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Former President Donald Trump and Vice President Kamala Harris both want to end taxes on tips — and some policy experts have already criticized the idea.
In 2023, there were roughly 4 million U.S. workers in tipped occupations, representing 2.5% of all employment, according to estimates from The Budget Lab at Yale University.
If enacted, the plan could face administrative hurdles and be costly, experts say.

U.S. Vice President Kamala Harris and Republican presidential nominee and former U.S. President Donald Trump.
Brendan Mcdermid | Elizabeth Frantz | Reuters

Former President Donald Trump and Vice President Kamala Harris both want to end taxes on tips — and some policy experts have already criticized the idea.
Harris expressed support for tax-free tips at a rally on Saturday in Las Vegas. Her comments come roughly two months after Trump shared a similar idea, also at a rally in the service economy hotbed.

Nevada is a key battleground state where the hospitality sector accounts for roughly one-quarter of the workforce, according to the state’s June employment data.
“It is my promise to everyone here, when I am president, we will continue to fight for working families, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers,” Harris said at her rally.
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In 2023, there were roughly 4 million U.S. workers in tipped occupations, representing 2.5% of all employment, according to estimates from The Budget Lab at Yale University.
Generally, tipped workers are lower-income individuals, and some 37% weren’t subject to federal income tax in 2022, the report found. As a rule, employed workers who make less than their standard deduction don’t owe federal income taxes.

Not taxing tips is “a fairly narrowly targeted tax exemption,” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
Still, the idea has some bipartisan support in Congress with a bill introduced in the Senate in July and a House companion bill.

No tax on tips ‘fails every score’

Despite support for no tax on tips from Harris and Trump, some experts have voiced concerns about future plans. 
Experts consider equity, efficiency and revenue when weighing policy, explained Steve Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center. “The striking thing about this proposal is it fails every score that you might make for tax policy.”

If enacted, the idea could face administrative hurdles and possible abuse, experts say. For example, some workers could try to reclassify wages as tips to avoid the tax.
After Harris’ weekend comments, a campaign official told CNBC that, if elected, Harris would work with Congress to enact a law with an income limit and requirements to prevent “hedge fund managers and lawyers from structuring their compensation in ways to try to take advantage of the policy.”
Trump’s campaign did not respond to CNBC’s request for comment.

The striking thing about this proposal is it fails every score that you might make for tax policy.

Steve Rosenthal
Senior fellow at the Urban-Brookings Tax Policy Center

The idea of not taxing tips could also present a fairness issue for similar low-income workers who don’t earn tips, Rosenthal said.
“Why should someone whose compensation is a mix of tips and wages be better off after taxes than somebody who just gets wages?” he added.

The cost of no tax on tips

There are also critiques about the cost of the idea, particularly amid concerns about the federal budget deficit.
At Saturday’s rally, Harris called for no tax on tips and a higher minimum wage. The two ideas could collectively raise the deficit by $100 billion to $200 billion over 10 years, assuming the minimum wage increased from $7.25 to $15 per hour, according to an estimate from the Committee for a Responsible Federal Budget.

It’s unclear whether Harris’ and Trump’s plans would include an exemption from payroll taxes or just federal income taxes, which could impact revenue.
The cost could also be higher “depending on behavioral assumptions and avoidance questions,” Watson from the Tax Foundation said.

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Home equity is “not like bread,” said Greg McBride, chief financial analyst at Bankrate. “It won’t go stale if it just sits there,” he said.
But if you do have major home improvements or repairs, tapping home equity is a viable solution, experts say.

Iuliia Isaieva | Moment | Getty Images

Homeowners are sitting on $17 trillion in equity as of the end of the first quarter of 2024, according to CoreLogic. The average homeowner gained $28,000 in equity compared to a year earlier.
For many people, there’s no need to touch that money.

Home equity is “not like bread,” said Greg McBride, chief financial analyst at Bankrate. “It won’t go stale if it just sits there.”
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There is one exception, however: If you need to make major home improvements or repairs, tapping home equity can be a viable solution, experts say.

Home equity is ‘a less expensive borrowing option’

Among polled homeowners, 55% see home improvements or repairs as a good reason to tap home equity, according to a new survey by Bankrate. The site surveyed 2,294 U.S. adults, including 1,133 homeowners, in late June.
Using home equity is “certainly a less expensive borrowing option than resorting to personal loans or credit cards,” McBride said. 

