Capital Commerce

Portfolio's Matt Cooper suggests that Barack Obama wouldn't raise taxes if elected because no one cares about the deficit right now. (Other than raising, of course, income tax rates on rich folks.) What they care about is avoiding a depression. About that, I will say this: Our economics troubles do provide all the excuse in the world to justify any and all spending increases by calling them stimulus. The fallout from the credit catastrpophe is really a blessing for a future Obama administration since it helps it avoid making any hard choices.  Of course, it also kind of chucks away the party's hard earned reputation a deficit fighters (though much of that was from slashing defense spending -- as Obama may also do). So long, Clintonomics!

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There are at least two pretty effective ways to turn someone into a Republican: (1) get them married with kids and (2) get them to invest in the stock market. So, if I were a highly paid Democratic political strategist, I would make sure to spend a few minutes every day thinking of ways to get Americans out of the stock market—the faster, the better. And that's why if Barack Obama is elected president next week, 2009 may well bring a concerted and all-out effort by the Obama administration and a Democratically dominated Congress to turn the generally pro-Republican Investor Class into an endangered class by, among other tactics, raising investment taxes and ending the tax preferences for 401(k)'s, IRAs, and other retirement accounts. Here is the emerging battle plan for Operation Investor Class Rollback:

1) Hike Investment Taxes. Obama wants to raise capital gains taxes even though he has kinda, sorta admitted that it might be bad for the economy and might actually decrease tax revenue to the government. For now, he's talking about raising the highest cap gains rate by one third to 20 percent, though earlier in the campaign, he floated pushing it as high as 28 percent, a near doubling. (Recall that Democratic presidential contender John Edwards wanted to raise it as high as 40 percent, a move that was applauded by liberals who want investment income to be taxed as onerously as labor income.) With the next administration facing a trillion dollar budget deficit—maybe more—there will certainly be pressure to raise taxes to higher levels than now being suggested.

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Here is the short version coming from inside Team McCain: 1) McCain is surging and is now essentially tied across the battleground states—including Pennsylvania; 2) the so-called Hillary Clinton voters—rural, noncollege—are flocking to McCain; 3) more and more voters perceive Obama as "liberal"—more so than Gore or Kerry or really any other Democratic nominee in a generation. The "spread the wealth" comment is hurting him big-time. Let me also add that I am now hearing more and more about McCain winning the electoral vote and Obama winning the popular vote. Let the litigation begin!

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"Just because I am losing, doesn't mean I'm lost, doesn't mean I'll stop."—Coldplay. Yesterday's nearly 1,000-point gain by the Dow industrials, I think, was partly due to a recognition by Mr. Market that Mr. McCain might actually pull this thing out. (Yes, yes, the rebound in the commercial paper sure helped, too.)

Polls are tightening. McCain-Palin has been given message clarity by the emergence of Barack Obama's "spread the wealth" message, opposed by more than 80 percent of Americans. I also think voters are realizing that Obama plus a Democratic Congress (as the old Russian proverb goes, "You don't buy a house, you buy a neighborhood") might mean a kind of lurching change to the left that a basically center-right nation might not want (such as getting rid of the tax benefits for 401[k] and other retirement plans like IRAs).

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