Economy

GOP Leader: Stimulus is Bad For Wall Street

JM Ashby
Written by JM Ashby

Senate Republicans who say we shouldn't pass another stimulus bill of any description have now been joined by the top ranking House Republican.

House Republican Minority Leader Kevin McCarthy is making an argument that isn't going sell well when the evictions and bankruptcies start piling up. He says we shouldn't pass more stimulus because it would be bad for Wall Street.

WASHINGTON (Reuters) - U.S. House of Representatives Republican leader Kevin McCarthy said on Friday that Democratic legislation on coronavirus relief would undermine the stock market, if enacted into law.

If we went forward with what the Democrats asked for in that $3 trillion? I believe the market would drop hard because it would put greater debt on all taxpayers,” McCarthy told CNBC.

Won't someone think of the poor, pitiful shareholders?

Actually, we think of them all the time!

Wall Street was quite alright with it when we added $1.5 trillion to our debt in December of 2017 when Republicans like Kevin McCartchy jammed through a tax cut using budget reconciliation. The market has also soared over the summer of this year because of massive federal stimulus spending. The market is near record highs after adding some $4 trillion to our debt.

McCarthy is trying to make an economic counter-argument that a stimulus bill would harm the economy more than it would help, but you would have to be a diehard supply-side voodoo economist with blinders on to believe that for even a second. You would have to be Grover Norquist.

Republican refusal to pass a stimulus means all of their various small business programs including the Paycheck Protection Program have expired. You might say that should concern them, but they don't actually care about legitimate small businesses near you. Republican invocations of "small business" are usually political cover for policies that mostly benefit rich corporations and shareholders.

Senate Majority Leader Mitch McConnell sent his members home last week, but the Senate has now officially adjourned until September 8th.

I didn't step out on a very long limb, but my casual prediction that we won't see a stimulus bill this month if we ever do appears to be coming true. I believe the next best chance to pass stimulus will be at the end of September when it could be attached to an overall government funding bill to prevent a shutdown on October 1st.

Speaking of which, a shutdown may have just become more likely.

  • katanahamon

    What are the latest stats? 12% of our wealthiest control/own 80+% of the stock market. Reflect on that..

  • muselet

    For the sake of conversation, let us assume Kevin McCarthy is correct about US public debt and stock prices (let us please agree to leave blind squirrels and blind pigs out of the discussion).

    So what?

    The stock market is not the economy and the economy is not the stock market. Even if share prices take a hit because of public debt, guess what? Bond yields rise. The investor class gets hurt not at all (okay, sure, some wealthy people might have to make two-minute phone calls to their financial advisers to move money around, boo-hoo).

    It is far more likely, though, that McCarthy is spectacularly wrong. A stimulus bill won’t tank the stock exchanges—stimulus never has—and will make it possible for the serfs to continue to purchase products made by the companies whose share prices McCarthy is so concerned about.

    It doesn’t look to me like Kevin McCarthy has thought his argument through.

    –alopecia