As of Aug. 7, the current average home equity loan interest rate is 8.59%, according to Bankrate. The average HELOC interest rate is 9.37%.
To compare, the average personal loan interest rate is 12.38% , Bankrate found. The average credit card interest rate stands at 24.92%, according to LendingTree.

While cash from savings continues to be the most common way homeowners fund renovation projects, or 83%, credit card use has increased, according to the 2024 U.S. Houzz & Home Study. Houzz surveyed 33,830 homeowners of ages 18 and older from Jan. 19 to Feb. 27.
About 37% of homeowners paid for their repair projects with credit cards, up from 28% who did so in 2022, Houzz found.
While tapping equity is cheaper, it still has risks. Rates are higher given the Federal Reserve’s spate of rate hikes, and you need to go in with a plan to pay off the debt.

Remodeling can add value

Using home equity to invest in your home can make sense, said Jessica Lautz, deputy chief economist at the National Association of Realtors. Such projects not only help preserve the house, they may even enhance its value, boosting profits when you eventually sell.
The highest percentage cost recovered for exterior projects was from new roofing, at 100%, according to the latest Remodeling Impact Report by NAR. For interior projects, the highest percentage cost recovered was from refinishing hardwood floors, at 147%, and installing new wood flooring, at 118%, NAR found.

“We’ve found that hardwood floors have more universal appeal,” said Lautz. “For something like a roof, it’s a big project. … People may want to have that completed before they move into a home, make sure that the roof is in good working order.”

Tapping home equity for vacations, big purchases

More than 1 in 10 millennial homeowners said vacations or buying big-ticket items are good reasons to tap your home equity, according to Bankrate. But experts say this move is a “don’t.”
“If you have to finance the cost of your vacation, you can’t afford the vacation,” McBride said.
Plus, big-ticket items, such as a car or electronics, are depreciating in value from the point of purchase, he explained.
“You’re not only buying a depreciating asset, but you’re financing the purchase of that depreciating asset,” McBride added.

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While still resolving the challenges that have plagued this year’s rollout, the Education Department said the launch of the 2025-26 FAFSA will also be delayed.
For many families, financial aid is crucial when it comes to covering college costs, which have now crept into the six figures.
Reports show students and parents are turning to students loans even more.

By most accounts, the rollout of the new Free Application for Federal Student Aid, better known as FAFSA, was disastrous from the start. Even now, some college students don’t know the status of their aid awards for the fall.
“The Department’s poor planning has led to a stunning failure: Some college students might not have financial aid dollars in their hands in time to start classes in the next few weeks,” said Beth Maglione, interim president and CEO of the National Association of Student Financial Aid Administrators.

To avoid the same issues going forward, the U.S. Department of Education recently announced that the launch of next year’s federal student aid application form will also be delayed.

A ‘new approach’ for the 2025-26 FAFSA

The 2025-26 FAFSA will be available to applicants on or before Dec. 1, following a phased rollout starting on Oct. 1 to “identify and resolve the kind of system errors that can derail millions of students,” the Education Department said. (Typically, students have access to the coming academic year’s form in October.)
“Following a challenging 2024-25 FAFSA cycle, the Department listened carefully to the input of students, families, and higher education institutions, made substantial changes to leadership and operations at Federal Student Aid, and is taking a new approach this year that will significantly improve the FAFSA experience,” U.S. Secretary of Education Miguel Cardona said in a statement. 
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Higher education expert Mark Kantrowitz said he is skeptical that the department will be able to address all of the challenges that have plagued this year’s federal student aid application in the months ahead, not to mention next year’s form.

“Given that there are still more than two dozen unresolved issues from the 2024-25 FAFSA, it remains to be seen whether the 2024-25 FAFSA will be fully implemented by October 1 — or December 1 — let alone the 2025-26 FAFSA,” Kantrowitz said. 
“Just because the U.S. Department of Education says that it will get it done by December 1 doesn’t mean that they will get it done in time,” he added.

Families ‘are falling back on borrowing for college’

For many families, financial aid is crucial when it comes to covering college costs, which have now crept into the six figures.
The FAFSA serves as the gateway to all federal aid money, including federal student loans, work study and especially grants — which have become the most crucial kind of assistance because they typically do not need to be repaid.

