Doug Henwood, Petunia 2020’s Chief Economic Advisor, today issued a statement attacking an attempted coup attempt against Congresswoman Alexandria Ocasio-Cortez, lovingly known by her admirers as AOC.
Here is Henwood’s entire statement, as previously posted on Facebook by the well-regarded economist:
[This just in from Greg Valliere, who watches Washington for Wall Street at Horizon Investments. Be very scared of AOC—and worry that the youth are into socialism.]
Why the Markets Should Worry About Alexandria Ocasio-Cortez
THERE’S SO MUCH GOING ON – the shutdown, Brexit, Robert Muller – that it’s easy to overlook lots of other stories. One that the markets should keep at least one eye on is the growing appeal of Rep. Alexandria Ocasio-Cortez, the self-described socialist who has rocked the aging and stale Democratic Party establishment.
OCASIO-CORTEZ is likely to have two major impacts. First, she’ll be a headline risk for the financial services industry as she takes a coveted seat on the House Financial Services Committee, joining firebrand Chairman Maxine Waters. The committee has no chance of getting legislation enacted, but it has subpoena power and will make life miserable for industry execs with endless hearings.
HER OTHER IMPACT WILL BE MORE SIGNIFICANT: Ocasio-Cortez has stunning support for her agenda, and that’s likely to persist as the media flocks to the telegenic 29-year-old. A poll released this week showed 59% of respondents nationwide favor her call for a 70% top tax rate for the wealthy; an astonishing 45% of Republicans support the idea. Polls by Gallup and others in the past year show a majority of Democrats favoring socialism over capitalism; millennials strongly favor socialism.
NEVER MIND THAT OCASIO-CORTEZ’S ambitious agenda – universal health care, a guaranteed income, student loan forgiveness – can’t possibly be paid for, even with confiscatory new taxes. The main point, she has candidly conceded, is that these are “moral issues,” not issues that have to be addressed with specific spending details. Young activists, oblivious to the pricetag, are in full agreement.
THERE ARE THREE POLICY IMPLICATIONS: First, centrist Democrats will try – unsuccessfully – to muzzle Ocasio-Cortez as the primaries heat up, just as they tried to thwart Bernie Sanders, and the rift within the party will widen. Second, the era of tax reductions is over; the challenge for conservatives is to simply keep the existing Trump tax cuts in place during the next decade. Third, the sky’s the limit on spending – Ocasio-Cortez doesn’t care about deficits; neither does Donald Trump, she says.
BOTTOM LINE: This is not an imminent threat for the markets, which now have the wind at their backs thanks to the Federal Reserve’s embrace of a more dovish monetary policy. And the young socialists are likely to over-play their hand.
BUT WHEN FUNDAMENTAL VOTER ATTITUDES change on issues like taxation and spending, that’s worth watching carefully; the seeming rejection of capitalism by young people is something to take very seriously. As for Ocasio-Cortez, she’s a brash New Yorker, skilled at self-promotion, with a modest understanding of how government works – and a passionate base of supporters. Sound familiar?