2020 Election: Jobs, Trade, and the Economy Explained

On Saturday, Nov. 7, 2020, The Associated Press called the presidential election for Joe Biden. 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.

On Jan. 5, 2021, Georgians went to the polls to vote in the two runoff elections for their state’s U.S. senators. 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.

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 has to help Americans hurt by the pandemic, and whom to prioritize was a huge bone of contention in creating the stimulus and relief packages.

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 (Fed). The Fed introduced a large number of new monetary stimulus measures to try to prevent the COVID-19 crisis from causing a liquidity crisis.

In addition, there was one empty space on the Federal Reserve Board. Then-President Donald Trump attempted to appoint his nominee, Judy Shelton, to fill it before Biden took office. Shelton believes in returning to the gold standard and, before her current hearings, 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. Around 45 million people carry a total of $1.54 trillion in such debt. Student borrowers are graduating from college with a whopping $30,000 in debt, on average, which presents a major obstacle to starting their postgraduate life on sound financial footing.

This debt overhang has major implications for the housing market, upon which much of the U.S. economy is based, and is 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.

After taking office, Biden was vague on what plans he had regarding student loan forgiveness, but he said that canceling student loan debt does “figure in [his] plan.” In August 2022, Biden announced broad student loan forgiveness.

The plan calls for student loan debt cancellation of up to $20,000 for Pell Grant recipients and $10,000 for non-Pell Grant recipients. To qualify, individuals must earn less than $125,000 ($250,000 for couples).

Climate Change

This is one of the most hotly debated topics in American politics and around the world. Since the U.S. pulled out of the Paris Climate Accord, Democratic candidates released their own climate change policy proposals throughout the campaign. 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 Trump’s administration. In his first two years as president, Trump pulled out of several trade deals, introduced a new 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 then-President Trump worked to finalize the USMCA trade pact and seemed to have set in place Phase 1 of his China trade deal.

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

Trump demanded that Chinese firm Bytedance, owner of the TikTok app, sell its U.S. operations. He also banned the sale of electronics 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. Then-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; however, these instructions did not suggest any specific methods or remedies, nor have they yet produced any concrete policies.

The problem was so great, and the remedies 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.

Considering that 31.5% of households in America pay more than 30% of their income on housing, the standard definition for affordability, housing was likely to be a significant issue during the election, even in the absence of the coming eviction crisis.

Among other things, then-presidential candidate Biden proposed a refundable, advanceable (paid at the time of usage) tax credit of up to $15,000 to help first-time homebuyers and fully funding the Section 8 voucher program so that the program could serve more than 25% of eligible households it served.

He also proposed reinstating the Affirmatively Furthering Fair Housing rule, which requires “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, which excluded people of color from purchasing houses in many suburbs throughout the 20th century.

This last issue, in particular, has been taken up by Trump, who has falsely claimed that this is a deliberate attempt by Biden to “abolish” suburbs and eliminate single-family zoning.

Healthcare

The U.S. spent far more per person than other countries on healthcare, while having lower life expectancy and higher rates of infant mortality than most other rich countries.

However, no one could agree on what would fix our system. Then-President Trump and Congressional Republicans proposed the American Health Care Act (AHCA) back in 2017, but it failed to pass.

On the other hand, Biden was looking to expand on the Affordable Care Act (ACA), which passed when he was vice president.

After the election, the results of vaccine testing began emerging. On Nov. 9, 2020, Pfizer Inc. and BioNTech announced that their vaccine, which they are 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, both of which require some level of cold storage, both across the nation and around the world.

Investing

As the stock market returned to record highs while the U.S. economy was still deep in recession, the gap between the stock market and the rest of the economy was as wide, or wider, than ever.

As only about half of Americans owned stocks, that gap also increased wealth and income inequality, also at near-record levels.

With Securities and Exchange Commission (SEC) Chairman Jay Clayton announcing that he was stepping down at the end of 2020, this gave President-elect Biden an opportunity 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 then-President Trump 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 will expire in 2025.

These cut individual taxes largely for higher-income Americans, but they also introduced at least some level of tax cuts across the board. Investors were a big winner of the tax cuts, as most of the corporate money repatriated under the law went to share repurchases and dividends rather than to wage increases or investment, mirroring the effects of the repatriation holiday in 2004.

Then-presidential candidate Biden proposed a tax plan that would raise taxes for wealthy Americans and tax long-term capital gains at the same rate as normal income, going completely in the opposite direction from Trump’s tax plan. Under President Biden, it is likely that American tax policy could see a shift.

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

Tech

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

Former 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 Party politicians attacked these companies for their sale of users’ data and use of corporate inversions to avoid paying taxes. In a rare example of bipartisanship, 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.

Years are company fiscal years.

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

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

While he has been vague in general, President Biden made one specific statement with regard to big tech. He has said he wants 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.

The Bottom Line

The 2020 election was unlike many others before as 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 then President Trump had done.

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