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This op-ed was authored by Stephen Moore, Larry Kudlow, and Art Laffer.
Everyone’s blaming the oil price collapse and China’s sliding economy, for the rout of the stock market these first two weeks of 2016. That’s part of the story, but there may also be a policy explanation for the bearish sell-off.
Call it the Bernie Sanders effect. In the Democratic presidential primary debate last week between Hillary and Bernie, the race was on to see which could raise taxes and punish businesses more. While Hillary was touting her income tax surcharge on millionaires that could raise income taxes to near 50 percent (and her capital gains tax hike), Sen. Sanders said that a 90 percent tax rate might be too high, but somewhere approaching that number is the target he’d shoot for. Bernie also talks about breaking up the banks, putting Wall Streeters in jail, a single-payer health care plan to the left of Obamacare, and adding trillions of new government spending.
This isn’t blossoming investor confidence. Was it just coincidence that polls that show Bernie surging into a widening lead against Hillary in New Hampshire and even beating several Republicans in a head-to-head competition were released the same day the stock market took another nose dive.
But for the umpteenth time: Where is the Republican growth message? The economy is sputtering clearly with corporate profits and business investment weakening and consumer spending slowing down as well. The GOP runs the House and Senate, but still no sign of a growth package to offer up a contrasting vision from the Bernie and Hillary show. Too many in the GOP have bought into the Chamber of Commerce unwise idea that funding the Export-Import Bank is a stimulus.
If the economy does sink into negative territory this year, the Democrats will surely demand more infrastructure spending, unemployment assistance, job training and a panoply of “stimulus” budget busters that didn’t work in 2009 and won’t work now. The Republican response to this nonsense should be short and sweet: been there. Done that.