Tax and Spend
With Election Day in the rearview, US voters may have to wait to learn the full results. But it’s not too early to examine what the election could mean for your finances.
One of the most significant areas where Republicans and Democrats disagree is taxes. President Joe Biden has said he wants to enact a windfall tax on Big Oil companies’ profits, amid soaring prices driven by inflation and the war in Ukraine. If Republicans end up with a majority in Congress, that tax may not become reality. Similarly, if Republicans take either the House or the Senate — or both — they will likely face difficulty passing tax cuts, with the White House under Democratic control.
It’s worth keeping an eye on the federal debt ceiling, which caps government borrowing, and is on track to be reached sometime next year. If an agreement to raise the limit can’t be reached, it could cause further financial turmoil, as seen in 2011.
With inflation at its highest level in decades, the Federal Reserve has been enacting rate hikes in a bid to cool down the economy. This has been visible to voters in rising food costs, which were up 11.2% in September on an annual basis. The price of groceries in particular jumped 13% year-over-year.
But some elected officials have spoken out against the central bank’s hawkish approach, especially Democrats like Senator Elizabeth Warren of Massachusetts and Senator Sherrod Brown of Ohio, the Banking Committee Chair. Both have called on Fed Chair Jerome Powell to slow the pace of rate hikes.
On the other side of the aisle, Republican Senator Pat Toomey has demanded Powell resist buying more government debt, even if the economy continues to struggle. This more dovish approach would inject money into the system.
What Voters Want
Ahead of the elections, Pew Research determined voters are most focused on the economy and inflation. Just below 8 in every 10 respondents said the economy was “very important” to how they voted, which was up from the number recorded in both August and March of this year.
Specifically, 73% of those surveyed expressed a high level of concern over the price of food and consumer goods. 69% expressed the same regarding the price of energy; 60% regarding housing prices. Clearly, the majority of voters are keyed in on the long list of things that are getting more expensive, while hoping the election results will yield positive financial results.
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