Steve Forbes shares his update on the coming election, and what it may mean for the financial markets in 2013.
Nice to have you here with us, Steve. What do you make of where we are in the presidential elections? We're here in the summer. The elections are upon us. We're passing through the conventions. The polls are telling us that the election's very, very tight, and yet we hear things that might be different.
And in past elections particularly-I'm reminded of the 1980 election between Jimmy Carter and Ronald Reagan, when we were told that Ronald Reagan was trailing by 6% at about this time. Today we're told that, depending on which poll you look at, Romney and Barack Obama are closely tied, and in some polls, Barack Obama is still ahead.
You've been in this business as a candidate and watching it more closely than anyone I can think of, and we'd love to get your insight into that.
Well, I think what you have here is that people really don't know Mitt Romney and Paul Ryan yet, and so after the conventions, I think that'll start to change dramatically. With the debates, I think you'll see even more of a change.
The negatives that have come to President Obama are not going to be changed, I don't think, between now and November. But I think as people get to know the two other candidates, Romney and Ryan, they're going to see these are individuals of substance.
They understand this is a stark contrast between big government and free markets, and I think at the end of the day, November 6, Romney and Ryan will win because they're more in tune with the principles and the policies that have made this country great.
The Ryan pick. Some say that he doesn't help Romney in Florida like Marco Rubio would have,, and he may not help Romney in other parts of the country in certain swing states. And he's considered kind of a harsh egghead-trained economist, which we like him for. But what do you make of the Ryan pick from a pros and cons point of view?
Well if you look at it, what he does appeal to are independent voters who recognize that he's a man of extraordinary knowledge, intricate detail, but also never loses sight of the big picture.
I think people are going to be reassured. Here's an up-and-comer who understands what needs to be done, who knows we must save Medicare and Social Security for those who are on it and about to go on it. But we also have to have positive changes for younger people so they have something as they get older.
So again, as people get to know Paul Ryan at the convention, or already now as he's gotten around the country, he's making a very favorable impression to spike the attack ads from the Democrats. And in the debate...he has one debate with Joe Biden, and I think he's going to do very well there.
I already know some independents-at least one who voted for Obama in 2008 is now going to vote for Romney. Not because she loves Romney, but she's impressed with Ryan.
That's terrific. I've heard many of those stories as well.
And what about the Romney tax plan? Again, no one has done more work at advancing the idea that we need to simplify taxes, abolish the draconian system, and the super complex system that has arisen through the Washington machine. What do you make of what's forming in the Romney tax plan?
Well, he already has a proposal out there: a 20% across-the-board cut in income tax rates. And I emphasize across the board-middle-class taxes are not going to go up. He wants some simplification.
Paul Ryan does even better. He wants to truly revolutionize the code, and have just two rates: 10%, 25% above $100,000. He hasn't gotten yet to a single rate, but I'll take two in simplicity with what we have today. So I think it's moving in the right direction.
There's no way to defend this indefensible code. President Obama's been in office three and a half years, and done nothing except junk it up even more. Massive tax increases are coming next year even if we avoid the fiscal cliff, and a lot of bad stuff is in train, so I think that's going to be a vivid contrast to the favor of the Republicans.
Assuming the White House goes to the Republicans, do you think that the Senate...what chances do you think that the Senate goes to the Republicans? And then I want to ask you a question about the investment impacts of policy changes.
Well, I think the Republicans will get control of the Senate. There are 23 Democrat seats coming up this year, only ten Republican seats.
So even though you have a tight race in Massachusetts, and Maine is a question mark that is held by the Republicans, there are at least eight or ten seats out there that Republicans have a very good shot in, including your home state of Florida, or Virginia, North Dakota, Nebraska, and other states look very good.
Yes, well, assuming we get the Senate and the White House goes to the Republicans, what would be your view of the investment market's reaction to that?
Well, I think it's going to happen before the elections if voters feel that this thing is going to go the right way. Obviously, markets try to anticipate the future, so you could see a run up. If they feel there's no decision likely before the election, you're going to have to wait to the election itself.
In other words, I think post-election the markets will go up in anticipation that we're finally going to tackle the problems, and-I want to emphasize this-pursue opportunities. It's not just ashes and sack cloth that we look forward to. I think when we get things right, we're in another era of great prosperity.
Where would you see those areas of prosperity?
Almost everywhere. One of the things about the Web and the technology that's unleashing, is it's now going to start to impact us.
Our publisher, Rich Karlgaard, has talked about this in areas where you haven't seen much great technological advance. Some, but not the kind of great leaps we've seen elsewhere in areas such as manufacturing, aircraft, and areas like that that haven't really been touched in a major way.
In the next generation, you're going to see enormous changes there that are going to not only revolutionize the way these things are made, but also sharply reduce their costs. Take aircraft: we'll finally get some supersonic speed without breaking your eardrums.
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