Jeff Bush: Post-Election Policy Perspective

Jeff Bush is principal of The Washington Update, the financial industry’s nonpartisan experts on all things Washington. In our recent interview, Jeff shared his expertise on policy and politics and answered investors’ questions on post-election outcomes—and what that could mean for their finances.

Key Takeaways

Interest Rates

The Federal Reserve (Fed) lowered interest rates by 25 basis points. Do you think the election outcome will alter their approach moving forward?

“I do think it will give the Fed a little pause. Some of the strategies that Donald Trump wants to put into place could actually be inflationary, and that could cause them to hold at current interest rates for a little bit longer than they probably had planned, with the idea to let this work out within the economy before making a decision one way or the other.”

Market Performance

After an election, does the market judge one party better or worse in terms of returns?

“It’s not really about the party as much as about predictability. Markets really like certainty, and a split congressional environment yields a more certain environment because fewer things will be changing.

“But in a single-party scenario with the Republicans sweeping in Congress, that does bring to bear the potentiality of more action. But that’s certainly not anything that I would suggest someone should change their asset allocation around for.”

Tax Reform

You've been telling the industry that we need to prepare for a tax reform effort in 2025. Why is that?

“Our current tax code actually expires at the end of 2025. We're under the Tax Cuts and Jobs Act, which Republicans passed back in 2017 with Republican-only votes under a rule called reconciliation. And that reconciliation rule really hemmed in the Republicans. Any tax changes they wanted to make had to fit within a budget window, and that closing date is the end of 2025.

“If we get to the end of 2025 and we've not gotten a tax reform bill done, legally we go back to the 2017 tax code with the numbers indexed forward. And the idea that the Tax Cuts of Jobs Act would just expire and we go back to the old tax code is pretty abhorrent to both parties, actually.”

Who would be most impacted if we don't see a tax reform bill next year?

“If the Tax Cuts and Jobs Act just goes away, the biggest negative impact will be for families earning between $200,000 and $400,000 a year.

“But it impacts everybody up the income scale. 81% of filers will actually have a tax increase. So it's not just a wealthy tax expiration. It really would impact deeply into the middle class.”