Jeff Bush, Principal of The Washington Update, gave a keynote titled “The 2024 Elections: Legislative & Regulatory Outlook” on the second day of the 2024 Money Management Institute (MMI) Annual Conference. Bush took the stage with levity, saying “I don’t make jokes, I just watch Washington, D.C., and report the facts. If you find those facts funny, that’s on you.”
Known as a non-partisan who analyzes politics for Wall Street, Bush walked through an analysis of presidential candidates and campaigns, their vice presidential picks, and control outcomes for both chambers of Congress, addressing the impact elections will have on advisors and clients.
Dubbing this election “the most fascinating, boring election of our lifetime,” Bush pointed out that none of the unprecedented and fascinating occurrences in politics of the last several months have fundamentally changed the election this year.
‘Pandering’
While examining the strengths, weaknesses and strategies of both presidential candidates, Bush highlighted that much of what each candidate is saying is “pandering,” and not likely to be put into action, including the potential increase of taxes on the wealthy.
Bush says that Harris would like to continue many of the initiatives of the Biden administration. To pay for these initiatives, her solution is to “increase the slope of the progressivity of the U.S. tax code, meaning higher income, higher net worth America – and corporate America – sharing a larger share of a larger tax burden.”
“This is where she veers into pandering,” Bush explained, saying that a wealth tax, or tax on unrealized gains on income, is very unlikely even if the Democrats sweep the elections. Bush pointed out the position of both candidates to not tax tip income is another example of “pandering.”
Bush says he’s watching a different proposal closely – that above a certain income threshold, a person would not enjoy a lower long-term capital gains tax, which he believes has “a very real chance of passing.” He notes that it would be especially difficult for advisors whose clients have inconsistent levels of income that may or may not exceed the triggering threshold in different years, meaning the tax rate for the client in a particular year can’t be known in advance.
Bush points out that Trump is likely to use tariffs as a negotiating tool if elected, which would cause inflation. Trump would also increase production of fossil fuels – a strategy Bush says has limited effectiveness because at a certain point the policy will result in a glut of supply. He points to Trump’s statements on making Social Security and overtime pay tax exempt, and car loans tax deductible, as “pandering.”
He also bemoans the fact that neither candidate is addressing a Social Security and Medicare system that needs financial repair.
Back To The Future Of 2017
Bush sees a very real possibility that the provisions of the Tax Cuts and Jobs Act, signed into law in 2018, may expire, causing a range of repercussions on tax rates and brackets, estate tax exemptions, the expiration of increased standard deductions and the return of the state and local tax deductions. “Whatever the client’s been dragging their feet on – get it done,” he advised.
Bush says that even if Republicans sweep in November, there are many Republicans who are elected on a fiscal responsibility platform, who cannot move forward with the extension of the Tax Cuts and Jobs Act without considering how the extension must be paid for. An extension of eight to 10 years could cost over $4 trillion.
If the Democrats control both chambers of Congress and the White House, Bush predicts more policy along the lines of the Build Back Better Act that passed the House of Representatives in 2021 and influenced the Inflation Reduction Act of 2022.
However, Bush predicts that a split is the most likely outcome, which will lead to a mix of agendas, as well as to an executive that turns to foreign policy and regulation as legislation becomes much harder to pass. In that case, a Republican White House would “slash and burn” regulations, while a Democratic White House would increase regulations in a “paternalistic” fashion.
President’s Update
Immediately following Bush’s keynote presentation, Craig Pfeiffer, President and CEO of MMI, took the stage to give the “President’s Update,” along with Anne Steer, Head of Distribution, Congress Asset Management, who is the current Chair of the MMI Board of Governors; and Brendan Clark, CEO of Clark Capital Management Group, who is Chair-Elect of the Board of Governors.
The group discussed MMI’s membership, which has remained stable despite the loss of a few members due to M&A; and reflected on the success of its Academy program in conjunction with NYU Stern Executive Education, which was launched in March; as well as its Leadership Pathway program and Executive IQ program.
Clark spoke to the success of adding emerging asset managers as a focus area under MMI’s structure, which is “vital to the health of our membership and sustainability of our membership.”
Pfeiffer praised the collegiality of the membership, noting that the annual conference is the only event where participants “leave the guns at the door” and engage in a sharing of ideas for the betterment of the industry.
Pfeiffer said that MMI does not need to develop the capacity for regulatory advocacy because other organizations are already engaged in that work. Instead, MMI will continue relationships with and being signatory to the advocacy work of other organizations when the regulations in question affect MMI members.
Diversity and inclusion are key priorities for MMI, according to Pfeiffer, who pointed to progress in the industry for women and racial diversity, but emphasized that much more change is needed.
Julius Buchanan, Editor in Chief at Wealth Solutions Report, can be reached at jbuchanan@wealthsolutionsreport.com.
