The 2024 Election: Nothing Stops This Train

I was barely paying attention to this year’s election cycle for a long time.

But in late June, something interesting finally happened: Biden debated Trump, and his brain exploded and got sucked into a black hole on stage.

In the following months, we got multiple assassination attempts, the Kamala swap, controversial VP picks, two more debates, cat lady memes, accusations of Haitians eating cats, and New York State euthanizing a pet squirrel YouTube star.

After all the noise, the 2024 election ended with a decisive victory for Donald Trump in both the Electoral College and the popular vote.

The Republicans also flipped the Senate (the exact majority is unclear as I write this), and the House of Representatives could also be a narrow win for them (??).

Even if you absolutely hate Trump, you must acknowledge that he’s now the most dominant national political figure since Reagan or possibly even FDR.

So, what exactly happened?

How does it affect careers in the finance industry, compensation, and deal activity?

And most importantly, will the cats and squirrels be OK?

Ground Rules

I’ve been writing these “U.S. elections reviews” for 16 years, with the first one right after Obama’s win in 2008.

In each election cycle, I try to approach the results from an objective perspective.

I do not have a “side,” I don’t identify with any major party, and I don’t stray into policy debates outside the core areas on this site.

Therefore, this feature ignores “character” and personal strengths and weaknesses and focuses strictly on potential policy ramifications.

So, if you think that Donald Trump is “literally Hitler” or that Kamala Harris is a “Kommunist,” this article is not for you.

What Happened in the 2024 Election?

Over the coming days, you can spend hours reading hot takes, commentary, and “post-mortems” on what went wrong for the Democrats.

But I think most of this commentary over-complicates things.

Many people are not doing well economically or socially and are upset at the Biden-Harris administration due to inflation, illegal immigration, and foreign policy.

Democrats had no real responses to these frustrations, and instead of doing the intelligent thing and picking someone removed from the administration to replace Biden, they picked Biden’s VP, who was… perhaps not the strongest candidate (to be diplomatic).

I don’t think most people voting for Trump “liked” him, but they disliked Biden-Harris even more and felt it was time for a change.

How Can You Evaluate What Happens Next?

We can evaluate potential policy changes based on a few criteria:

1. Track Record – What did each candidate do in their previous positions of power?
2. Promises – During the campaign, what did they say they wanted to do?
3. Unilateral vs. Joint Powers – With how the U.S. government is set up, the president has significant unilateral power in some areas but must go through Congress in others.

For a good example of the last point, consider Trump’s “proposal” to remove the income tax and implement universal 10 – 20% tariffs with an additional 60% tariff on all imports from China.

The president can impose tariffs on selected goods for national security reasons, but something as big as this would have to go through Congress, and I doubt he could win approval even with a Republican majority in the Senate.

And even small changes to income tax laws are incredibly difficult to pass; “eliminating the income tax” in favor of high/universal tariffs is pure fantasy.

If you look at what Trump did during his first term – not what he angrily tweeted about – he mostly governed like a standard Republican with a few twists.

He cut corporate and personal taxes, reduced or slowed regulation, imposed stricter immigration rules, and took a tougher stance on China, trade, and tariffs.

The Biden administration reversed some of these policies (immigration) but kept others in place or even expanded them (Chinese tariffs) and passed its own policies, including the Inflation Reduction Act, CHIPS Act, and a massive stimulus in 2021.

My Predictions for the Second Trump Term

As usual, Trump’s promises and rhetoric have been wildly inconsistent, but I will hazard a few guesses.

First, if you’re an international student, I would not worry much about changes to the OPT program, H-1B visas, or the legal process to get a green card.

Yes, Trump has promised a “crackdown” on immigration, but he’s focused on illegal immigrants, not ones who are studying or working in the U.S. on visas.

Illegal immigration has become such an issue that the administration will have its hands full with this problem.

Second, on taxes: Many provisions of the 2017 Tax Cuts & Jobs Act (TCJA) expire at the end of 2025, which means there will be some type of Congressional action before then.

We don’t yet know the results in the House of Representatives, so this “action” could be anything from a protracted fight to a modest compromise to a simple extension.

I do not think a corporate tax rate reduction to 15% is on the table, despite Trump’s suggestions, because it’s too unpopular and would make the deficit even worse.

But I could see a compromise where they let the tax cuts expire for anyone earning above $400K in exchange for uncapped state/local tax deductions or child tax credits (for example).

Third, on tariffs, I think he’s likely to keep in place everything from his first term and all the additional ones that Biden imposed and go slightly beyond them.

In the short term, this will make inflation worse (or at least “not better”), but you could argue that they might help in the long term if they bring back jobs and boost wages.

That said, if he really wants to boost manufacturing, he’ll have to do something much bigger to incentivize companies, which means more deficit spending (see below).

Fourth, regulation is one area where the president has quite a lot of power, so we could see more rollbacks related to energy, finance, and other areas.