In part because of issues with the new form, students are now relying on loans more, according to Sallie Mae’s recent How America Pays for College report. The share of parents taking out federal parent PLUS loans to help cover the costs of their children’s college education has also grown, other studies show.
“We’ve really seen that in times of economic hardship, [families] are falling back on borrowing for college,” said Jennifer Berg, vice president of public affairs for market research firm Ipsos, which partnered with Sallie Mae on the report.
“That’s when the FAFSA really plays a role,” Berg said.

To that end, it’s more important that the FAFSA is fully functional for next year, even if it means another delayed start, most experts say.
“The fact that we are still, to this day, dealing with the aftershocks of this year’s FAFSA rollout shows just how imperative it is that the process is thoroughly tested from end to end,” said the National Association of Student Financial Aid Administrators’ Maglione.
Although a reliable FAFSA trumps the postponement, “we acknowledge this is a difficult trade-off between functionality and the release date,” added Kim Cook, CEO of the National College Attainment Network — but it’s worth it as long as the FAFSA is fully operable by Dec. 1.
“Our students need to know they can afford college and stay on track to enroll,” Cook said.

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A long-awaited rotation out of tech and into small caps — a trend that kicked off a few weeks ago — could still have legs.
The long-talked-about soft landing may still be possible and rate cuts could deliver a cyclical recovery that benefits small firms.
It could also be worth taking individual positions in a handful of midcap companies that have underperformed this year but could benefit from further rotations out of Big Tech.

Traders work on the floor of the New York Stock Exchange during afternoon trading on July 26, 2024.
Michael M. Santiago | Getty Images

Stocks have endured a brutal stretch, with the Nasdaq now flirting with correction territory since reaching an all-time high on July 10. Even so, a long-awaited rotation out of tech and into small caps — a trend that kicked off a few weeks ago — could still have legs.
While all indexes have taken a beating in recent trading sessions, the Russell 2000 had shown signs of life before the so-called carry trade and worries about the U.S. economy disrupted its best run in years. A small-cap revival would unequivocally be a positive thing.

Indeed, coming after spikes in the S&P 500 and Nasdaq powered by a handful of companies perceived to benefit most from the boom in artificial intelligence, the increased market breadth may provide stocks the boost they need to overcome the recent rough patch.
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Two things need to happen for small caps to regain momentum.
The first is that the Federal Reserve will have to slash rates soon. That seems like a sure thing, with futures markets pricing in a probability of 100% of that happening in September. Notably, this level of certainty is largely responsible for sparking the rotation mentioned above in the first place. 
Secondly, we’ll need to see continued economic growth. This is obviously less certain, with July’s labor market data raising some concerns. Yet, the report is not as bad as some have made it out to be. Remember, recessions typically start with layoffs, which is not what the jobs report showed. The issue was more related to demand.

Therefore, the long-talked-about soft landing may still be possible and rate cuts could deliver a cyclical recovery that benefits small firms. The catch, though, is that these companies experience more volatility than their larger peers.
That’s why a fund tracking small caps is a smart bet. The iShares Russell 2000 ETF (IWM) is the largest one, which, along with the fact that it includes diversified exposure to many small companies, means the ups and downs are more muted.
However, it could be worth taking individual positions in a handful of midcap companies that have underperformed this year but could benefit from a further market rotation. One is Fabrinet (FN), a good way to play the increasing importance of data centers since it’s a leading contract manufacturer of optical components.
Silicon Laboratories (SLAB) and Synaptics (SYNA) are also attractive. Each produces discrete semiconductors, which, unlike integrated circuits, are individual units that perform specific functions. That’s an advantage because they can be more easily customized. 
Finally, Monday.com (MNDY) is also worth considering. It provides small- and medium-size businesses with a cost-effective, multipurpose alternative to expensive, single-use products such as Salesforce and QuickBooks.

