by the Federal Trade Commission (FTC) into all five of these companies and Microsoft, looking into whether their acquisition strategies were anti-competitive.

The Department of Justice (DOJ) filed an antitrust suit against Google on Oct. 20, 2020 over exclusivity deals that Google had made with smartphone manufacturers.

President Biden made one specific statement about big tech. He said that he wanted to revoke Section 230 of the Communications Decency Act. This provision stops internet platforms from being sued for what people post on their platforms. Biden argued that this allows companies like Facebook to casually profit from allowing the spread of dangerous misinformation with no repercussions.

Why Is It Important to Vote?

It is important to vote because the citizens of a nation are participating in the overall democratic process and how the nation moves forward and changes. Citizens vote to elect leaders that represent their ideas, goals, and the changes they wish to see.

What Are Some of the Main Issues That Face American Elections?

Some of the issues that face American elections include income inequality, abortion rights, racial inequality, education, student debt, healthcare, and taxation.

Does the Economy Influence Presidential Elections?

Economic sentiment is one of several factors that can influence electoral decisions. Voters often hold incumbent presidents responsible for the state of the economy.

The Bottom Line

The 2020 election was unlike many others before. The country was battling the COVID-19 pandemic and many Americans were suffering from the fallout. Much of the election focused on how to handle the pandemic and improve upon what President Trump had done in his first term.

Other key issues for voters included the student loan debt crisis, income inequality, the tax code, healthcare, and housing.