Most of Wall Street, it seems, is happily preparing for a Joe Biden victory in November. “The majority of my friends on Wall Street would like to see Trump lose to Biden,” one very senior investment banker tells me. “They’re saying, ‘We’d like to see Biden crush Trump.’” And that is without knowing exactly what Biden and the 117th Congress—to be elected on November 3—will do about such important economic topics such as the corporate tax rate, the capital gains tax rate, or taxes on the wealthiest Americans. The consensus on Wall Street seems to be that a Biden presidency will mean an overhaul of the Trump 2018 tax law. That means higher tax rates for the very wealthy, for corporations—likely an increase in the tax rate to 28%, from 21%—and on capital gains.
At a virtual fundraiser on June 29 with Wall Street types, Biden said he’ll likely roll back much of Trump’s $2 trillion tax cut “and a lot of you may not like that.” Interestingly, in my conversations with Wall Street executives, bankers and traders, higher taxes seems to be a small price to pay to be rid of Donald Trump. “Wall Street’s not this amorphous, unified blob,” the senior Wall Street banker continues, “but the majority of people I talk to on Wall Street think it’s worth taking the hit to get Trump out of office. They view him as an existential threat.”
Robert Wolf, the former head of UBS in the Americas who now has his own advisory and investment firm, 32 Advisors, concurs. Wolf, who was once described as Barack Obama’s favorite investment banker, says Wall Street understands the numbers: the multi-trillion-dollar annual federal budget deficits and a national debt at $24 trillion. “The numbers don’t lie,” Wolf says. “Those managers who are best on Wall Street are preparing for possible changes in tax reform, are preparing for how best to look at infrastructure, are preparing for what we’ve seen under this administration of more nationalistic policy that hopefully will change. People prepare for change. They don’t necessarily institute the policies, but they start preparing for change, and the good Wall Street firms, they look at where they think 2021 can be, and they look at the changes where each administration could have, and they start planning for that.”
He says he’s convinced if the election were held today, Biden would win, big. The election is “predominantly a referendum on Donald Trump,” Wolf continues. “He’s at his lowest approval polls to date. If the election was today, I think that the Democratic Party would win the presidency, the Senate, and the House.” He says Wall Street, while not monolithic in its voting patterns, looks “at the volatility and the lies that come out of this White House, and my gut tells me that they’re exhausted from it. The old saying that people vote with their pocketbook, I’m not sure I agree with that. I think there’s more to people. I believe that people are much more substantive than just the pocketbook.” He says that what has been revealed by the COVID pandemic and the faltering economy is “income inequality, health inequality, and racial inequality,” and voters are going to be focused on the candidate that is best able to articulate solutions to these serious problems. He thinks Biden is the best qualified to address these issues. “Biden is going to focus on how we can grow, and how we can grow in a fair and just way,” Wolf says. “I think you’ll see the corporate rate go up. You’ll see the highest earners’ income tax rate go up. I think it’s expected. I don’t think any of this is unexpected…I think there will be clear-cut disagreements between what’s the best way to take our country into 2021. Certainly, my view is that the Biden campaign is going to be able to show why they have the best case and the best person to lead.”