One reason to doubt that a prolonged recovery for cyclically sensitive small caps is in the works: the price of copper. The metal usually goes up when cyclicals are poised for an extended rally. Copper prices, however, have fallen steeply since May.
Still, the performance differential between the Russell 2000 and S&P 500 during the spring reached 30 percentage points, a record. Since then, it has only recouped about 6% of that. Moreover, outside of the “Magnificent Seven”, valuations are reasonable. 
Therefore, once all the recent smoke clears and if it becomes apparent that policymakers can pull off a soft landing by cooling inflation and avoiding a recession, rates will come down and the rotation will continue, giving small and midcaps staying power.
— Andrew Graham, founder and managing partner of Jackson Square Capital. More

A “record-breaking backlog” of pending actions has led to an estimated $1.1 billion in improper beneficiary payments, according to a new report.
Experts say the Social Security Administration needs more funding in its budget to properly address a “customer service crisis.”

zimmytws | iStock | Getty Images

The Social Security Administration faces a “record-breaking backlog” of open cases, leading to approximately $1.1 billion in projected improper payments to beneficiaries, according to a new report from the Social Security Administration Office of the Inspector General.
The SSA OIG, which provides independent oversight of the agency’s programs and operations, found the agency’s backlog of so-called pending actions climbed to an all-time high of 5.2 million as of February.

Of those that were improper payment cases, the average processing time was 698 days, according to a sample evaluated by SSA OIG.
Improper payment includes overpayments, where beneficiaries are paid more than they should be, as well as underpayments, where payments to beneficiaries may be erroneously reduced.

If the pending cases had been resolved immediately, about 528,000 beneficiaries would have been improperly paid about $534 million, the report estimated.
After 12 months, that improper payment amount for those beneficiaries rose to about $756 million. At the time of the SSA OIG’s review, many of the cases had been outstanding for more than 12 months, bringing the improper payment amount to the reported $1.1 billion figure.

Some overpayments may be preventable

Earlier this year, the Social Security Administration put in place new policies to make it easier for beneficiaries to resolve overpayment issues with the agency, loosening previous rules that called for clawing back 100% of the money beneficiaries received.

However, the agency’s workflow still makes it vulnerable to inaccurate payments, which is worsened by processing delays.
The SSA OIG report’s findings are based on pending actions at the SSA’s processing centers, which handle appeal decisions, collect debt, correct records and process benefit decisions.
“The longer it takes SSA to process [processing center] pending actions, the longer beneficiaries wait for underpayments due or they receive larger overpayments to pay back,” the SSA OIG report said.

Some incidents of overpayments may be preventable in cases where beneficiaries do not provide necessary information to the Social Security Administration in a timely fashion, said Paul Van de Water, senior fellow at the Center on Budget and Policy Priorities.
However, other cases are just due to slow processing times by the agency, he said.
“Whatever the source of the problem, getting the claims and adjustments processed more quickly would be advantageous,” Van de Water said.

Improvements depend on ‘sustained adequate funding’

Notably, the Social Security Administration met its performance measure goals for pending processing center actions in four of the six fiscal years between 2018 and 2023, according to the report.
However, the agency was not able to meet its goals in two of the fiscal years in that time period due to unexpected staff reductions, increased workloads and less than expected overtime funding, according to the Social Security Administration.
“The number of beneficiaries continues to grow while we have the lowest staffing levels across the agency in 25 years,” Dustin Brown, acting chief of staff at the Social Security Administration, wrote in a letter in response to the SSA OIG report.
The Social Security Administration has more than 650 fewer employees working on processing center workloads than it did eight years ago, Brown added. During that time, the number of beneficiaries who rely on Social Security benefits has risen to almost 72 million, up from about 64 million, he said.
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The Social Security Administration agreed with the recommendations that came out of SSA OIG’s report to develop a workload and staffing plan, to create performance measures for pending actions and to establish time frame targets to handle those workloads.
However, the agency’s ability to successfully implement those recommendations will depend on “sustained adequate funding” to pay for hiring, overtime and improved technology, Brown wrote in his letter.
The Social Security Administration has faced a “customer service crisis” that has prompted long phone hold times and waits for disability determinations in addition to inaccurate payments, Van de Water said.
Unless the agency is given an adequate amount of funding in its budget, that crisis could worsen, Van de Water predicts.
While a Senate proposal calls for increased funding for the agency for the fiscal year starting in October, a House version instead calls for cutting the agency’s funding.
“Everyone wants to get rid of these long processing delays, but as long as the budget is so tightly constrained, that’s going to be very difficult to do,” Van de Water said. More

Sen. JD Vance of Ohio, former President Donald Trump’s GOP running mate, wants to raise the child tax credit to $5,000.
Vance’s plan would be a “relatively large expansion” compared with the current benefit, worth $2,000 per eligible child for 2024, according to Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
Without action from Congress, the maximum child tax credit will drop from $2,000 to $1,000 once Trump’s 2017 tax cuts expire after 2025.

