Republicans last week adopted their national party platform during the Republican National Convention in Cleveland.
The New York Times called it “the most extreme Republican platform in memory.”
ThinkAdvisor examines some of the economic principles discussed in the platform that could affect financial advisors – and what industry experts are saying about them.
Following Republicans’ adoption of the platform, Greg Valliere, chief global strategist of Horizon Investments, explained in his daily “Capital Notes” newsletter why Republican presidential nominee Donald Trump has a chance to win.
“The country hates Wall Street and big banks; polls show an astonishing level of public antipathy toward the industry. Bernie Sanders has inflicted enormous damage on Hillary Clinton, labeling her as the candidate of Wall Street, and Trump sees an opening,” he writes. “Look at the issues where he has her on the defensive: trade deals, fighting terrorism, the economy, and now the big banks. This is why he has a chance to win.”
Jeff Bush of The Washington Update made the important distinction, though, that a platform does not mean policy.
“We have to be very careful with confusing a platform with policy proposals,” he told ThinkAdvisor.
(The platform is available in its entirety here.)
Republicans want to “start anew” with the current tax code.
“They alluded to a flatter or simpler code,” Bush told ThinkAdvisor.
But he added that they didn’t say how exactly they would do that.
“[The platform] left them a lot of room to further define that as they move forward,” he said.
The platform states that “wherever tax rates penalize thrift or discourage investment, they must be lowered. Wherever current provisions of the code are disincentives for economic growth, they must be changed.” It goes on to say that “we will eliminate as many special interest provisions and loopholes as possible and curb corporate welfare, especially where their erosion of the tax base has created pressure for higher rates.”
Joe Lieber, director of research and senior political analyst at Washington Analysis, expected much of this from the Republican Party.
“We would expect one of the top agenda items to be comprehensive tax reform,” Lieber said in a statement. “It may take a year or more to complete, but the markets would be fixated on the issue through 2017. We would expect a corporate rate cut from 35% to 20% to 28%, a move to a territorial system, repatriation, a closing of loopholes, and, potentially, the creation of a patent box.”
Under the GOP, Lieber suspects that “material fiscal policy, which has been absent in Washington for some time, would likely overshadow monetary policy.”
In its platform, the Republican Party called the Dodd-Frank law “the Democrats’ legislative Godzilla.” The platform claims Dodd-Frank crushed small and community banks and other lenders.
“Dodd-Frank’s excessive regulation and burdensome requirements have helped contribute to the slow economy we all endure today,” the platform states. The platform specifically targets the Consumer Financial Protection Bureau established under Dodd-Frank, calling it a “rogue agency” and accusing it of harassing local and regional banks. The platform states that if the CFPB is not abolished, it should be subject to the annual appropriations process.
Meanwhile, the platform announced its support for reinstating the Glass-Steagall Act of 1933, which prohibits commercial banks from engaging in high-risk investment.
“Perhaps the biggest surprise from [day one of the convention] was the last-minute platform plank that pledged to reimpose Glass-Steagall and its restriction on commercial banks that engage in investment banking,” Valliere writes in his daily newsletter.