Time to go way out on a thin limb.
We are just over a year away from the 2022 mid-term elections that will see a host of Congress-folk up for re-election.
Here’s my two-pronged prediction:
- The Democrats lose Congress.
- The stock market has a pretty good last quarter of 2022.
Let’s start with the Democrats…(and, by the way, this isn’t political; it’s just my reading of the tea leaves relative to history. Personally, I don’t believe in political parties; they’re poison to a functioning democracy—particularly these days).
The Democrats will lose control of Congress because they’ve done exactly what every party in power always does: overreach.
The Republicans did the same thing when they had a super-majority under Newt Gingrich in the ’90s. Now, the Dems are following the same, sad playbook.
In recent weeks and months, the Democrats:
- Proposed a retroactive tax hike on capital gains;
- Want to tax capital gains at rates that, at Biden’s suggested level of nearly 50%, would be the highest in the developed world. Democratic leaders in Congress are tempering that, but only barely; they’re preferred rate is nearly 2x the average of countries in the Organization for Economic Cooperation and Development.
- Are pushing a $3.5 trillion infrastructure plan that will cost well over $3.5 trillion, and they’ll pay for it through tax hikes, through really by larding an already overleveraged balance sheet with even more debt;
- Proposed doing away with the step-up cost basis on assets bequeathed to heirs;
- And now they want banks to report the comings and goings of every deposit and withdrawal over $600 into every customer’s account…an invasion of financial privacy that’s beyond the pale and which rightly has banks—particularly small banks—up in arms because of the costs and back-office headaches of complying with such an ignorant idea.
There are other proposals and machinations milling about, but those five serve my point.
Though some of those proposals are DOA, such as the retroactive tax hike (an incomprehensibly boneheaded and unethical notion), these kinds of maneuverings infuriate the very voters that Dems must hold onto to maintain power: independent, middle-of-the-road voters like me, who don’t care about party, and only care about policy.
I don’t exist as an ATM for Uncle Sam to drain because he has self-inflicted and uncontrolled diarrhea of the wallet.
And I know there are tens of millions of Americans just like me who are frustrated and infuriated by the kind of idiocy that the Democratic leadership is proposing (again, not political; the Republicans under Trump and Baby Bush were just as infuriating in different ways).
The problem here goes back to the narcissism of the political parties, themselves.
We’re no longer at a point where politicians care about coming together for the betterment of the country. We’re at the stage where political parties exist simply as a conduit by which their vested interests can shape laws that allow them to dig their paws into the country’s coffers for their own, personal enrichment.
One party gains the upper-hand in Congress, and it immediately starts passing laws that benefit its belief system—a belief system shared only by that party’s diehard supporters, and pretty much despised by everyone else.
It’s tyranny of the minority. The squeaky wheels getting greased with my tax dollars.
Voters like me get pissed.
And when the next election rolls around, we vote out the bums and create a gridlocked Congress—one in which neither party has any real power to impose the fringe stupidities it believes in.
Which is why 2022 will see the Democrats lose their current power in Congress.
They had they’re chance.
They’re screwing up.
They must go.
Independent voters will once again neuter the offending party and manifest a gridlocked Congress.
Which brings us to the stock market.
Wall Street adores gridlock.
As the 2022 elections roll around and it becomes increasingly clear that gridlock is the way forward for the second half of the Biden administration, Wall Street will be giddy and stocks in the final months of next year will likely rally meaningfully. (That’s assuming, of course, a resurgent pandemic doesn’t undermine the global economy.)
So, there you have it: Two predictions you didn’t know you wanted for 2022, neither of which might come true in the end.
Still, the policies and proposals flowing forth today are not sitting well with the independent voters that gave Democrats their power in the current Congress.
And if these proposals become law—particularly requiring banks to report every deposit and withdrawal over $600—then Democratic power will be as fleeting as smoke from a snuffed-out candle.