Wall Street braces for 2 faces of a President Biden: Progressive champ or middle-of-road moderate?
Biden allies in the finance world are currently working hard to assuage Wall Street’s worries
{{#rendered}} {{/rendered}}Wall Street isn’t sure what to expect if presumptive Democratic presidential nominee Joe Biden wins November’s general election.
The former vice president has recently embraced the progressive shift within the Democratic Party that has frightened some investors on Wall Street.
“All Wall Street is worried about what if Biden the progressive Biden gets elected...is it going to hurt things?” Biden said during an event with union workers on Wednesday.
{{#rendered}} {{/rendered}}With investors openly concerned that a Biden victory could see the White House hijacked by a left-wing, progressive agenda, longtime Biden allies in the finance world are currently working hard to assuage Wall Street’s worries.
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Millionaire venture capitalist Alan Patricof, a Democratic megadonor and longtime friend of Biden, told Fox Business that the former vice president’s promise to raise the corporate tax rate from 21 percent to 28 percent is an effort to rebalance the economy.
{{#rendered}} {{/rendered}}“That does not make Joe into a lefty or a progressive,” Patricof said. “It makes him responsible to 350 million-plus people in this country.”
Some on Wall Street are even warming to the idea of a tax hike.
After Biden spoke about his plans at a June fundraiser, Roger Altman – the chairman of investment bank Evercore, said he “would agree with [Biden’s] agenda, including those tax changes.”
{{#rendered}} {{/rendered}}Some firms, however, are forecasting that Biden’s proposed corporate tax hikes could be a blow to some investors and cut S&P 500 earnings by 12 percent.
Goldman Sachs said in its recent analysis that Biden’s plan to hike the corporate tax rate could backtrack growth.
“We estimate that the Biden tax plan would reduce our S&P 500 earnings estimate for 2021 by roughly $20 per share, from $170 to $150,” the multinational investment bank stated.
{{#rendered}} {{/rendered}}Some investors also are echoing President Trump’s claim that Biden would surround himself with people that would push him to adopt a far-left agenda.
“The people around him are radical left,” Trump said in a recent interview with Fox Business. “They are going to raise taxes, raise regulations...It would be a disaster.”
Jonathan Hartley, a former risk manager at Goldman Sachs, told Fox Business that among some investors “there is a concern that the socialist wing of the Democratic Party may very well be in charge” if Biden wins the White House.
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Wall Street isn’t just watching Biden – they are also keeping an eye on Senate and House races in the lead-up to November.
If Democrats take control of the Senate and keep the majority in the House, Hartley noted that concerns over a progressive agenda being implemented become much more real for Wall Street.
{{#rendered}} {{/rendered}}“I think especially if you see both a Democratic Senate and a Democratic House coming out in November along with Biden, that things like corporate tax hikes and financial transaction tax would come a lot more of a possibility,” he said.
Patricof said that Biden needs to win the White House by a “significant” margin in November in order to assert control over the Democratic Party.
“I'm hopeful that the victory is significant enough that it will give Joe even more backbone to resist any force on either side,” he said.
{{#rendered}} {{/rendered}}He added some advice to the presumptive nominee: “I like to always think of Harry Truman's famous comment, ‘I think Republican and vote Democratic.’”