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Liberal Losses

You may think you want a Democratic Congress. But if you care about your wallet, watch what you wish for.


Illustration by Marc Boutavant  

We’ve had a government of, by, and for the corporations for so long that most people have forgotten that political risk used to be a reason to sell stocks. We’ve gotten so complacent about the Feds’ doing everything to support the rights of corporations to make as much money as possible with the lowest taxes in years that Wall Street could be in for the shock of a lifetime come fall, when—oh, heavens—the Democrats could take control of Congress. Given the fiasco that is our foreign policy, it could happen.

If the Democrats do take over, you can expect the usual whining: Corporations don’t pay enough taxes, CEOs are overpaid—all true, of course. But this column’s not about political philosophy; it’s about saving money. It’s about preserving your investments in specific industries coddled for a half-dozen years by the GOP’s love affair with business that I believe will be under assault, if not overrun, by a Democratic Congress.

First up, the oils, the Democrats’ favorite whipping boys. You can bet that Big Oil will be public enemy No. 1 in the fall. Try as they might, these outfits can’t even hide a portion of the obscene amounts they make. Their ­billion-dollar profits are just too ripe for the picking. I predict that the Democrats will propose that “old oil”—oil that was discovered years ago, before the price run-up—should be subject to a high tax because it’s just found money for these guys. That tax would devastate ExxonMobil, Chevron, ConocoPhillips, and Occidental, all of which live off these old fields. The real petroleum gut shot, though, will be fired at the refiners. Valero, the largest refiner in the country, makes $20 per barrel from buying Maya crude, distilling it, and selling it at gas stations. Can the Democrats resist taxing a company that “gouges” consumers daily? No wonder Valero didn’t rally after reporting a recent monster quarter; a Democratic sweep’s starting to get priced into the stock.

Next up? We’ve had a gigantic wealth transfer from you to the drug companies, in the form of Medicare Part D, the government’s plan to distribute drugs to seniors. It’s a huge giveaway because the Republicans insisted that even though the U.S. government is the biggest buyer of drugs, the Feds can’t use their obvious clout to bargain prices down for pharmaceuticals. The Feds pay a fortune to the drug companies that they don’t have to. How fast will that go away? The Democrats will insist on screwing Big Pharma by pitting drug companies with similar drugs against each other and insisting their profit margins come down. If a company doesn’t want to cut its prices, the government will simply give the business to another—after all, there are only a handful of top-­selling patented drugs without competition. That’s how it works in most developed countries in the world, and that’s how it will work in ours if the Dems take over.

Lately, under the Republicans, there’s been some sense that the defense budget—a document that almost seems written by Lockheed Martin, General Dynamics, and Northrop Grumman—has gotten out of control. When it comes to weapons, nothing’s too big or expensive for the GOP. Put the Democrats in charge and you can bet that all of those useless programs designed to defeat nonexistent land armies will disappear. Look for Alliant Techsystems to take a real hit; that’s the nation’s largest ­bullet maker. It’s been running full-out since the Iraq war began. Under the Democrats, I can’t imagine we’ll need as many of those.

Throughout the country the Democrats have worked feverishly to stymie Wal-Mart in its ongoing destruction of mom-and-pop outfits with its big-box stores. Democrats don’t care for Wal-Mart’s anti-­union stance, and they can’t stand its policy of importing a ton of stuff from China. Although the Democrats can’t break up Wal-Mart—yet (wait until one gets in the White House)—they can push a three-­pronged anti-­Bentonville agenda: (1) Demand that nationwide ­retailers sell a much higher amount of made-in-America content, (2) ban big-box retailers from urban areas to protect small businesses, and (3) insist on a prevailing wage for Wal-Mart workers. So what if such moves would actually raise prices for the poor and hurt the 100 million shoppers each week who go there? Who can resist beating up on those rapacious Arkansans?

You know the Democrats won’t be able to resist the “cartel” that now provides health care to tens of millions of people: the health-maintenance organizations. Under the Republicans, these companies have been able to merge repeatedly to eliminate competition and raise margins to please Wall Street. The Democrats would love to set up a virtual TVA of health-care cost containers to see how much money these companies really make. I think, instead, they will encourage new incentives for competition—a government set-aside program for poor areas?—that could cause the whole industry’s profits to shrink. That could hurt best-of-breed UnitedHealth Group and Humana, but it would crush CIGNA and Aetna, serial sad sacks when it comes to missing Wall Street estimates.


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