Earlier this week Sen. Elizabeth Warren said that an economic crash is right around the corner. She’s right. But it’s her own plan that would bring about the collapse she’s predicting.
Warren says that she sees all the signs of a “coming economic crash” that she — and she alone, apparently — saw before the 2008 financial crisis.
Let’s leave aside the dubiousness of Warren’s self-proclaimed economic forecasting abilities, and the fact that Democrats have been predicting an economic calamity since November 2016.
Here’s her central point:
“The country’s economic foundation is fragile. A single shock could bring it all down,” she proclaimed. To emphasize the point, she made it again. “With a vulnerable economy, we should be reducing the odds of potential shocks that could push us into a downturn.”
If that’s true, then Warren should abandon her entire economic plan. It is rife with massive self-imposed shocks that would destroy one entire industry, throw millions out of work, double the size of the federal government, raise taxes to unheard-of levels, and give Washington effective control over corporate decision-making.
Even though the economy isn’t as fragile as Warren says, the combined impact of her plan would break it into a million pieces.
Look at just a few of the shocks she has planned.
Warren was one of only four Democrats to raise their hands when asked at the first presidential debate whether they would eliminate private insurance.
That alone would throw roughly 2.4 million people out of work — 834,000 who work directly in the industry and the additional 1.6 million who work in jobs dependent on private insurance. That’s why Medicare for All has to set aside billions of dollars in “transition” funds in an attempt to soften this shock.
This is to say nothing of the vast amount of wealth that would be vaporized when the government drives private insurers out of business. The five biggest health insurance companies have a combined market capitalization of more than $200 billion.
Warren is also on board with a federally mandated $15 minimum wage, which the Congressional Budget Office figures would kill another 1.3 million jobs.
The Warren-backed Green New Deal would eliminate more than 5 million jobs, and that’s just counting the impact of carbon taxes, according to a new analysis from the Heritage Foundation.
Oil industry jobs would take an instantaneous hit, since Warren promises an immediate ban on drilling on federal lands. And the GND, of course, envisions wiping out the oil and coal industries entirely.
Warren also wants to bring the disastrous Dodd-Frank banking regulation back to full strength, even though we now know that it starved access to capital, destroyed small business growth and, as much as anything else, was responsible for the historically lousy economic recovery after the last recession.
Then there are the other shocks Warren wishes to inflict on the economy. She wants to confiscate nearly $3 trillion over 10 years through a “wealth tax” on anyone with a net worth of $50 million or more. It’s an idea that many other countries have already tried, and one they abandoned when they realized that it’s impossible to administer and is terrible for economic growth.
As the Mercatus Center’s Tyler Cowen has noted, Warren’s wealth tax would “lower investments in human capital and the creation of new businesses.”
In other words, it’s another job-killing economic shock.
Add it all up, and you have an economic crisis all right. One designed and engineered by a leading Democratic candidate for president.
— Written by John Merline
Issues & Insights is a new site formed by the seasoned journalists behind the legendary IBD Editorials page. We’re just getting started, and we’ll be adding new features as time permits. We’re doing this on a voluntary basis because we believe the nation needs the kind of cogent, rational, data-driven, fact-based commentary that we can provide.
Be sure to tell all your friends! And if you’d like to make a contribution to support our effort, feel free to click the Tip Jar over on the right sidebar.
I’m a psychic! If the democrats win then exactly what Warren claims will happen actually will happen. Not because of Trump but because of them. They are predicting the future of this country under their rule!
The 2008 mortgage crisis was created by her fellow Massachusetts’ Democrat Barney Frank. He threatened mortgage companies if they did not do more lending to people who where known to not pay their bills and did not have money to afford a house. By itself, this may not have been a problem, but the reduction in interest rates below historical figures inflated prices, amplifying his failed economics.
Then it became worse because it started looking like Obama was going to become president. Business owners expected the economy to tank under Obama’s tax and regulation increases. They therefore began cut backs many months before the election (my own company put in a hiring and salary freeze in late May 2008 because of Obama’s likely win).
Conversely, once Trump one, businesses expanded. Within days of Trump’s surprise win, my company’s phones started ringing with new orders, projects we had been trying to get for years, and suddenly they all popped unexpectedly. We hired, hired, and are still trying to hire.
Oh yes, policies matter.
I’m not sure if the author understands markets or just prepping the blame game. An honest and unbiased assessment of the market is this: sometimes it goes up, sometimes it does down. Sometimes it goes down with a Republican, sometimes a Democrat and vice versa. (If you really want a scorecard of recessions: 2007 Bush, 2001 Bush, 1990 Bush, 81 Reagan, 80 Carter, 73 Nixon, 69 Nixon, 60 Eisenhower, 58 Eisenhower, 53 Eisenhower, 49 Truman, 45 Truman, 37 FDR, 29 Hoover. Lets see… carry the 1 and 10 recessions for Rs, 4 for Ds)
Frankly the author may as well blame Warren for the tide.
As to 2008, I can’t speak for Warren but I will say that many, many people predicted that recession. If the author didn’t see 2008 coming, I’m not sure he really has the market expertise to opine on the subject.
Thanks for the feedback. A couple points in reply: Three of those R recessions started in the first year after taking over from a D. So I’d argue that the score is more like 7-7. In any case, we don’t pretend that recessions only happen under Democrats or even mostly, only that Warren’s economic policies would guarantee one. As to your point about the 2008 recession, it is Warren herself — not us — saying she predicted it and that “nobody listened.” She’s making that boast specifically to give herself credibility on her new prediction. If you want to find someone who shouldn’t be opining on the subject, don’t look at us.
Senator Warren’s wealth-confiscation plan is blatantly unconstitutional. The 16th Amendment established an income tax but did not repeal the prohibition in Article I, Section 9 against other direct taxes. As a trained and admitted lawyer, she knows it would be struck down before a single penny was collected. Too bad those to whom she panders for votes don’t.
Hey Ry De, being someone who claims to be unbiased, you have forgotten, or purposely decided, not to include Clinton’s Dot Com implosion! a recession Bush II had to deal with.
Tim, I believe you are referring to 2001 when Bush was in office.
You have to understand the strategy…Predict the economic downfall is an easy one because any correction like we had a few gets pointed to as a successful prediction…that is short strategy…the long strategy is to get elected and enact all the regards with no regard to economic affect and blame the economic downfall on Trump. Also a huge part of the “this is Obama’s economy”. So the end state is Obama boosted the economy, Trump destroyed it and Warren’s regs or whoever’s have nothing to do with the sudden downfall when it occurs…purely coincidental and they shouldn’t be blamed for what they were telling you was coming. Then the ole long and slow approach and that “this is as great as it gets”, “what are you going to do, wave a magic wand”….If you vote for it.