The Republican vice presidential candidate, Sen. JD Vance, speaks at a campaign rally at NMC-Wollard Inc. / Wollard International in Eau Claire, Wisconsin, Aug. 7, 2024.
Adam Bettcher | Getty Images

Sen. JD Vance of Ohio, former President Donald Trump’s GOP running mate, wants to more than double the child tax credit. But the increase could be difficult to enact, policy experts say.
“I’d love to see a child tax credit that’s $5,000 per child. But you, of course, have to work with Congress to see how possible and viable that is,” he said Sunday on CBS’ “Face the Nation.”

Vance’s idea would be a “relatively large expansion” compared with the current benefit, worth up to a maximum of $2,000 per child for 2024, according to Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
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Without action from Congress, the maximum child tax credit will drop from $2,000 to $1,000 once Trump’s 2017 tax cuts expire after 2025.
During the pandemic, lawmakers temporarily increased the maximum child tax credit from $2,000 to either $3,000 or $3,600, depending on the child’s age. Families received up to half via monthly payments for 2021.
The child poverty rate fell to a historic low of 5.2% in 2021, largely due to the credit’s expansion, according to a Columbia University analysis.

Senate blocks a child tax credit expansion

Vance’s comments come less than two weeks after Senate Republicans blocked an expanded child tax credit that passed in the House in January with bipartisan support.
If enacted, the bill would have improved child tax credit access and retroactively boosted the refundable portion of the tax break, which could have triggered refund checks from the IRS.
Democrats held the vote partially in response to Vance, who has positioned himself as a pro-family candidate. But the bill was expected to fail without a consensus from Senate Republicans on credit design.

Vance wasn’t present for the recent Senate vote but described it as a “show vote” during the CBS interview, noting that it wouldn’t have passed even if he were there.
Meanwhile, President Joe Biden and Vice President Kamala Harris will “continue to fight for an expanded child tax credit,” National Economic Advisor Lael Brainard said in a statement.
Trump’s campaign did not immediately respond to CNBC’s request for comment.

How Vance’s $5,000 child tax credit might work

“The child tax credit is obviously a priority of Democrats across the country,” said Richard Auxier, a principal policy associate for the Urban-Brookings Tax Policy Center.
However, Vance’s idea for expansion could be challenging as lawmakers face growing concerns over the federal budget deficit.
Increasing the child tax credit to $5,000 could cost “somewhere in the neighborhood of about $3 trillion” over 10 years, the Tax Foundation’s Watson said.
“The immediate question is, of course, how to navigate the cost,” on top of other proposed changes, including extensions for Trump’s expiring tax cuts, he said.
There are also questions about Vance’s proposed child tax credit design, how Vance’s idea might work, including eligibility, work requirements and income phase-outs.
“Many Republicans are very skeptical of moving the child tax credit in a direction that would remove the work requirements of the phase-in,” meaning they only want employed families to claim the credit, Watson said.
Vance’s proposal could revive this debate within conservative and Republican circles as the 2025 deadline approaches, he said. More

Former President Donald Trump said last week that the president “should at least have a say” in monetary policy. Sen. JD Vance of Ohio, Trump’s running mate, backed that position.
Interest rates are set by the Federal Reserve, which governs these decisions independently from the White House.
Fed Chair Jerome Powell has maintained that politics will not play a role in the Fed’s policy decisions.

Republican presidential candidate former President Donald Trump speaks during a press conference at his Mar-a-Lago estate in Palm Beach, Florida, Aug. 8, 2024.
Joe Raedle | Getty Images

When it comes to raising and lowering interest rates, Republican presidential nominee Donald Trump says the president should “at least have a say.”
“They’ve gotten it wrong a lot,” Trump said of the Federal Reserve’s decision-making during a news conference Thursday at his Mar-a-Lago residence in Florida. 

“In my case, I made a lot of money, I was very successful, and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman,” Trump said.
Sen. JD Vance of Ohio, the Republican vice presidential nominee, echoed this opinion in a CNN interview that aired Sunday, saying that interest rate policy “should fundamentally be a political decision.”
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Also over the weekend, Vice President Kamala Harris told reporters in Arizona that she “couldn’t … disagree more strongly” with Trump’s suggestion that the president should have a voice in the central bank’s monetary policy moves.
“The Fed is an independent entity, and as president, I would never interfere in the decisions that the Fed makes,” Harris said.

