Will Barack Obama Be Good For Your Personal Finances?
This year, perhaps more than any time since the “it’s the economy, stupid” race, personal finances are coming into focus for the presidential election. From the housing market crisis to gas prices to food inflation, the economy — and its effects on personal finances — are the bread and butter of this presidential race.
One of the questions being asked, especially by those who consider many of Barack Obama’s policies socialist, is whether or not a President Obama would be good for the economy. And by extension: Would Barack Obama be good for personal finances?
BloggingStocks offers this rationale as to why Barack Obama would be good for the economy, and why it could ease the situation in terms of personal finances:
President Obama will offer a middle class tax cut and raise the capital gains rate. This change will put more money into the pockets of consumers which account for 70% of GDP growth. And it will help balance the budget — Bush’s tax cuts have helped hit a record $410 billion deficit. Obama will also veto earmarks and implement pay-go rules which require a balanced budget.
These fiscally sound policies will strengthen the dollar which will help drop the price of gasoline and food. Obama will also create incentives to encourage investment in alternative energy. America knows that high oil prices enrich the enemy — 15 of 19 9/11 hijackers were from Saudi Arabia — our second biggest oil supplier. The sooner we can free ourselves of that devil’s bargain, the safer we’ll be.
The opposing view, as expressed on Free Money Finance, takes issue with the tax increase on the wealthy. The idea is that taxing the wealthy won’t ultimately solve any of our problems:
Seriously, I’m all for lower taxes and applaud any effort to cut them, but I’m not liking the Robin Hood “tax the rich and give to the poor” methodology. At some point, the weight of the extra tax burden will offer a big dis-incentive for higher earners to earn more (it literally won’t be worth their time.) and since these people often control/run businesses, the implications could be that they’ll hire fewer people — not something that benefits our country’s economy.
I’m more in line with the BloggingStocks view of the situation, especially since there are always incentives to earn more — unless taxes increase dramatically (which they wouldn’t). And I like the idea of helping out the middle class through tax breaks — since the middle class usually gets the shaft, despite being the foundation of our economy.
Which assessment do you agree with? And Why?
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23 opinions for Will Barack Obama Be Good For Your Personal Finances?
David
Jun 11, 2008 at 2:24 pm
If Obama stops our country from spending all of our money on the war in Iraq, that will go a long way towards balancing our budget and improving the value of the dollar which in turn will stop soaring oil prices and overall be good for my persoal finances.
Curt
Jun 11, 2008 at 2:49 pm
Have you ever read the Obama Spend-O-meter?
This website details all the new spending that Obama has committed to.
http://politicomafioso.blogspot.com/2008/02/obama-spend-o-meter.html
If Obama become president, it is unlikely that the economy will get better. It will be like the Nixon years of stagflation. Obama will try all kinds of creative tricks like rationing gas, wage freezes and price controls, but the economy will continue to decline.
miranda
Jun 11, 2008 at 3:33 pm
I agree that Iraq is rather expensive, and that we could save a great deal of money by pulling out. Additionally, getting rid of continual earmarks and pork barrel spending (that Obama promises to cut) would also go a loooong way toward easing out budgetary problems.
Thanks, Curt, for sharing the Obama Spend-O-Meter! More information is always good. Although if the spending is balanced by cuts elsewhere, or by an increase in revenue (Obama, of course, plans to raise taxes on the “wealthy”), then spending could be a good thing — especially if it increases funding for things like health care and education.
Pete
Jun 11, 2008 at 5:16 pm
I tend to be more in line with free money finance’s stance. I don’t believe that taxing the wealthy is going to be helpful, they’re the ones that are creating jobs, and creating value in stocks that middle class americans own. Taxing them is going to hurt the poor and middle class as well through lower job growth and other factors.
The idea that we need to tax the wealthy to help the middle class and poor speaks to the idea that wealth is finite - that if one person has more, then another must have less. I don’t believe that - I believe wealth is created and just because one person has more doesn’t mean you can’t create your own.
I DO think we need to cut wasteful spending in so many areas but raising taxes is not the answer.
miranda
Jun 11, 2008 at 5:22 pm
While I think that you should pay more if you earn more (and by that I mean, for example, 15% of your income for the wealthiest as opposed to 5% for the poorest), I do think that we could re-arrange our priorities so that we aren’t paying more in taxes than we are now (and maybe even less) — provided the special Bush tax breaks that favor the rich are repealed.
However, “trickle down” as described above doesn’t really work like the theory suggests. We’ve been in this “trickle down” type economy since the Reagan years, and the disparity between rich and poor is growing larger.
Ren Garcia
Jun 11, 2008 at 8:24 pm
How about those without any “personal finances” to speak of? With the widespread downsizing and cutbacks, many are losing paychecks & purchasing power which could help the economy get back on its feet. Downsizing & cutbacks during a recession push the economy over the cliff into a downward spiral. Perhaps, there should be some kind of government assistance / tax breaks / reward for companies that don’t downsize / cutback.
miranda
Jun 11, 2008 at 8:51 pm
An interesting idea…Rewarding companies that keep their middle class workers employed…
Your comments are almost always thought-provoking and out-of-the-box, Ren!
