Cramer's 8-Point Plan to Send Stocks Higher
When President Barack Obama and challenger Mitt Romney meet face-to-face for the first presidential debate Wednesday, Jim Cramer said it’s unlikely either candidate will talk about how to get stocks to go higher, even though he thinks the stock market greatly matters to a majority of Americans.
Nevertheless, the “Mad Money” offered his ideas on how to produce sustainable higher stock prices.
To start, Cramer called for a complete elimination of any tax on dividends.
“We need people to own dividend stocks and if they know they are tax free, like municipal bonds, then people will buy them,” Cramer said. “I trust the balance sheets of corporate America far more than I trust the government’s balance sheet so this is hardly a reckless position and it would encourage companies to issue and raise dividends.”
(Read More: Cramer's Top Dividend Stocks 2012)
To make up for the lost revenue, Cramer suggests raising the capital gains tax, which is assessed when one sells a stock. In turn, he thinks there would be more incentive for investors to own stocks, as opposed to selling.
“Plus, if you raised the tax on capital gains these companies that do these stupid buybacks would not waste the shareholders money as they do now,” Cramer said. “Put the money in the owners’ pockets, not the sellers’ pockets by encouraging saving not flipping.”
Next, Cramer would like to see the markets cleaned up, so the retail investor can get back into the game. Naming Preet Bharara as U.S. Attorney General would be a good start, he said. After all, Bharara is currently the U.S. Attorney for the Southern District of New York, where he’s built a reputation for being tough on insider traders and what Cramer called the “crooks that populate the banks.”
“Serial offending banks should be indicted, not be made to settle,” Cramer said. “And therefore pay the government money funded by shareholders, not wrong-doers.”
Cramer would also like for Arthur Levitt to return as Chairman of the U.S. Securities and Exchange Commission. To Cramer, Levitt was the “best SEC chair we’ve ever had.” He thinks Levitt would help level the playing field for retail investors by eliminating “ridiculous” financial engineering, including high-frequency trading.
Additionally, Cramer would demand that all federal vehicles be retrofitted for natural gas-powered engines, thereby reducing the demand for foreign oil. Utilizing natural gas as a transportation fuel on a widespread basis would also create jobs, Cramer said, as workers would need to build the pipeline network, fueling stations and overall infrastructure. If more vehicles operated on natural gas, Cramer thinks the price of gas would drop, giving more money for consumers to spend and boosting the economy.
“I would have the Federal government take advantage of the low rates and issue $500 billion in 30-Year bonds to fix the nation’s infrastructure and another $500 billion to help refinance the deficit,” Cramer continued. “Believe me the market would lap up both.”
Cramer would tax goods from countries that “pollute beyond reason.”
“That will stop the endless parade of jobs from our country, which has strict pollution rules, to others that don’t and therefore have a ridiculous competitive advantage,” Cramer said.
Another idea is to require all American school children learn about money, Cramer said. The required class would educate students about how to earn money, how to budget, how to save and how to invest.
“I would also appoint a Steven Jobs Memorial Competitive Czar who would do nothing but figure out how our businesses could be more competitive and find out what they need in order to hire and expand,” Cramer added.
Finally, Cramer said he would reappoint Federal Reserve Chairman Ben Bernanke, who he credits for helping steer the U.S. out of a recession. Cramer called Bernanke “the only adult in Washington,” who’s done a great job of keeping the stock market afloat.
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