A bad week for Mike, a good week for Bernie, an even better one for Donald

Mike Bloomberg learned last week that the Beatles are right. “Money can’t buy me love.” Until then his decision to forgo early primaries — Iowa, New Hampshire, Nevada and South Carolina — and concentrate his efforts on buying more than $400 million worth of ads seemed sensible. The delegates up for grabs in those states constitute 0.04% of the majority necessary for victory and 0.03% of the larger number of delegates voting should the battle continue past the first ballot at the party convention in Milwaukee, Wisconsin in July.

The $400+ million ad buy is more than all his opponents combined have spent, including current leader in the polls, Bernie Sanders, who relies on contributions averaging $18, and emerging competitor for so-called moderates’ votes, Pete Buttigieg, who relies heavily on contributions gathered at the swank parties thrown for him by his Wall Street backers. When all the Bloomberg checks are cashed, he might well have spent $2bn, which comes to a mere 3% of his $60bn fortune, which makes him the eighth richest man in America according to Forbes. That pile probably would have earned more than his campaign spending by the time he does his year-end portfolio review.

His spending did propel Bloomberg upward in the polls, encouraging his backers — until Mayor Mike emerged from behind his pile of cash for a face-to-face shootout in the Paris Las Vegas Hotel & Casino with his Democratic rivals, a quintet led by democratic socialist Bernie Sanders, who says, “I don’t think billionaires should exist.”

Bloomberg, a debate neophyte who apparently has little experience with having his statements rudely challenged, and who was allocated the fewest amount of minutes by his interlocutors (complaining sotto voce, “What am I, chopped liver?”), withered under hostile fire from a group that has the experience of nine — now ten — debates. “The turkey at a turkey shoot,” headlined the New York Post. “Billionaire Beatdown …” led The Washington Free Beacon. “It was the Roman Coliseum” chortled Chris Matthews, commentator on the leftish cable channel MSNBC. He was accused of racism, abusing women in his workplace, a lack of transparency (he hasn’t released his tax returns), having as many heart stents as Bernie Sanders, and worst of all — delicate readers shield your eyes — of being rich. His performance — “cringe-making” said Jim Cramer, a Bloomberg-friendly commentator on financial channel CNBC; Mike was “the grownup in the room … just warming up” claimed his campaign manager.

The implication for Democrats’ economic policy is clear. Bloomberg’s policy proposals, which would have been regarded as solidly left wing only a few years ago, now don’t go far enough for the progressive wing to roll out the welcome mat to this former Republican who has promised to finance the campaign of any rival should his own bid fall short.

In addition to calling for tighter regulation of big banks, better consumer protection, and criminal prosecutions for financial crimes, Bloomberg, who retains too much firepower to be counted out, is proposing to take the tax code in a decidedly equalising direction:

  • Levy a financial transactions tax phased in to 0.1% on every share and bond traded, raising $777bn over ten years according to the Congressional Budget office,
  • repeal Trump’s tax cut for high earners, returning the rate to 39.6% from 37%,
  • raise the capital gains tax to the same rate as tax on ordinary income for taxpayers with incomes of $1mn or more,
  • raise inheritance taxes by a variety of changes in applicable law,
  • impose a 5% surcharge on annual incomes above $5mn,
  • raise the corporate tax rate to 28% from the 21% to which Trump had cut it from 35%.

All in all, $5tn in new taxes are to be levied in a manner that accommodates the party’s “progressives”. With two exceptions: no wealth tax on which progressives are relying to eliminate billionaires, and, for example, no major restructuring of corporations to include workers on boards. It is advocacy of just such pieces of his revolution that has propelled Sanders to strong showings in Iowa, New Hampshire, and Las Vegas, and to an even stronger showing on Saturday in the Nevada caucuses- he “didn’t just win the Nevada caucuses. He crushed the rest of the primary field…” reports Politico. That crushing of his opponents proves that Sanders’ appeal is not as narrow as his opponents claim. He won in a state with an urban, ethnically diverse population that, according to Axios analysts, now looks like America will look in 2045.

All Democrats now accept that redistribution rather than incentives to more rapid growth should be the main goal of the tax system. They also accept that there is no need to be concerned about the red ink pouring over the national ledger. With Trump’s latest budget postponing budget balancing until 2035, the President sufficiently unworried about the pile up of the government’s IOUs to be calling for still more tax cuts and, along with Democrats, infrastructure spending, deficit hawks are an endangered species.

Bloomberg’s five attackers in the Vegas circular firing squad that the Democrats’ debates have become reserved some of their venom for each other. Elizabeth Warren accused Bernie Sanders of taking away the health care insurance of 150mn Americans, Bloomberg of being a sexist racist, Buttigieg of taking money from big donors; Pete Buttigieg accused Amy Klobuchar of not knowing the name of Mexico’s president; Klobuchar accused Buttigieg of being unable to win even a state-wide election; Joe Biden accused the others of abandoning his friend Barack’s health care policies; and Bernie Sanders, the leader as the action moves from Nevada to South Carolina later this week, and the candidate most likely to win big in California according to Bloomberg (the company, not the man), accused all and sundry of being too timid to submit American capitalism to the democratic socialist revolution he believes — has long believed — it badly needs.

Simultaneously, in the neighbouring state of Arizona, Donald Trump was addressing a capacity crowd of 15,000 supporters at a “Keep America Great” rally. It is only 255 miles from Las Vegas, Nevada to Phoenix, Arizona. But in electoral terms the distance between the Democrats’ assault on one another, and the display of Republican unity is far greater.

With the economy strong, and history on his side — 77% of first-term presidents have won re-election — Trump has been the oddsmakers’ favourite. Unfortunately for Democrats, the display of mutual hostility that happened in Las Vegas will not stay in Las Vegas. The derogatory video clips will be used by the Trump campaign, and the animosities generated will make it difficult for the losers to unite behind the eventual nominee. Bloomberg had one thing right when he said, “Look, the real winner of the debate … was Donald Trump”.

Before the Vegas shoot-out, Vegas bookies reckoned, “With each passing day … Donald Trump’s odds to spend another four years in the White House continue to improve … [from] an all-time high.” After the Vegas debate, Trump was in even better shape.