Medicare expansion decimates business confidence – perceived as too much spending
Lawrence H. Summers, 11-5-2019, Lawrence Summers is a professor at and past president of Harvard University. He was treasury secretary from 1999 to 2001 and an economic adviser to President Barack Obama from 2009 through 2010, "Warren’s plan to finance Medicare-for-all pushes into dangerous and uncharted territory," Washington Post, https://www.washingtonpost.com/opinions/2019/11/05/warrens-plan-finance-medicare-for-all-pushes-into-dangerous-uncharted-territory/, //hm-sms
Because of abnormally high valuations, along with increased uncertainty and volatility, loss of business confidence and selling pressure from those in distress, the market would likely fall more than proportionally to earnings. Accurate market predictions are impossible and will in any event depend not on what is proposed but on what the market expects will actually take place. There is, however, the real risk of economic contraction following a sharp market decline, especially given that the current very low level of interest rates puts the Fed in a weak position to pursue counter-cyclical policy. For decades, I have emphasized that corporate profits and the market do better when progressives are in power and have dismissed conservative fear-mongering about progressive policies. This time seems different. Judged relative to gross domestic product, the Medicare-for-all program dwarfs the federal spending hikes of the New Deal and the Great Society. Presidents Franklin D. Roosevelt and Lyndon B. Johnson emphasized that their new benefits would be paid for by contributions from their middle-class beneficiaries. With Warren’s plan, it is the combination of vast new entitlements with total reliance on the top 1 percent for revenue that puts us in uncharted and, I fear, dangerous territory.