Reflections on the Surprising Results of the Iowa Caucus

February 2, 2016

Ted Cruz, who recently turned 45, upset the perceived front-runner, Donald Trump, to win the Republican race.  Trained as a lawyer and formerly a Solicitor General of Texas, Cruz won a U.S. senate seat in the November 2012 election as an underdog with Tea Party support.  My misgivings about his candidacy are several:

  • Cruz is a conservative purist.  He’s highly ideological and combative.  His “my way or the highway” negotiating style even rubs presumed allies on the right the wrong way.  Cruz would have been perfect for the French Revolution but seems wrongly suited for the give-and-take of compromise that’s needed to get anything done in the U.S. system of government.
  • As a card-carrying Republican, his positions on social, fiscal and foreign policy issues line up well with ones pursued in the George W. Bush presidency. He isn’t concerned about the extreme polarization of wealth and income, wants to scrap Obamacare, and favors fossil fuel production with drill-baby-drill fervor.  It’s not clear what system of heath provision Cruz would favor, most likely one controlled by insurers, the AMA and pharmaceutical companies that delivers a low bang for the buck when comparing healthcare’s share of GDP to national life expectancy ratings.
  • Put a Texan anywhere near the White House, and bad things happen to the dollar.  Lyndon Johnson’s guns plus butter priorities overheated the U.S. economy, laying the seeds for accelerating inflation, a deteriorating current account and the eventual devaluations of the dollar in 1971 and 1973.  Treasury Secretary John Connolly famously told his European colleagues that the dollar is America’s currency but your problem and oversaw the end of fixed dollar exchange rates.  Secretary of Treasury Baker represented the United States at the September 1985 Plaza Accord, which ultimately promoted a halving of the dollar’s external value in less than three years.  Lloyd Bentsen, President Carter’s initial Treasury Secretary, hit the ground running in 1993 with Japan bashing over that country’s trade policies and used dollar depreciation as a weapon in that crusade.  George W. Bush’s presidency, like Johnson’s, spent a lot of money on war and domestic programs.  By late in his eighth year, the U.S. economy, world economy, and global financial markets were on the ropes.

Bernie Sanders earned a moral victory on the Democratic side, where he came in second to Clinton by the thinnest of margins.  He has a long history as a protestor of social injustices and as a local, state, and national politician from Vermont.  My misgivings in his case involve the following items.

  • Sanders is also too ideological.  All the problems that America is grappling with cannot be answered simply as “It’s the rigged economy, stupid!”
  • He’s too old for the job.  Sanders was born before America entered the Second World War.  He would be 75 years old when sworn in for the first time.  The only previous presidents to start out at an older age than 66 were William Henry Harrison, who caught pneumonia at his inaugural and died within a month, and Ronald Reagan, who conceivably was already beginning to be impaired cognitively by the end of his term.  Sanders would be more than five years older than each of them and he’d be 83 on leaving office if he serves two terms.
  • Sanders often yells.  I prefer a more even temperament in the man whose finger is on the nuclear trigger.
  • As a self-described socialist, independent or social democrat at different times, it’s really hard to imagine Sanders getting elected by a nation whose political center of gravity is much more conservative than voters in other advanced economies.

Marco Rubio produced a bigger surprise than either Cruz or Sanders.  Right before the vote, it was thought conceivable that Cruz or Sanders might win in an upset, but nobody really imagined Rubio getting within a percentage point of Trump’s voter share.    Rubio’s background is as a Florida lawyer and politician.  He was elected to the U.S. senate in 2010.  My misgivings about Rubio are these:

  • He’s a climate change denier, which tells a lot about his whole attitude toward science and the scientific methods of discovering truth.  Having a climate change disbeliever as president for the next 4-8 years might ultimately destroy forever many plant and animal species including the human race.
  • Rubio devoted much of his campaign to defining his differences from Cruz, but in fact they are pretty similar peas in a pod when it comes to matters of taxation, government size, deregulation, immigration, healthcare, white collar crime and foreign policy.  Their ages and backgrounds are similar, and they met muster with the Tea Party’s litmus tests.

Many factors have compiled to create the market volatility of last year and this one.  Concerns about the type of U.S. government that will come to power after January 20, 2017 is one of them, and it’s probably no coincidence that share prices should have tumbled on this day when high-importance data were not reported but when investors had their first chance to react to the Iowa Caucus results.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.