Here’s four reasons not to.
- The U.S. constitution’s separation of powers. Hard to imagine a Republican-controlled House, or less-conservative Senate, going along with the kind of taxes Bernie has in mind for Wall Street.
- Especially if markets are more bearish than bullish, as seems highly possible, which would make new taxes an even harder sell.
- Then there’s the Wall Street’s lobby, with the power to stop tax reform dead in its tracks (unless the #sandersnistas manage to storm both houses of Congress). “Sanders is accurate about the immense power of Wall Street on Capitol Hill,” Gary Meltz, a former Democratic lawmaker’s press secretary, writes in Crain’s New York Business.
- Bernie? President? Never gonna happen. Won’t make much past the New Hampshire primary as the more centrist Democrat voters come into play. For the worried, “my advice is to relax,” says Meltz, who now heads up a political risk management firm in Washington D.C.
“Barring a cataclysmic event that reshapes the entire political landscape between now and November, you can take Wall Street reform off of your list of things to worry about.”
The above points are Meltz’s, not necessarily mine, though they seem eminently rational. The most persuasive, in my view, is #1. Sanders’ promised revolution would need to extend to the ideological make-up of the next Congress to make the dramatic changes Sanders envisions. Given the gerrymandering of electoral districts and voter suppression laws designed for the GOP’s benefit, that seems a reach even further than Bernie occupying 1600 Pennsylvania Avenue.
Points #2 & 3. Nobody knows where the markets will be come November. Right now they’re looking pretty bearish, so we wouldn’t want to send it right over the edge with disincentivizing new taxes, the thinking goes. Besides, Dodd-Frank is supposed to avert another financial collapse. Nevertheless, markets worldwide are falling, despite the application of zero to negative interest rates. Banks are pulling back, and alarm bells have started to ring. Greg Ip in the Wall Street Journal writes,
“Declining markets, worsening psychology and economic weakness can feed on each other. If such a vicious spiral threatened to pull the economy into recession, central banks step in as circuit breakers. These days they are less equipped to do that.”
Point #4. Might we be heading for a collapse of worldwide proportions? Here’s Mohamed El-Erian, who heads President Obama’s Global Development Council, talking to NPR.
“We could well be. What we’re seeing is unusual volatility. It doesn’t reflect what’s going on in this country as much as it reflects what’s going on abroad and the fact that investors are now doubting the effectiveness of central banks. [But] with most of the other policy-making entities frozen by political dysfunction, the central banks are the only game in town.”
Political dysfunction, check. Sluggish to zero growth (aka “secular stagnation”), check. Eroding confidence, check. Is “a cataclysmic event that reshapes the entire political landscape” so inconceivable? These are strange times, unpredictable times, and we’re not talking just about the economy. And should such an event of that magnitude occur, into whose hands would it play? The democratic socialist or the real estate developer promising to make America great again, and who sees himself, along with his more fervid supporters, as the man on the white horse?
This is not to assume that Wall Street is any less concerned about a President Trump than a President Sanders. “Investors can’t dismiss the odds of an extreme election outcome that poses major risks to the stock market,” Andy Laperriere, a political analyst at Cornerstone Macro, a New York investment research firm, told the Wall Street Journal.
Of course, the election of either one would mark a cataclysmic event in itself. Could it happen? Don’t ask me; I said Donald Trump was toast when he dishonored John McCain’s war record back in July. Right now I’mnot feeling the Bern, although I share his antipathy toward the unpunished, unaccountable lords of finance, and the untrammeled hold they have over the American economy. Bernie is right, the system is rigged. But, as with Trump, I’m having a hard time envisaging that kind of cataclysm.
Now, if Elizabeth Warren was running ….