I earn my living investing other people’s money in the stock market. I am terrified contemplating how I am going to save my clients’ money, as well as my own, if a Democrat is elected president. The policies that the Democrats are advocating will destroy the American economy, not just the stock market, but the whole US economy. My first instinct will be to raise cash ahead of the stock market crash, but even that is only a temporary safe harbor.
The Green New Deal, renewed regulations, Medicare for All, free college, as well as the 70-90% tax rates proposed by Democrats, will tank the stock market and US economic growth, leading to higher unemployment and reduced wage gains. All these programs require higher taxes and not just the soak the rich fantasy of the 70-90% rates. Most of the Democratic candidates have pledged to roll back the 2017 Republican tax cuts that fueled the renewal of economic growth in the US.
Open borders will flood the US with poverty stricken immigrants and their competition for jobs will depress wages. The social welfare needs of the immigrants will skyrocket government expenditures. So while taxes receipts are falling due to slower economic growth rates, expenditures will be rising, leading to increased government debt and consequently higher interest rates. If the Federal Reserve tries to keep interest rates low to prevent a deepening recession, then the increase in the money supply and the expanding deficit will eventually destroy the value of the dollar. So much for my safe harbor in cash.
Immigration: What do Open Borders Mean?
Milton Friedman pointed out over a decade ago, you cannot have open borders and a social welfare state… the supply of immigrants will become infinite.
Virtually all of the Democratic candidates have advocated for opening the border to all who want to come. All the Democratic candidates on the second night of the debate supported free health benefits for illegal immigrants and several have advocated for free college for all. But even without these additional incentives, the level of living available in the US, even to the poorest Americans, far exceeds what many of the world’s peoples can hope for in their own countries. No one starves in America. Our poor have cars, large screen TVs, air conditioning, video games for their kids and eat better than the average GI in World War II.
This is an invitation to all the world’s poor to come to the US in unlimited numbers. All you need is to get to our southern border. The number of people living in poverty in Latin America in 2017 was 184 million.
But immigration will not be limited to the poverty stricken in our own hemisphere. There are 750 million people who live below the international poverty line of $1.90 a day. By that standard, those coming from Latin America are not the most desperate. People will find a way to come to the US from Africa, possibly trafficked by cartels and other criminal gangs, as are many coming from Latin America now. (Have you ever wondered how poverty stricken people manage to travel 1400 miles, often with children and obtain food and water for the trip, and then arrive at our southern border in non-ragged clothes?) Since May of this year, 1100 illegal immigrants from Africa were interdicted at the southern US border. More will be coming.
With open borders, the economy of the US will sink under the demands for social services to be provided for a population that will overwhelm citizens living here now. But those advocating open borders do not put America first. They are “citizens of the world” and feel it is unfair that Americans have a higher standard of living than others. They will ensure that we don’t for much longer.
Tax the Rich Delusion
The race for the 2020 Democratic presidential nomination is quickly becoming a contest to determine which candidate wants to tax the rich the most. Democratic candidates have been attracted to Congresswoman Ocasio-Cortez’s proposal to tax incomes over $10 million at a 70% rate. Not to be outdone, Ilhan Omar has proposed a 90% top rate.
But what are the benefits and costs of these proposals beyond the fun of calling to soak the rich? According to the Tax Foundation, a 70% tax on all income over $10 million would raise only $51.4 billion over ten years and lose revenue in the first two years of its enactment because people would forego capital gains. The federal budget is estimated to collect $3.645 trillion in taxes in fiscal 2019, so the increased tax revenue will be trivial in terms of changing the actual amount of taxes the US government will have to spend, but it will have strong disincentives on entrepreneurship. It is America’s high rate of innovation and entrepreneurship that account for American economic success and wealth.
Medicare for All
The cost of Medicare for All means that the availability of Medicare for those on it now will be sharply reduced. The current level of Medicare cannot be provided to vastly more people without bankrupting the country. But even if it could, services would have to be cut sharply because we do not have the doctors and hospital beds to service vast new numbers of eligible people. Some candidates like Bernie Sanders admit that you will not be able to keep your private health insurance even if you want to, and that your taxes will go up to pay for this new benefit; others like Joe Biden lie and say if you like your plan you can keep your plan and Sen. Kamala Harris denies that your taxes will rise. But Medicare for all will be another costly program that will increase the national debt.
The Green New Deal
To those who believe that climate change is the existential threat facing America (not Iran or China), destroying the US economy to save the planet is a fair trade. Doing away with fossil fuels now that the US has become the world’s largest provider of oil and natural gas and has become energy independent is a sure way to cripple the US economy and to hand economic might to China and Russia who will not face the same restrictions. So not only will the Green New Deal destroy the US economy, but possibly also our freedom, as we decline economically and our adversaries, China and Russia, continue growing in economic strength without these restrictions.
Trump is the only choice
Whatever you think of President Trump, you know by his record that he will put America first and that his policies have created a robust economy. Unless you want to see the US economy and your standard of life destroyed, there is no alternative to voting for President Trump.