This space is a place for discussing stocks, investing, and the markets, yet all of those things can be affected by what happens in politics, by who wins elections, ultimately, and who’s up and who’s down in the meantime.
So, now and then, politics must enter this space, as well. In my view, after more than two decades covering business and the markets, the political factor is best summed as thusly:
Democrats bad. Republicans better.
The single biggest reason I say Democrats bad is taxes: universally, the Democratic candidates for President want to raise them.
Well, almost all of them say this, given that Sen. Elizabeth Warren keeps refusing to admit that this is what she do. She is as slippery and hard to corner as Floyd Mayweather was in his fight against Conor McGregor.
She will have little other choice, given her plans to “lift five million people out of poverty” by adding $200 a month in extra pay to every one of the more than 60 million people who collect Social Security benefits and the 10 million people on disability benefits; and provide free college for all and wipe out over a trillion dollars in college debt; and provide free day care for all toddlers under age 5, and free Medicare for all 320 million of us. The litany itself is freakin’ exhausting.
All the Dem Demogogues say not to worry—they mainly want to raise taxes only on The Rich. Let someone else pay for it. That is a comforting message at a time when half of all households in America pay little to no income tax after refunds, yet half of America receives some kind of government benefits—likely the same half.
They lie in unison.
The trouble is that the tax hikes that first are aimed only at the “rich” will end up targeting the rest of us: All of us will be paying higher taxes, eventually, to fund government’s insatiable appetite for spending our money.
The latest soak-those-bastards proposal is Sen. Elizabeth Warren’s idea for an entirely new federal tax that never existed before: a “wealth tax” on total assets rather than on the past year’s earnings. For 70,000 families with assets of $50 million or more, a new 2% annual tax would be imposed; for billionaires, 3% extra per year.
What is it with Democrats’ giddy eagerness, always, to raise our taxes? Maybe they fail to recall the outcome in 1984 when Democrat nominee and former Vice President Walter Mondale bluntly and proudly proclaimed he would raise income taxes America to offset the supposed damage done by the Reagan tax cuts. Reagan went on to win re-election in a landslide.
Lesson unlearned. Now it is the Trump Tax Cuts that must be undone. In a recent Dem debate, Joe Biden said he wants to double the capital gains tax (now down at 20%). Bernie Sanders proudly proclaims he wants to tax billionaires out of existence and says yes, by golly, he will raise taxes even on the middle class to fund his programs. His spending plans total $90 trillion over ten years by some estimates. That is $9 trillion extra per year—more than double the current $4 trillion annual federal budget.
Given all of that, it seems inescapable that a Democrat win in the 2020 presidential election could lead to a market meltdown of historic, earthquake proportions.
The trouble is that even the rich aren’t rich enough to fund the wild, fantastical spending plans of the Dems who took the stage on a recent Tuesday night. When I was an anchor on TV some years ago, we came up with a startling stat: If you seized all earnings above $1 million per year from every person in the top 1%, you would end up with all of $600 billion per year.
The government already spends $4 trillion annually, so it is akin to collecting only six hundred bucks to fund $4,000 in spending. The other $3,400 has to come from somewhere and from someone else. That is why the rest of us will end up paying higher taxes, too, unless voters stop this madness.