by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
May 19, 2020
SIGNS OF LIFE: Presumptive Democratic nominee Joe Biden is emerging from his basement as his sputtering campaign finally catches some breaks. Here are four:
1. A potential third party challenger — Rep. Justin Amash — has abandoned his challenge, which could have hurt Biden in a few key states.
2. Tara Reade, who has accused Biden of sexual assault, looks less credible in the wake of reports from news outlets, including Politico, which quote people who have dealt with her in recent years. These people (mostly California liberals) uniformly describe her as “manipulative, deceitful and a user,” Politico says.
3. Attorney General William Barr has no intention of probing Biden or Barack Obama, despite Donald Trump’s absurd assertion that “Obamagate” is the greatest scandal in American history. Trump now has issues with Barr.
4. And there’s that Trump-hydroxychloroquine story, what can we say? It’s an unproven drug that has cardiac risks for a nearly 74-year-old man who is clinically obese. Once again, Trump’s judgment is an issue.
SO BIDEN STILL HAS A CHANCE — except he apparently has decided to reject a nominee’s traditional pivot toward the center. He’s willing to embrace Bernie Sanders and the party’s progressive wing — using the pandemic as an opportunity to “go big” with a breathtaking agenda that Trump will mock as socialist.
A MASSIVE LAUNDRY LIST: The New York Times yesterday listed items on the Democrats’ agenda. What a list — dramatically expanded health care benefits, including a huge increase in health jobs and facilities; sweeping infrastructure and green programs; aggressive worker protection rules; expanded child care benefits; student loan relief, etc.
WATCH OUT WALL STREET: Biden and the Democrats are likely to call for a ban on stock buybacks, a tax on stock transactions, and a generous sharing of profits between corporations and workers. Biden would hike taxes on corporations and the wealthy, but not by enough to remotely pay for this laundry list.
DEFICIT BE DAMNED: Many Democrats believe that neither Jerome Powell nor Trump care about deficits — so why should they? In his testimony before Congress this morning, the Fed Chairman is likely to call for more spending from Congress. Biden’s proposals are likely to cost several trillion dollars.
THIS IS A CALCULATED RISK for Biden. He’s prepared to gamble that the Sanders progressives will embrace these spending and socialist policies — and that they will turn out to vote. In normal times, centrist and conservative voters would rebel against such a radical agenda — but these aren’t normal times.
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This post was first published at the AGF Perspectives Blog.
