The Independent Market Observer

The Dog That Did Not Bark: Republican Debate Ignores Economy

Posted by Brad McMillan, CFA, CAIA, MAI

Find me on:

This entry was posted on Sep 17, 2015 1:15:00 PM

and tagged Politics and the Economy

Leave a comment

economyOne of my favorite Sherlock Holmes stories centers around something that did not happen: a dog that did not bark when he should have. I was thinking about that story last night during the Republican presidential debates.

It wasn’t just the debates that recalled the story to me, but also how they were reported—lots of words on how Trump and Fiorina interacted; lots of words on how Bush played off Trump’s “low energy” comments. There was essentially nothing about the economy. Why not?

Maybe it’s because the people on the stage essentially agree on the basics of economic policy and wanted to spend their time outlining their differences. Or it could have been because they feel the economy is on track—which I doubt. It could also have been because they feel people are less concerned about the economy, so there is less chance to make political hay around it.

This last possibility is interesting.

If there is a notion that the primary problems the president should be addressing are immigration, foreign policy, and the balance between religion and law (to pick three issues from the debate)—not the economy—this suggests that, in the opinion of major news figures and politicians from all over the country, things are closing in on normal, at least from an economic perspective.

It also ties in with the Fed’s decision today. As I mentioned earlier this week, I believe there is no economic reason, at least here in the U.S., not to raise rates. The relative absence of discussion last night suggests that the Republican candidates agree. The pie is starting to grow again.

With normalizing economy, is tax policy the new focus?

With a growing pie, though, comes a renewed fight over how to share it out, and here is where the Republican debate did get into economics—through a discussion on tax policy. It wasn’t much of a discussion, admittedly, but at least it started to outline the two different tax paths the Republicans might follow. One is the flat tax, favored by several candidates; the other is a more progressive approach, which Donald Trump apparently favors, though he doesn’t think the hedge fund guys will like it. Bush may also be on board with higher taxes in some areas, per his piece in the Wall Street Journal the other day.

All of this suggests to me that, from an economic point of view, the most interesting part of the Republican race might well surround tax policy.

This matters because the Republicans have been locked into a no-taxes stance for years. By opening up debate within the party, we might start to see a plan for addressing the very real concerns about growth that tax policy gives rise to. At the same time, such a plan might also lay the groundwork to get deficits under control when they start to rise again. This is the most positive thing I have heard in the debates so far. The country really needs a responsible fiscal policy debate between parties, and this could be the first step toward just that.

Overall, it was an interesting couple of hours and provided some mildly encouraging takeaways. The race has not even really started, and we are already seeing some genuine and valuable differences being aired. For all its deficiencies, the U.S. system does work. 

                      Subscribe to the Independent Market Observer            

Subscribe via Email

Commonwealth 2023 Economic and Market Outlook
Crash-Test Investing

Hot Topics

New Call-to-action



see all



The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.


Please review our Terms of Use

Commonwealth Financial Network®