We are now about half way through the 2019 second quarter corporate earnings season when companies report how they’re doing. So far, most corporations report they’re doing a bit better than was expected, but before you spend that next dividend check, hear me out.
Driving home from New York City today, I had the radio tuned to CNBC when they reported a large number of corporations are reducing their long term earnings forecasts. When I heard that, I turned up the volume.
The reason wasn’t the trade war with China. Most investors seem to think that’ll get resolved well before the election.
The reason wasn’t fears of an impending recession, or heightened inflation, or huge new federal deficits.
Nope. Most companies reducing their earnings forecast are doing so because they’re afraid of the Democrats. They’re afraid of higher taxes, massive regulatory control, and Democrats’ general anti-business bias. The fact is that the policies advanced by the Democrat candidates for president would wreck our economy and seriously damage the businesses that make it tick. And companies know it.
Here’s just a sampling of what we can expect if just about any of the Democrats running were to win the White House next year.
- Tax all trades made in the stock market thereby dis-incentivizing investment in American companies.
- Increase the minimum wage which will hurt small businesses, cost tens of thousands of jobs, and ultimately reduce the incomes of most hourly workers as companies reduce worker’s hours.
- Pay off existing student debts adding $1.7 trillion to an already huge national debt.
- A Green New Deal that destroys our economy, increases taxes to punitive levels, and ruins the stock market - along with the life savings and retirement plans of everyone invested.
- Open the borders, provide citizenship to the millions of illegal immigrants already here as well as the new ones coming in, and shower them with tax-supported benefits including free healthcare, free education, food stamps, housing, and much more.
- Medicare-for-All that will cost more than $2 trillion per year, hurt quality, chill innovation, ration health care, and eventually end private health insurance.
The costs for just these programs will exceed $70 trillion in the first 10 years. By pure necessity, taxes will not only have to go sky high, they’ll have to reach 80% plus for those making over $250,000 per year and roughly 50% for everyone else.
With tax rates like that on individuals and businesses, you can be sure our economy will tank. And those new tax rates assume Democrats offset some of their big government costs by dismantling our military and seriously damaging our national security.
With our economy in shambles and our military gutted; it won’t take long for China, Russia, Iran, and just about every other bad actor out there to fill the vacuum in global leadership. Before long, they’ll come knocking on our door demanding whatever we have left, but at a steep discount. Food, technology, ships, planes, pretty much anything they want. And, with the lead-from-behind Democrats in charge, they will likely get it.
Even before then we may come to realize we’re all together in a very leaky boat; having exchanged our freedom for dependence on a government that provides poor healthcare, inadequate incomes, unsafe and dysfunctional communities, lousy schools, and fewer choices. And there won’t be a damn thing we can do about it.
Complain or rock the boat, your food ration will be reduced, your monthly guaranteed income check will be lost, or AOC’s goon squad will show up in the night and you’ll go missing.
Think it’s hyperbole? Maybe. But it wasn’t that long ago that Venezuela was the richest economy in Latin America. Strong, wealthy, successful, proud, independent. Then a socialist demagogue promised the people free stuff and they folded. Now, a handful of years later, Venezuelans are suffering malnutrition, nonexistent healthcare, and million percent inflation. And when they take to the streets, they’re gunned down or arrested on trumped up charges.
American businesses may not foresee a Venezuelan outcome here in the U.S., but they are nevertheless predicting lower earnings on the chance Democrats win in 2020. If that happens, they’ll have more to worry about than a few cents less in earnings. They may well be fighting for their survival. They should either take a stand now and fight back, or they should run for the hills. The problem for them is run where?
Most Americans don’t believe it can happen here. They’re as wrong as those Venezuelans who elected Hugo Chavez.