“Fewer rules” is generally good for business activity and deals, so this could be positive, but he’s also made a lot of contradictory suggestions (e.g., capping credit card interest), so who knows.

Finally, anti-trust enforcement is likely to be looser under Trump.

Due to Lina Khan’s appointment at the FTC, the Biden administration took a much tougher stance on blocking M&A mega-deals and even some smaller deals.

This wasn’t the only factor that led to reduced deal activity, but it played a major role (higher interest rates, inflation, and geopolitics also factored in).

That said, I do not think anti-trust will be as loose as it was during Obama’s terms or Trump’s first term.

Attitudes on corporate power have shifted, and Republicans like JD Vance are more supportive of anti-trust and restrictions on big companies; remember that the lawsuits against Google and Facebook started under Trump.

We could even see some breakups of tech companies, which, ironically, is good for bankers (more fees!).

Considering everything above, Trump’s victory is probably a slight positive for deal activity, markets, and finance compensation, but less so than his 2016 win.

But What About Inflation? Economic Growth? “Government Efficiency”?

One of the biggest issues these past few years was inflation, as the prices of many consumer products, homes, rent, etc., spiked 20% – 50% between 2019 and 2024.

I don’t think it’s fair to put all the blame on specific politicians because it happened worldwide, including in countries with wildly different COVID/lockdown policies (e.g., Sweden and Australia).

That said, you could certainly argue that some policies made it worse (I’m very skeptical of the additional $1.9 trillion stimulus under Biden in 2021).

Some Trump supporters believe he will somehow reduce inflation or “restore” prices to their 2019 levels, but this is wishful thinking.

For prices to return to their 2019 levels, we’d need deflation, which is unlikely in a fiat monetary system with an expanding money supply due to huge government deficits.

The best-case scenario is that wages increase faster than product/service prices, so people have higher disposable income even if prices remain elevated.

I guess this is possible, but I’m still skeptical; even something like 5% wage growth vs. 3% price growth would barely be noticeable over a short time frame.

But there is one wild card: Trump has surrounded himself with a very different crowd this time, including people like Elon Musk, who has promised to “pull a Twitter” and massively cut government spending.

Like many other countries, the U.S. is running unsustainable fiscal deficits that worsen inflation.

But the problem is that most of this spending (~$6.1 trillion in FY 23) goes to mandatory programs, such as Medicare, Social Security, and interest on the $35 trillion in national debt (source).

So, it’s not a Twitter scenario where Elon can just walk in and fire 80% of the employees.

They may be able to cut some discretionary and defense spending, hope for lower interest rates, and perhaps raise additional revenue from tariffs, but the math is still not great.

I guess ~$1 trillion deficits are better than ones closer to $2 trillion, but no politician will touch programs like Social Security and Medicare until there’s a real crisis.

Also, even if these cuts result in stronger private sector job and wage growth in the future, there will likely be a short-term hit because government spending accounts for a significant percentage of the GDP.

Nothing Stops This Train: Why None of This Really Matters

Ultimately, any administration faces the same problem: “Fiscal dominance” currently reigns supreme in the U.S.

We’re spending far more than the country generates in tax revenue, which means the money supply is constantly growing (OK, there was a small drop in 2022 – 2023).

This means there will always be inflationary pressure; it’s just a question of whether it affects financial assets, real-life products/services, or both.

And then there are other problems that may not even have political solutions:

• Birth rates and populations are declining in most developed countries.
• AI is hurting many “knowledge worker” jobs or at least reducing demand for these jobs. I worry that the benefits of AI will flow mostly to big companies and very small firms.
• Many emerging/frontier markets are tapped out, led by a poor economy in China.

So, our current situation is not sustainable, and I don’t think Biden vs. Trump vs. Harris matters much at the macro level.

I agree 100% with Lyn Alden’s meme that “Nothing stops this train”:

The Good News About Trains That Don’t Stop

In my update four years ago about the 2020 election, I made a few predictions that turned out to be correct: More anti-trust scrutiny, less restrictive immigration policies/enforcement, and reduced deal activity.

But I was wrong about one major point: My pessimism for the U.S.

I still think the country has a lot of problems, but if your main goal is to win a high-paying job or start a business, nothing else compares.

Sure, you get healthcare and more paid leave in Europe, but taxes are higher, and salaries and bonuses are laughably bad.

Compensation is better in some Asian countries (HK, Singapore, etc.), but you’ll work long hours with fewer high-paying exit opportunities.

And while the U.S. fiscal situation is bad, it’s much more likely that a European country using the euro will hit the “breaking point” first because of its inability to print its own currency.

I would put money on a pension/budget/fiscal crisis starting within the next ~5 years in France, Germany, Italy, or Spain.

If you’re on a train that doesn’t stop, you just need to avoid crashing before all the other trains go off the rails.

And with any luck, you can also avoid any squirrels or cats on the track.