By Michael Pento

It has become apparent to me that whichever candidate wins this fall, the country will take a dangerous turn towards the left. The reason behind my conclusion is both Obama and McCain--as well as many in congress--have adopted an anti-capitalist posture on what enables the free market to work effectively. The candidates have expressed a desire to manage and control the market that will have a negative impact on equity prices and the economy. It should come as no surprise that Senator Obama and the Democrats want to socialize parts of the economy like medicine and education but what's surprising is the rhetoric coming Senator McCain regarding energy and CEO pay.

On June 11, 2008 Mr. McCain appeared on The Today Show and agreed with Matt Lauer's contention that the amount of money oil companies are making is excessive. He then explained that as President he must help steer those exorbitant corporate earnings towards the development of alternative energy and bring the country away from its dependence on oil. He stopped short of directly saying that he would force energy companies to explore energy alternatives. But the implication was that he would get involved in the management of their profits rather than allowing the free market to dictate where those profits should be spent. What he does not understand is that when consumers can no longer afford skyrocketing oil prices, they will demand other forms of energy. It is at that juncture-and not by a mandate from government-- that companies will respond by developing and offering cheaper alternatives to the market.

If that's not scaring you then listen to a quote from a prepared speech John McCain delivered at a Small Business Conference. "Americans are right to be offended where extravagant salaries and severance deals of CEO's...bear no relation to the success of the company or the wishes of the shareholders." He continued "If I'm elected President, I intend to see that wrongdoing of this kind is called into account by Federal Prosecutors. And under my reforms, all aspects of CEO pay, including severance arrangements, must be approved by shareholders." This non-conservative view he takes ignores the fact that shareholders already vote and approve CEO compensation every time they buy and sell their stocks. The free market approach would continue to allow stock holders to sell a company's stock that was run by a CEO who in their view was receiving excessive pay. Under McCain's program the government would force another layer of bureaucracy on America's already overregulated and overtaxed corporations.

Back to Senator Obama, we find some of the more frightening examples of how the country is moving towards socialism. He wants to increase capital gains and dividend taxes as well allow the Bush tax cuts to expire. Barack also wants to lift the cap on social security taxes from the first $97,000 of income and apply it to all income. And then to further his folly, he wants to renegotiate NAFTA, which accounts for 35% of our exports. What advanced the great recession into the Great Depression was anti-free trade protectionism and higher taxes. He is following the play book of President Hoover who approved the Smoot-Hawley tariffs of 1930, which increased duties on 20,000 items, and enacted the Revenue act of 1932, which increased the top tax bracket to 63% from 25%. We know how that turned out.

The current assault against freedom comes not only from both sides of the isle but the middle as well. Connecticut's Independent Senator Joseph Lieberman is pulling the country further to the left with his proposal to bar institutional investors, such as pension and index funds, from investing in commodities. According to him, "There is excessive speculation in the commodity markets that is driving up the cost of food and energy. The question is, do large institutional investors play a positive role? They do not." Mr. Lieberman fails to recognize that preventing institutional investors and pension funds from trading in commodities may be able to subdue rising prices in the very short term but higher prices provide the support needed to bring increased supply to the market. Suppressing the natural market price level by barring legitimate investment causes producers to decrease exploration and production of that commodity. Eventually, the supply demand imbalance becomes deadly and hyperinflation in that commodity is the result.

I've only touched on some of the more egregious proposals that may become law next year. For example, I could go on about the chorus of Senators who are proposing a windfall profits tax on oil companies or how congress and the Fed want to become an integral part of the mortgage business. But the point has been made.

Regardless of whom our next president is and how far the left congress runs, there are no true conservatives running in this election. What you do not hear much at all these days is talk of strengthening our currency and lowering our debt-a crucial part of any true conservatives agenda. Unfortunately, investors should prepare now for an unfriendly environment for the economy and the markets.