Clinton, Trump and … Linus Van Pelt?

Eighty-three days from now, America will pick someone to spend four years signing laws and speechifying. In those 83 days, we will see increasingly more campaign theatrics and media dissections, and most all of it will be hot air. True political wisdom will be a precious commodity, but I know where you can find it: You're Not Elected, Charlie Brown, which will air back-to-back with It's the Great Pumpkin, Charlie Brown at some point in October.^[i] It teaches a time-honored lesson-and a vital one for investors-more simply than any history lesson or political science textbook can.

Our hero is not everyone's favorite hapless reject, Charlie Brown, but his loyal, blankie-toting best friend, Linus Van Pelt-brother to Lucy, not-quite paramour to Sally, faithful believer in the Great Pumpkin. In this special, Linus is running for student body president. Like all politicians, he makes sweeping campaign promises-all frightening or exhilarating, depending on one's perspective:

If I am elected student body president, I will purge the kingdom! My administration will release us from our spiritual Babylon! My administration will bring down the false idols in high places! If I'm elected school president, I will demand immediate improvements! I will demand across-the-board wage increases for custodians, teachers and all administrative personnel! And any little dog who happens to wander onto the playground will not be chased away, but will be welcomed with open arms! If I'm elected, I will do away with cap-and-gown kindergarten graduations and sixth grade dance parties! In my administration, children will be children and adults will be adults! If I'm elected school president, my first act will be to appear before the school board. ... (Lucy comes up and whispers in his ear) ... I'm sorry, I will not be able to appear before the school board, they meet at 8 o'clock, and I go to bed at 7:30.

Linus, as he later told a student reporter, was going to "straighten things out" at his school, which he said was "in the midst of a moral decline." The other kids fell for it hook, line and sinker. SPOILER ALERT^[ii]: Even after he nearly ruined his chances by delivering a soliloquy about the Great Pumpkin during his final campaign speech, Linus won, 84-83-the deciding vote cast by his opponent, Russell, who thought Linus would do a better job.

Armed with a fresh mandate and the will of the people-and prodded along by Sally-Linus went straight to the principal:

Sally: Here we are! Now you go in and tell him exactly what you're going to do to straighten out this school. You go right and tell him. You've got the authority. We voted you in!

(Linus enters the office and closes the door. Sally sits outside.)

(Door opens)

Linus: Yes, sir. You're absolutely right, sir. I won't do anything without consulting you, sir.

Sally: Well I hope you told him!

Linus: Well, not really. As a matter of fact, he told me.

Sally: HE SOLD OUT! WE ELECTED HIM AND HE SOLD OUT! THEY'RE ALL THE SAME! PROMISES, PROMISES! YOU ELECT THEM, AND THEY WEASEL OUT OF THEIR PROMISES!

(Sally kicks her locker and stalks off in a huff. End scene, roll credits and that delightful Vince Guaraldi score.)

Art imitates life, huh.

Politics is a web of lies, but in that web are two ceaseless truths: American presidents don't have much power, and they always abandon campaign pledges in office. Sometimes it's because they sell out. Other times, it's because the law, Congress and the courts get in their way. Sometimes, events simply overtake them, particularly when foreign policy is involved. Here are just some presidential promises that never happened, in reverse chronological order.

"[I] will direct revenues from offshore oil and gas drilling to increased coastal hurricane protection." (Barack Obama, 2008)

"As President, Governor Bush will bring taxes down from their record high level and pay the debt down to a historically low level." (Boldface ours) (George W. Bush, 2000)

"We will control health care costs to ensure that they do not rise faster than the rate of inflation." (Bill Clinton, 1992)

And the granddaddy of them all in the modern age: "Read my lips: No new taxes." (George H.W. Bush, 1988)

Our founding fathers were pretty darned smart. They wrote a Constitution that split the government in three, put each branch on equal footing and-for good measure-gave a boatload of power to the states. On the one hand, this led to a state-by-state torn patchwork quilt of a healthcare market. On the other, it decentralized power, preventing any one person from implementing their will, for good or ill. The president can't write laws. He or she can sign them or veto them. Congress can override that veto. The president can issue Executive Orders, but those can't do much. A president can't, for example, change tax rates by Executive Order. Or do anything more than reinterpret a line or two of an existing law. They can try to do something more sweeping, but the courts usually intervene, as we saw in June. This isn't Putin's Russia, Erdogan's Turkey or Kim's North Korea. No single person can make the law.

Personally, I wouldn't waste much mental energy trying to analyze what either candidate's anti-trade rhetoric, tax proposals, crusades against certain industries or all the rest means for stocks. The likelihood any of it comes to fruition as outlined on the campaign trail is about nil. Sweeping new laws require one party to hold the presidency and slanted majorities in both houses of Congress. The Obama administration had that during its first two years and passed all of two major bills-both of which were watered down heavily from initial proposals. For all the angst and joy over the Affordable Care Act, the mooted "public option" died in committee. So did the toothiest proposed provisions of Dodd-Frank. That's what happens when laws are written by politicians whose sole goal is re-election. Neither Trump nor Clinton appears at all likely to have anything close to the majority Obama enjoyed his first two years.

Bureaucracy and the separation of powers are the principal delivering that off-screen smackdown to Linus. Often, they're off-screen in real life as well, unseen but throwing wrench after wrench in a president's plans.^[iii] To the casual observer, it looks like selling out-and sometimes it is. But process and the law are roadblocks, too. Big, beautiful roadblocks.

For markets, this is for the best! Stocks hate sweeping, sudden change. They love gridlock and governments tangled in bureaucratic morass (at least, they love it in competitive developed countries) because it reduces the risk of sudden, sweeping change. Stocks don't really care who's president. They're neutral, objective, unbiased-just like investors should be when thinking about politics and their portfolio. Stocks simply care what presidents actually do-and are usually happy that they can't do much.