According to CNBC Pro (subscription needed), “The market could be anticipating a Republican sweep of Congress in Tuesday’s election.” The headline gives away what many market players are thinking. What if Democrats (and democracy) win Tuesday’s election, opposite of what the market expects?
Under the traditional capitalist extraction model, Republicans are good for stocks. There are lower taxes, fewer thorny regulations, less scrutiny on mergers and acquisitions, less investigations on shady business practices. Lower taxes boost stock values, as more goes to shareholders. The market believes the false economic theory of trickle down economics, which means if the wealthiest benefit greatly a small amount might trickle down to the peons making up 99.9% of the population.
In this traditional model, markets are zero sum. I can only gain if you lose.
What if Democrats sweep Congress?
If market expectations are crashed, and Democrats have durable majorities in the House, and enough to make things happen in the Senate, lots of things might happen.
- Markets will go down in anticipation of higher taxes
- Specifically, the 2017 Trump taxes, a huge contributor to federal deficits might be overturned
- The minimum corporate tax might be raised
- Taxes on stock buybacks may increase
- Tax benefits on carried interest, which allows hedge funds and private equity managers to pay less taxes than you and I, may be on the chopping block
- Regulations will be enforced regarding the environment, labor, and double dealing
This is bad for the far cats and raiders of Wall Street. How would Democrats winning help the poor and middle class?
- Women’s right to own their reproductive healthcare is regained
- Child poverty can be eliminated. We saw the 2021 enhanced child credit reduce child poverty by 40%
- Insulin costs can be capped for everyone
- More investments can be made in green energy
- …leading to more job growth in the US
- If possible, immigration reform may happen, always a tricky subject
- Investments will continue to be made in infrastructure and education
- Wages will rise
- Inflation will go down
- Ukraine will get funding to fight off Russia
- Obamacare can expand health coverage to cover more people
- Social Security and Medicare can be put on a sounder footing
- On a side note, “The maximum taxable income for Social Security for 2022 is $147,000,” according to the AARP.
- Diversity of thought, ideas, and experiences will be welcome
- Federal judges will continue to reflect American diversity
- Democracy and future elections can be secured
- Gerrymandering, the art of slicing a state for maximum political advantage, can be eliminated
- Crime will go down, as more are gainfully employed
- Marijuana offenses may be downgraded in severity
- Regulations will be enforced
- The rule of law continues
- Gender and racial income and wealth gaps are reduced
- Student debt relief continues
- The economy will grow strongly
- And more of the poor and middle class will grow wealth
- Political contributions limited
- Supreme Court de-radicalized
- Plus many more
As you can see, that’s enough to have privileged, rich folks in a panic. If the world realizes there is an alternative to zero sum, trickle down economics, that everyone can share in a growing, equitable pie, and investments in the middle class as opposed to the rich are possible and fruitful, the rich will be on the outs politically for many decades.
It’s time to break free of our economic chains.
What if the Democrats won on Tuesday and markets were wrong? Vote! It matters!
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