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The election race between Donald Trump and Joe Biden has become one of the most singular in the history of the United States, not only due to the clash of their personalities but also because of the consequences of the pandemic, from the rise in unemployment rates to President Trump’s infection. As a result, eyes around the world are set on what will happen on November 3 this year, when a decision will be taken on who is going to be, during the next four years, one of the most influential figures in the world and the financial markets.   

US Elections. How Do They work?

An important fact must be kept in mind before talking about the candidates: unlike in many other countries, the President of the United States is not elected by an absolute majority. Figure 1 displays the main steps of this process that started last January with primary elections, also known as primaries where parties choose their presidential candidate. With Bernie Sanders -who was a candidate in previous primaries- and Joe Biden -Obama’s vice president- in the contest, the Democratic Party primaries were tight this year, but the latest finally won the internal election. In the Republican Party primaries, President Trump’s nomination was secured from the beginning, even though there were other candidates.

Once the debates are over -only one has been held so far, and the question remains on whether the rest will take place since President Trump tested positive for Covid-19-, electors of the Electoral College will cast their votes on Tuesday, November 3. With a total of 538 electors, a candidate needs at least 270 votes to become president. Here lies the difference with other electoral systems: the election is not done directly, but indirectly, through electors. Citizens vote for electors who will, in turn, cast their votes in the Electoral College for one of the presidential candidates.

The Electoral College awards a specific number of votes to each state; therefore, winning in as many states as possible is necessary to reach the 270 votes. Another main aspect that has to be considered is that the number of electors from each state depends on how many congressional districts that state has. As an example, California has 55 electors, Texas 38 and Florida and New York both have 29 electors each. As a result, the monitoring of the campaign progress moves remarkably close to the electoral support in each state.

 

Trump Vs Biden

As was mentioned before, the incumbent Republican candidate Donald Trump and the Democratic candidate Joe Biden had their first debate on September 29, which resulted in a somewhat chaotic and aggressive meeting that added to the confusion instead of providing any certainties. Biden was strengthened by this situation, proving that he can withstand the pressure despite age-related criticism.

Graph 2. Own elaboration. Source: Bloomberg taken from RealClear Politics

2020, in addition, has posed a tough test for the Trump administration, questioned by the delay and lack of leadership in the response to the Covid-19 pandemic, that resulted in over 200,000 deaths in the US as of today. This made an impact on the country’s economy, with a GDP contraction of -31,4% annualized for the second quarter of 2020, and an unemployment rate of 7.9%, plus the social problems that arose in many cities.

In a context that favors Biden’s campaign, the electoral race with Trump remains very even according to data published by Bloomberg that gives Biden the lead with 49.9% against Trump’s 43.1%.

 

Trump and Biden on the Most Relevant Current Affairs:

Covid-19: Their views on how the pandemic should be handled are opposed. The Trump administration has left most of the decisions and responsibilities under control of the state governments, whereas Biden pledges a more centralized, White House based management, that involves free testing on a wider scope and implementing the usage of face masks at a national level.
Infrastructure: Both platforms include the submission of bills on infrastructure, with budgets that range from $1,3 to $2 billion. Biden’s platform includes major investments in clean energies.
Taxes: The candidates differ widely on their tax plans, as well. Biden made statements about reverting Trump’s corporate tax cuts and applying Social Security tax to earnings over $400,000 a year. The incumbent administration, on the other hand, seeks to extend the current tax cuts, that expire in 2025, to 2030.
Health: Biden was Barack Obama’s Vice President when the Obamacare, or Affordable Care Act, was passed. His approach to the subject remains aligned with these ideas, but he is proposing a public insurance option instead of Medicare for All. The Trump campaign has focused on cutting public spending on health.
Trade: The trade conflict with China and the technological cold war that has been escalating between both countries are among the defining aspects of the Trump administration. If Trump is reelected, this will probably remain as the approach on the subject. Biden, on the other hand, has stated that making alliances to put pressure on China in order to tackle intellectual property disputes is a better approach than using unilateral tariffs as a weapon.

Even though the ongoing presidential election race in the US is quite an unusual one -including a candidate testing positive for Covid-19-, the major differences between the candidates’ platforms and approaches are responsible for exposing the reflection of a deeply divided country. In this sense, the pandemic has revealed such differences, and that is what makes a prediction on the outcome of the presidential election much more difficult. The United States is standing at political, economic and social crossroads that have been rarely seen throughout their history. We will remain attentive.

Report elaborated by Gandini Análisis for SupraBrokers only as content. It shall in no case be considered as an investment recommendation.

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