Is the ‘Era of Tax Reductions’ Over?

Is the ‘Era of Tax Reductions’ Over?

REUTERS/James Lawler Duggan

If Greg Valliere, chief global strategist at Horizon Investments, is correct, Wall Street should be worried about the rise of Rep. Alexandria Ocasio-Cortez (D-NY).

In a note to clients Wednesday, Valliere said “the self-described socialist who has rocked the aging and stale Democratic Party establishment” could create some headaches for the financial services industry. While he doesn’t expect to see any major legislation get through a divided Congress, Valliere warned that Ocasio-Cortez could use her subpoena power as a new member of the House Financial Services Committee to “make life miserable for industry execs with endless hearings.”

More broadly, Valliere says that Ocasio-Cortez’s “ambitious agenda – universal health care, a guaranteed income, student loan forgiveness” – could mark a shift in attitudes among some voters toward taxation and government spending, which the congresswoman’s young supporters tend to see in moral rather than financial terms. One implication of this renewed interest in large-scale social programs is that “the era of tax reductions is over; the challenge for conservatives is to simply keep the existing Trump tax cuts in place during the next decade.” Another is that “the sky's the limit on spending,” since Ocasio-Cortez “doesn't care about deficits.”