The president has no direct control over interest rates

As it stands, the president exerts no direct control over interest rates. The Federal Reserve sets interest rates, and it operates independently of the White House.
“While the Fed’s day-to-day operations are intentionally removed from partisan political input to protect the central bank’s integrity, the Fed and its conduct of monetary policy remain democratically accountable,” said Brett House, economics professor at Columbia Business School.
Through the Federal Reserve Act, the legislative and executive branches of the government set the mandate of the Fed to promote maximum employment, keep prices stable and ensure moderate long-term interest rates, House explained.
“If a president wants to change this mandate, they always have the option to marshal support in Congress for an amendment of the act or new legislation,” he added.

However, this is not the first time Trump has contended that the relationship between the executive branch and the Fed shouldn’t necessarily work that way.
Last month, Trump said that if elected he would “bring interest rates way down.”
Inflation and high interest rates are “destroying our country,” the Republican presidential nominee said at the National Association of Black Journalists’ annual convention in Chicago.
“I bring inflation way down, so people can buy bacon again, so people can buy a ham sandwich again, so that people can go to a restaurant and afford it,” he said.

A rate cut is coming

Inflation has been a persistent problem since the Covid-19 pandemic, when price increases soared to their highest levels in more than 40 years. The Fed responded with a series of rate hikes to effectively pump the brakes on the economy in an effort to get inflation under control.
The federal funds rate, which sets overnight borrowing costs for banks but also influences consumer borrowing costs, is currently targeted in a range of 5.25% to 5.50%, the result of 11 rate increases between March 2022 and July 2023.
Now, recent economic data indicates that inflation is falling back toward the Fed’s 2% target, paving the way for the central bank to lower its benchmark rate for the first time in years. The personal consumption expenditures price index — the Fed’s preferred inflation gauge — showed a rise of 2.5% year over year in June. 

Markets have fully priced in the likelihood of at least a quarter percentage point rate cut in September and a strong likelihood that the Fed will lower by a full percentage point by the end of the year.
Once the fed funds rate comes down, consumers may see their borrowing costs start to fall as well.

Trump has a contentious history with the Fed

Trump, who nominated Jerome Powell to head the nation’s central bank in 2018, has been advocating for lower rates for years. The former president was a fierce critic of the Fed chief and his colleagues while he was in the Oval Office, skirting historical precedent by repeatedly and publicly berating the Fed’s decision-making. 
During that time, Trump complained that the central bank maintained a fed funds rate that was too high, making it harder for businesses and consumers to borrow and putting the U.S. at an economic disadvantage to countries with lower rates.
Ultimately, though, Trump’s comments had no impact on the Fed’s benchmark.
“Any chairman is going to remain loyal to the Fed’s mandate over any browbeating from the White House,” House said. 

Now, however, Trump has cautioned against the Fed lowering rates shortly before the presidential election in November.
Trump told Bloomberg Businessweek in an interview in July that cutting rates in September, just weeks ahead of the election, is “something that [central bank officials] know they shouldn’t be doing.”
Earlier this year, the former president also told Fox Business that he would not reappoint Powell to lead the Fed.
“I think he’s political,” Trump said. “I think he’s going to do something to probably help the Democrats, I think, if he lowers interest rates.”

When asked about these comments during a press conference after the FOMC meeting last month, Powell underscored the Fed’s singular focus on the economy.
“We don’t change anything in our approach to address other factors like the political calendar,” Powell said. “We never use our tools to support or oppose a political party, a politician or any political outcome.”
According to Greg McBride, chief financial analyst at Bankrate.com, “the Fed’s independence will remain paramount — regardless of who is president.”

A ‘consequential year’ for monetary policy

The central bank is an independent agency that governs decisions about monetary policy without interference from the president or any branch of government. Therefore, it is theoretically free from political pressure.
Still, the stakes are high in 2024.
In January, Powell said at a press conference that this was going to be “a highly consequential year for, for the Fed and for monetary policy.”
In the months that followed, signs of economic growth and cooling inflation laid the groundwork for a widely anticipated rate cut, which is welcome news for Americans struggling to keep up with sky-high interest charges.
After July’s Federal Open Market Committee meeting, Powell said that central bankers would cut rates as soon as September, if the economic data supports it.

