Prospects for Tax Reform and The Dow Jones Averages Jude Wanniski February 6, 1985

PROSPECTS FOR TAX REFORM AND THE DOW JONES AVERAGES (see chart)

1/2/85  Down  12.70  GOP Senate leadership planning to challenge Reagan with alternative budget; tax hike option for deficit reduction resurrected.        

1/3/85  Down  9.05  Stockman briefs GOP legislators on budget — Dole: "worse than I thought."  Chafee and Hatfield: "Tax increases may be necessary."

1/7/85  Up  5.63  Don Regan gets Presidential backing for negotiating bi-partisan tax revision with Kemp and Bradley.

1/9/85  Up  11.04  Jim Baker-Don Regan switch; Stockman seen as loser, tax reform as winner.

1/10/85  Up  20.76  Reagan's press conference prior evening: Baker and Regan described as "totally dedicated ...to tax simplification:"  President says keeping tax rates down will feed economic upsurge.  Volcker acknowledges sustained economic growth doesn't portend return of inflation.

1/14/85  Up  16.45  Dole declares Congress won't produce tax increase in '85: "the chances are zero."   

1/15/85  Down 3.75  But, says Dole, '86 is another matter.

1/21/85  Up  34.01  Reagan's upbeat Inaugural Address: U.S. needs simplified tax code with lower rates.

1/23/85  Up  15.23  Jim Baker's confirmation hearing for Treasury Secretary: declares tax reform "an equal priority."  Open to modifying unfavorable aspects of proposed tax reform.  

1/24/85  Down 4.30  Dole: forget tax reform for '85.  "I don't know of four votes it has on the [Senate Finance] Committee."  Deficit reduction the first priority.

1/28/85  Dow opened 1276.06.  1 p.m. EST up to 1284.12.  2 p.m. EST  Dow wire   summary of Preston Martin interview -- suggests Martin favoring credit tightening: down to 1270.21  3 p.m. EST — Dow wire carries Martin's own words -- not in favor of tightening: up to 1274.29  Closes 1277.83.

1/29/85  Up 14.79  Kemp and Bradley announce forthcoming press conference to  build bi-partisan efforts for tax overhaul.