Ren Garcia
Jun 11, 2008 at 10:45 pm
Thanks for the stroke, Miranda. Great minds run . . . . etc etc
Greener Pastures
Jun 12, 2008 at 6:39 am
I’m with you on this one. The republican “big money trickles down effect” isn’t working. Time to see what else might work.
Lisa
miranda
Jun 12, 2008 at 7:56 am
It would be nice to see a change. Besides, it’s not as if the super-rich haven’t been getting preferential tax treatment for years. What was it that woman said in 1989? “Only the little people pay taxes.” And it’s been true. It’s for the middle class to stop getting the short end of the stick.
Sylvia
Jun 13, 2008 at 9:50 pm
I’m going to have to agree with Blogging Stocks. Our household brings in over 130k annually, and we paid about 8k in federal tax last year. Between 4 kids, college tuition, mortgage interest and charitable contributions, our deductions were enormous. Honestly, I think we’ve paid far less than our share, and I’m concerned that my kids are going to have to shoulder the government’s masssive debt burden unless something changes soon.
miranda
Jun 13, 2008 at 10:11 pm
Thank you for sharing, Sylvia! How many of us look at the deductions and realize that the money really could be rather helpful elsewhere?
And you do make a good point about the debt burden our children and grandchildren will have to bear. Someone, sometime has to pay for this…
Obama Lies
Jun 17, 2008 at 1:57 am
We’ve been fighting wars since the beginning of this nation. David’s comment is just silly. There will continue to be wars for ever and ever. Obama’s social reforms are whats going to bankrupt the country. When did government become the cure all to our problems. Can’t we do anything for ourselves anymore?
miranda
Jun 17, 2008 at 8:37 am
Just because we’re always at war doesn’t mean we have to be. Perhaps we should focus more on developing our own nation instead of everyone else’s. After all, that’s the “reason” we went to Iraq — to “free” them and develop THEIR country.
At any rate, most people don’t think that the government should do everything. But David seems to be saying that the government should at least put its own people first and help its own people before rushing off to spend billions and billions in another country — especially with such dubious results.
seeker
Jun 20, 2008 at 2:45 pm
I disagree with the above comments.
Deficit is to be paid by tax as indicated by Obama. Immediately paying for deficit through tax will hurt the people more.
The status quo: To shield the people of taxes during the socalled War in Iraq, Bush Administeration technically loaned for it. It shielded the people of taxes. That’s what third world countries do how they cope up with loans from first world country. This means, Bush economic policy, is still better.
The sub-prime market fiasco, should not be included. Besides those greedy and false middleman, the main problem is the lack of “creditworthiness” of the buyers, which was exacerbated by many court orders forcing banks to provide loans to non-American and “poor” people. There were many lawyers in the 1990s and up to 2003 suing banks because of so called “racial discrimination” and “anti-poor” policies, undermining creditworthiness. You know what, Obama is one of them such as the case of Citibank which he won for a group of black families.
In addition, Obama has a different form of war. Global Poverty Act… which he has already tied to tax increases.
This indicates his lack of experience in economic budgeting. There are other government earnings which can finance programs including costs incurred in Iraq War.
This is the problem. We try to justify poor economic policy of Barack Obama by his own rhetorics.
Think again.
seeker
Jun 20, 2008 at 2:50 pm
Forcing to reduce government debts immediately say by 2013 (less than 10 years) using taxes is the worst thing America could experience.
The best way for an American is to cash out his money (a disposable income, taxable if using a parallel with Obama’s taxing of oil company’s profits) and move to other countries, say Canada.
Tell your Obama to change his wrong mindset, knowing you’ll vote for him despite of his socialist economic policies. To do that, try to separate your President from his socialist advisors especially those socialists in Hyde Park Chicago.
miranda
Jun 20, 2008 at 2:55 pm
I’d rather fight against global poverty than fight a war that further enriches only a few already-wealthy cronies of Bush Administration folks.
At any rate, I agree that credit standards need to be tightened, and that not every should have access to mortgage loans if they can’t make payments.
But what really gave people access was the re-regulation and monetary loosening in the 80s and early 90s (hmmm…while Republicans were in office) that allowed banks to lend to whomever they wanted, by charging higher interest rates (subprime loans). And then sell the debt to someone else as an investment. That and the introduction of loan products designed to lure borrowers into spending more and creatively financing.
While borrowers should certainly be held accountable for their decisions, lenders and investors are not immune from blame as well.
Does the financing you refer to include cutting money to things like education and infrastructure? Or maybe getting the financing by taxing the middle class even more? Or “wise investments”? At any rate, “Defense” spending on war and outfitting other nations’ militaries takes a rather large chunk of the budget. I’d rather finance social programs at home than war abroad.
miranda
Jun 20, 2008 at 2:59 pm
I don’t have a huge problem with some socialist policies. We already have them. We have taxpayer subsidies to Big Oil and Big Ag. This goes beyond just preferential tax treatment. Already profitable companies are receiving subsidies. We already have socialized capitalism — a programme that benefits the wealthiest by having society support their companies on top of the profits they already make.
seeker
Jun 20, 2008 at 3:19 pm
On Oil Companies with reeking with high profits:
1. His eyes are focused on the billions of profits by the oil companies.
2. Oil companies are public corporations and multi-nationals. Profits are distributed to stockholders. Being publicly-held, the profits go to ordinary people like you and me who buys stocks because of our disposable income.
