Everyone in Washington Has a Plan as Economy Slides
Author: Greg Valliere
June 20, 2022
THERE’S NO SHORTAGE OF IDEAS THAT ARE IN THE TRIAL BALLOON STAGE as Congress struggles to come up with something as an economic crisis looms. Here are some ideas that are on the table, and our handicapping:
Prescription drug price controls: This has strong public support, and can be sold as a way to reduce inflation. Chances: 55%.
Lifting tariffs: Sounds good in principle, but there are lots of details to work out. With U.S.-China relations still rocky, we don’t expect much between Washington and Beijing — maybe some U.S. tariffs on other countries could be lifted. Chances: 45%.
Gasoline tax break: Most experts consider this a gimmick, but Democrats would gladly accept an end of the 18 cents per gallon gasoline tax, which would win strong public support. Chances: 60%.
Windfall profits tax on energy companies: Progressives love the idea, and it polls pretty well, but there simply aren’t 60 votes to get this passed in the Senate. Chances: 20%.
Tax hike on the wealthy: Larry Summers called yesterday for killing some of Donald Trump’s tax cuts, but the idea of higher taxes with a potential recession coming has very little support. Chances: 25%.
Environmental reforms: Surprisingly, Manchin supports spending more money on clean energy programs, which could win 50 votes in the Senate: Chances: 45%.
TWO VERY BIG OBSTACLES: First, with a modest gun control measure slowing to a crawl, will there be enough time to pass a Build Back Better bill before lengthy recesses shut down Congress later this summer?
SECOND, MANY OF THESE BILLS WOULD SPEND MORE MONEY, and there’s a growing belief in Congress — and among the public — that spending lots of money is what has gotten us into this inflation mess in the first place.
SO WE DON’T SEE ANYTHING DRAMATIC FROM CONGRESS; the Federal Reserve will do the heavy lifting. But if there’s a need to show voters that Congress can do something, a gasoline tax break gets our nod as an idea that might fly.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2022 AGF Management Limited. All rights reserved.