by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
July 16, 2021
THE PUNDITS GOT IT WRONG: The future of the Democratic Party is not all about Alexandria Ocasio-Cortez and the progressives — the future is about Eric Adams, tough on crime and generally supportive of the police.
ON ISSUE AFTER ISSUE, the party’s progressives have failed to win support — a wealth tax, packing the Supreme Court, etc. Those issues fade in comparison to the one theme that has traction in crime-infested urban America — opposition to defunding the police. Adams, a former New York City police officer, gets it.
ADAMS IS THE NEAR-CERTAIN next mayor of New York, after winning the primary last month with blue collar support from Whites, Blacks and Hispanics. And he’s relatively young, 60 years old in a party dominated by Joe Biden, 78, Nancy Pelosi, 81, and Chuck Schumer, 70.
ADAMS, FROM BROOKLYN, SUPPORTS tough new gun controls and police reforms, but he’s widely viewed as a moderate in a party that has veered leftward. Assuming he wins easily in the Nov. 2 general election, he will become a dominant voice in the party, inoculating Democrats from charges that they want to defund the police.
DEMOCRATS WERE STUNNED BY THEIR MEDIOCRE SHOWING in last November’s election among Hispanic voters who viewed Biden as soft on Cuba and urban violence. Adams won’t make that mistake, and if Biden chooses not to run in 2024, the New York moderate could become a player in national politics.
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NEW SNAG FOR INFRASTRUCTURE BILLS: Not surprisingly, Congress is divided over how to pay for both of the pending infrastructure bills. Negotiators will spend this weekend grappling with the need to include “pay fors” in the wake of a revolt over giving the IRS $40 billion in funding to boost revenues.
SENATE MAJORITIY LEADER SCHUMER is determined to begin procedural votes next week on both bills — a basic infrastructure package for highways, bridges, broadband, water, etc., and an enormous social spending bill for health care, education, housing, etc. But can he win passage of these bills without explaining how to pay for them?
THE IRS PLAN, which theoretically would raise $100 billion over ten years by cracking down on tax avoidance, has energized the GOP resistance. “Rather than giving tens of billions of dollars to the IRS to harass and persecute American taxpayers, I think we should abolish the IRS and instead adopt a simple flat tax,” Sen. Ted Cruz said yesterday.
THREADING THE NEEDLE: Whether Congress can come up with pay-fors without the IRS provision is debatable and may not be resolved until after the August recess. We still think a deal on the basic infrastructure bill is likely; moderate Democrat Joe Manchin seems likely to go along with a compromise. The second bill is another story, however.
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