Jude Wanniski says war would be bad for the stock market, but that he thinks Bush will do the right thing and stick to diplomacy.
- Driving Down the Stock Market
- Memo To: Glenn Hubbard, chairman, President’s Council of Economic Advisors From: Jude Wanniski Re: War, war, war!!! You know I am in complete agreement that President Bush’s plan to end double taxing of dividends would be great for the stock market and terrific for the economy. But it would not stand a chance if President Bush decides to pull the trigger on Iraq next month, which seems to be the message coming out of the White House with more ferociousness every passing day. I’ve advised my clients that if Mr. Bush were to really do so without the support of the United Nations and the U.S. Senate, the Dow Jones Industrials would now be a few thousand points lower. And that the Bush tax plan would be deader than a doornail as the costs of the war would drive budget deficits through the roof, at all levels of government, here and around the world. I’m actually more optimistic, believing the White House is doing what it can to scare Saddam’s inner circle into a palace coup and that when that fails, Mr.Bush will be back on the diplomatic track.
- I don’t think he has any choice, because the White House did make commitments to the Senate Democratic leadership on October 9 in order to win their support for the resolution authorizing the use of force.
- People do forget that the President had to assure the Senate that he would go to the United Nations and seek a diplomatic solution, and only if that failed would he come back to the Senate with a report on the failure. He also promised a status report in 60 days, but it is now 90 days and no report has been made.