How the Fed adjusts policy during election years

In previous presidential election years, the Fed has maintained its charted course through the election, whether that was tightening as in 2004, cutting in 2008 or remaining on hold as in 1996, 2012 and 2020, according to a research report by Wells Fargo released in February.
Further, since 1994, the Fed adjusted its policy rate roughly the same number of times in presidential election years as in non-election years, the report said.
A separate research note by Barclays also found “no compelling statistical evidence that Federal Reserve policy is conducted differently during presidential elections.”

Going forward, McBride said, “what will influence what the Fed does is what is happening in the broader economy.”
And yet, Fed board members are nominated by the president and must be approved by the Senate. Powell will conclude his second four-year stretch as chair in 2026 — opening the door to a potential change in leadership — and, possibly, the direction of monetary policy — smack in the middle of the next presidential term. 
The Trump campaign did not respond to CNBC’s request for comment. 
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The Department of Labor issued a so-called “fiduciary” rule in April governing advice to retirement investors, such as those in 401(k) plans and individual retirement accounts.
Insurance groups sued the DOL. Two federal courts in Texas delayed the rule’s start date and hinted the regulation may be unlawful.
The Labor Department is aiming to crack down on perceived conflicts of interest in the investment advice delivered by financial professionals like brokers and insurance agents.

Acting Labor Secretary Julie Su testifies before the Senate Appropriations Committee on May 9, 2024. 
Chip Somodevilla | Getty Images News | Getty Images

‘Almost a certainty’ courts will overturn

However, the fiduciary rule’s survival is in doubt following recent court actions, attorneys said.
Two federal district courts in Texas issued a national “stay” of the regulation, in separate rulings in July.

That effectively indefinitely delays the rule’s Sept. 23 start date while the courts conduct a more detailed review of the lawsuits, which were filed by several insurance industry groups.
“It is almost a certainty that both courts will overturn” the DOL regulation, said Fred Reish, a retirement law expert and partner at Faegre Drinker Biddle & Reath.

One of the courts hinted at that outcome.
“The Rule is almost certainly unlawful for a broad class of investment professionals in the industry — not just Plaintiffs,” according to a July 26 order by the U.S. District Court for the Northern District of Texas, in the lawsuit American Council of Life Insurers v. United States Department of Labor.
The other case is Federation of Americans for Consumer Choice v. Department of Labor.
The rule will “create a level playing field” for all trusted investment professionals, according to a Labor Department spokesperson.
“The insurance industry can continue to advise investors and sell annuities, without giving advice that is imprudent, disloyal, or tainted by misrepresentations or overcharges,” the spokesperson said.
The agency referred questions about an appeal to the Department of Justice, which didn’t immediately respond to a request for comment.

Current retirement rollover advice rules stay in effect

In the meantime, the current status quo remains in effect, attorneys said.
Current rules let brokers give investment advice that earns them a higher commission but isn’t in savers’ best interests, the Labor Department said during the rulemaking process. Insurance products like annuities are a chief concern, attorneys said.
The fiduciary rule is part of the Biden administration’s broader crackdown on “junk fees” shouldered by U.S. consumers across the financial ecosystem.
Meanwhile, industry groups say the court decisions are justified.
“The stay of the effective date provides consumers with a needed reprieve from these devastating consequences as the court considers the substantial legal issues we have raised regarding this ill-advised rule,” according to a joint statement from ACLI, the National Association of Insurance and Financial Advisors, NAIFA-Texas, NAIFA-Dallas, NAIFA-Fort Worth, NAIFA-POET, Finseca, Insured Retirement Institute and the National Association for Fixed Annuities.

The legal conundrum echoes that of a similar Labor Department rule issued during the Obama administration.
The Fifth Circuit Court of Appeals ultimately killed that fiduciary rule in 2018. The Trump administration didn’t pursue an appeal to the Supreme Court.
“The new fiduciary rules are somewhat different than those in the 2018 decision and it’s possible that there could be a different outcome,” Reish said.
However, November’s presidential election is a “wild card,” he added.
“If the Democrats retain control of the White House, they will likely pursue the case all the way to the Supreme Court,” if they were to suffer an adverse ruling, Reish explained.
The litigation may takes years to resolve, attorneys said.
“We are nowhere near a conclusion to the challenges to the 2024 fiduciary rule,” wrote Gina Alsdorf and Stephen Kraus, attorneys at Carlton Fields. More