3. Taxing oil companies of their profits means taxing stocks in the Stock Market, which is now currently in bad shape.
4. Bad shape of the stock market is more of “perception”. If you all Americans shout that economy is failing as a whole, the whole stock market will fall. Those holding stocks will immediate cash out their stocks into currency.
5. Obama, shown by his socialist policy, is geared on the “absolute profit”. Doesn’t he know that oil infrastructure requires huge, huge investments, from drilling down to financing a gas station?
6. Compute the “Internal Rate of Return” of these American oil companies (may be estimated by profits/investments). They are not exceed ing 10%). Better if they just invest their money in Treasury Bills and let America use water instead of oil.
7. These companies are suffering too. Because of his rhetorics, some of these companies are now planning to undertake “layoffs”.
8. Now who is profiting from oil? Definitely those countries who have oil, stupid. Have you heard of Exxon’s financial problem when Venesuela grabbed its entire investments. That would not happen if Democrats allow oil drilling.
9. You want renewables, fine. Stop using cars and automobiles. Tell that to Obama.
10. Ethanol in Illinois? Tell Obama that’s the major cause of higher prices in meat and other staples with corn and soybeans as inputs of production.
11. Because of these Taxes,,,,,many investors are shying away. That’s why no additional jobs.
12. Current low level of employment? Tell Obama to stop his “black” friends like that Sharpton to blackmail business and employers that if they do not hire as many blacks as white, despite capability, they would harass the company by picketing and boycotting.
13. Low Employment again? What do you expect. America is now becoming Germany and France… too radical trade union that’s why poor productivity. Ask Obama not to accept endorsement of AFL-CIO. Can he? AFL-CIO is an affiliate of Democratic Socialist of America, whose Chicago branch is the reason why he is a Senator now.
In conclusion,….., Your Obama is bad to the economy and personal finance.
seeker
Jun 20, 2008 at 3:26 pm
If you hate the wealthy people, you will all end up like poor people of the third world countries. Stupid!
Strive to be wealthy, not to be jealous of the rich. To start with:
Hone you talent.
Have your children sacrifice by studying hard, like the Chinese and Japanese do.
Be wise in spending.
Invest and be wise in investment.
Be competitive. Don’t allow others to steal your own money.
Tell your children to invest, and not just rely on cheap labor and employment.
miranda
Jun 20, 2008 at 3:31 pm
I don’t agree with the “windfall tax.” But I also don’t see why Big Oil “needs” government subsidies. Cutting off their subsidies is not that same as taxing them. It’s getting them off a socialist program. And I don’t agree with ethanol, which just gives more subsidies to Big Ag (another sector that enjoys the benefits of socialized capitalism).
But drilling here isn’t the answer, either. It would cost billions and take 7-10 years to get additional oil through drilling. In that time, we could spend the billions and the 7-10 years using American innovation (and creating newer and safer jobs) to build on technology that already exists in renewables (H cell, solar, etc.). The money and time would be better spent that way. There is no immediate fix to energy prices. We can spend the next 7-10 years innovating and moving our energy into the 21st century, or we can spend it drilling oil wells here in the US, and face this problem again because we’re stuck in the past.
Also, investors aren’t really shying away from investing. Savvy investors know this is the time to buy the right kinds of stocks. A 20% capital gains tax for the wealthiest (rather than 15%) isn’t going to stop any of the serious investors from investing. They’re still making plenty of money, and the benefits of making that money always outweigh slightly higher taxes.
miranda
Jun 20, 2008 at 3:38 pm
I don’t hate wealthy people. My net worth has increased yearly, and I plan to have more money. I pay taxes now, and I’ll be willing to pay higher taxes as I earn more.
Just because I’m not miserly with my money, and just because I don’t think the wealthy deserve special treatment, doesn’t mean I hate wealthy people. But I do feel that wealthy people should feel an obligation to help others.
Also, continually calling people who disagree with you “stupid” is not conducive to a civil exchange of ideas. You evidently presume that I must be intellectually challenged, and “poor”, because I favor helping people who need it over financing a war and providing government subsidies to profitable corporations through socialized capitalism.
In fact, I am neither stupid nor poor.
rowdy
Jul 12, 2008 at 1:49 pm
I totally agree with seeker here! You want to see how well Obama will do in the future as president look at the Carter admin. Same rhetoric and ideas. Didn’t work then will not work now.
For you Socialist out there look around the world and see how well it is working there. I have been around the world myself and talked with plenty of people from Germany and France to name 2. They all say the same thing. Taxes and socialism lead to non-productivity. The government never delivers what is promised and they are taxed through the roof. Wake-up and smell the coffee here.
I say flat tax across the board at 15% for everyone that makes over 60k and everyone else is exempt. This is working great in other countries that lived under soviet occupation and communism (which is just another word for socialism) they are booming.
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