What Trump needs to worry about…

What Trump needs to worry about…

Evan Hochberg is a thoughtful, highly intelligent, liberal friend of mine, who I love and who I know–loves me. Evan has had a bad month but is still thinking and I can prove it by repeating to you – the faithful five — his challenge to me:

“Given that you are a fan, what are the things that concern you most about how he won as well as what might go wrong under his leadership?”

He won through a fair U.S. election that systemically favored every candidate but him and Sanders. No concern there.

My main concern going forward is something I call the Reagan unexpected consequences rule. In 1986, Reagan signed a tax reform bill that had a number of changes based on conservative principles, like the elimination of the tax dodge that allowed commercial property owners the right to deduct some of their passive real estate losses from their active gains. This was called a pig in a poke and when Reagan got rid of it ALL AT ONCE, the unintended consequences were horrific.

Every doctor, lawyer and airline pilot in America began unloading their commercial real estate assets into the market at the same time, toppling the savings and loans backing up those loans and almost toppling the State of Maryland, which had insured the Savings and Loans.

Could this happen again? You betcha. Trump’s radical tax plan, while sound for many economic reasons related to growth, IF NOT PHASED IN PROPERLY, will be a huge risk to the financial markets. This risk is not currently priced in to the market, which is giddy with the idea of lower regulations, lower taxes, and an infrastructure package, all sailng through united government.

 

 

 

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About karlspain

20 year Newspaperman. Lifelong Inventor. Wrote 2 books so far, working on more. The Revelation, 1st book, about your brain & the universe, and math. Hooked together! God I trust, America I love, 2nd book, is the biography of Aris Mardirossian, a great man. Also owned a software company, an IT integration company, a gas station and a fuzzy logic software title along the way.
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