US election 2016: America walks a tightrope

The US election cycle kicked off this week – and the results are unpredictable. Matthew Partridge considers how this might affect your investments.

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The US election cycle kicked off this week and the results are unpredictable.Matthew Partridge considers how this might affect your investments.

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Current situationTrans-Pacifi c Partnership (TPP) trade deal agreed and passing through Congress. Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated with EU.Obamacare expanded, giving more people access to healthcare. However , roughly 10% of people remain uninsured and healthcare costs are largest in developed world.US nominally leads bombing campaign against Islamic State and supports Syrian rebels. In reality it has done little. Open to a Syria deal that involves Assad remaining in power.Obama raised top rate to 39.6%, but corporate tax avoidance is a big problem.Obama oversaw large increase in regulation through Dodd-Frank bill. However, worries remain that America is vulnerable to another financial crisis.
Donald TrumpOpposes TTIP and TPP. Blames free trade for loss of jobs. Threatens tariffs on Chinesegoods.Opposes Obamacare, but replacement must cover uninsured. Used to support universal healthcare.Generally opposed to intervention, sceptical about Nato and supports making foreign countries pay cost of overseas troops. Has expressed admiration for Putin.Cut personal taxes, reduce corporate taxes to 15% and abolish inheritance tax. Claims this will be compensated for by closing loopholes.Railed against Wall Street support for immigration reform and trade deals. His various businesses are heavily in debt to banks.
Ted CruzReluctantly supports both TTIP and TPP, despite misgivings about giving too much power to the president.Repeal "every word" of Obamacare in 2017. Allow people to buy insurance across state lines.Rules out ground troops against IS and says US must accept democracy won't work everywhere. Attacks Obama for being inactive.Bring in fl at rate of income tax at 10% and business rate of 16%. Abolish the IRS tax service.Loosen regulations on banks.
Marco RubioStrongly supports expanded trade deals, including both TTIP and TPP.Repeal Obamacare and replace with tax credits. State subsidies for some high-risk patients.Expand US intervention in Middle East (including deal with Yemen Iran). Opposed to trade deal with Iran. Opposed Syria airstrikes in 2013.Simplify current tax system by reducing top rate to 35%. Abolish capital gains tax.Voted to repeal Dodd-Frank regulations.
Hillary ClintonNominally opposes TPP, but likely to change views once in offi ce (Bill Clinton famously did on Nafta).Expand Obamacare to cover more people, but keep mainly private elements of the system.Served with Obama in first term so essentially the continuity candidate, though slightly more hawkish in her rhetoric.Possible 4% surcharge on those earning more than $5m a year. No tax rises on those earning less than $250,000.Vows to bring in more aggressive regulation of banks, but large donations from Wall Street mean that many are sceptical.
Bernie SandersOpposes TPP as "race to the bottom". Sceptical about free trade, but unlikely to repeal existing deals.Increase tax to move from fragmented private healthcare to universal public system.Has said little, but is probably more dovish than Obama.Spending programme financed by clamping down on loopholes, Wall Street tax and taxing offshore income.Break up big banks, restore Glass-Steagall (which separated investment and retail banking).
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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri