The Politics of the Stock Market

The Story:

President Trump has made the stock market a central part of his reelection strategy. For example, in August of last year he told a campaign rally that people with an investment in the stock market “have no choice but to vote for me,” because his presence in the White House is preventing a crash. In recent days, that claim has lost some salience, since we seem to be having a crash anyway.


Many middle class Americans are in the stock market through their 401k programs. These are company sponsored retirement accounts that work through automatic payroll withholding, and the deferral of taxation on the money withheld.

The Dow Jones Industrial Average fell 3,600 points last week. Many analysts attributed this to investor concern about the impact the spread of the corona virus  is having and may continue to have on the world’s economy.

President Trump has said that the market is probably reacting to the Democratic Party debate on Tuesday evening, because investors are worried (on his view) that any one of them might replace Trump next January.

The Thing to Know:

The theory that the market was frightened by the debate is simply untenable: much of the decline occurred Monday and during the business day Tuesday, prior to that debate. A continuation of the drop — or even a market that proves to be indolent about making up the lost ground — will put Trump on the defensive as a steward of the country’s investments.

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