Day: October 29, 2008

Obama And Economics

This is a list compiled by Bussiness Week and is a lengthy piece, however if one wants to see where Obama stands on economic issues it is well worth the read.

Obama on Taxes

• Income Taxes: Senator Barack Obama (D-Ill.) would hold most income tax rates steady, making permanent the Bush tax cuts for the vast majority of individual taxpayers. With those cuts scheduled to expire in 2011, he would allow rates for households making more than $250,000 (or individuals making more than roughly $200,000) to return to earlier levels. Earners who now pay today’s maximum 35% rate would see their top marginal rate go back to the 36.9% in effect in the Clinton years, for example.

• Estate Taxes: Obama proposes setting inheritance taxes permanently at 45% on estates over $3.5 million.

• Capital-Gains Taxes: Obama would again limit any increases in capital-gains rates, as well as taxes on dividends, to households making more than $250,000 or individuals bringing in more than $200,000. For those folks, he proposes increasing the maximum rate to somewhere between 20% and 25%.

• New Tax Cuts: Obama has proposed a handful of new tax credits and other adjustments aimed at helping struggling families, students, and others. He would institute a refundable tax credit of 6.2% of earnings, up to a maximum of $8,100, for example, along with a refundable mortgage credit equal to 10% of loan payments for homeowners who don’t itemize their deductions. Students would be eligible for a $4,000 annual credit to help defray college costs, while Obama would eliminate income taxes for seniors making less than $50,000.

• Economic Stimulus: Obama has proposed giving businesses a $3,000 tax credit this year and next for every net new job they create to help jump-start the stalled economy. He would also temporarily eliminate taxes on unemployment benefits and calls for legislation that would allow struggling individuals to take up to $10,000 from their IRA or 401(k) retirement accounts this year and next without paying the normal tax penalty for early withdrawals.

• Business Taxes: Obama has proposed eliminating all capital-gains taxes on investments in small business. He would also make permanent the R&D tax credit and credits for renewable energy production. But elsewhere, he would eke more revenue out of the corporate sector: He would like eliminate loopholes that he says favor oil and gas companies, for one. And he favors shifting the tax code to favor companies that create jobs in the U.S. and increase taxes on those that move jobs overseas.

Obama on Jobs

• Job Creation: Obama wants to steer $50 billion into an economic stimulus. He proposes that $25 billion go into a “Jobs and Growth Fund” to prevent cuts in road and bridge maintenance, and to fund school repair. He says this effort will save more than 1 million jobs.

• ‘Green’ Jobs: Obama wants to create 5 million new “green jobs” and invest $150 billion over 10 years in biofuels and fuel infrastructure, plug-in hybrids, commercial-scale renewable energy, low-emissions coal plants, and a new digital electricity grid. He also wants to expand federal transportation investments to the tune of $60 billion over 10 years, which he says will create 2 million jobs.

• Unemployment: Obama is calling for a temporary expansion of the unemployment insurance program for those who have exhausted their current benefits. He’d also extend unemployment insurance to a bigger pool of workers, including some part-time workers.

• Trade: Obama says he opposes new deals that lack labor and environmental safeguards. Obama wants to renegotiate the North American Free Trade Agreement with Canada and Mexico so it has more favorable terms for U.S. workers. He wants to expand the Trade Adjustment Assistance program, which trains workers who lose their jobs because of offshoring.

• Labor Rights: Obama wants to strengthen the ability of workers to organize unions through what’s known as the Employee Free Choice Act (EFCA). The bill allows workers to join a union if a simple majority sign authorization cards instead of holding an election. He has won the support of the two major U.S. labor federations, the AFL-CIO and Change to Win, whose leaders say EFCA is their top legislative priority.

• Immigration: Obama supports strengthening border security with more personnel, technology, and infrastructure. He also wants to create tougher penalties against employers who hire undocumented immigrants. At the same time, he wants to increase the number of legal immigrants in order to keep families together and meet the demand for jobs that employers say they can’t fill. Undocumented workers who clear background checks will have a path to citizenship.

• Work/Family Balance: Obama wants to double funding for after-school programs, provide low-income families with a refundable tax credit to help with child-care expenses, and encourage flexible work schedules. Obama wants to extend the Family Medical Leave Act—which allows workers three months of unpaid leave—to cover eldercare and cases of domestic violence.

• Minimum Wage: Obama wants to raise the minimum wage to $9.50 an hour by 2011 (up from 2009’s rate of $7.25 an hour) and index it to inflation. He says these measures will help ensure that full-time workers earn a “living wage.”

Obama on Education

• Early Childhood Education: Obama proposes a $10 billion “Zero to Five” early childhood education plan that would expand access to Early Head Start, preschool, and child-care services. Would establish an early learning council to coordinate federal and state early childhood education programs.

• K-12 Education: Obama supports goals of No Child Left Behind but says law has significant flaws, including lack of adequate funding. Says he will improve assessments and accountability for NCLB. Proposes funding of intervention strategies to reduce dropouts.

• Teacher Pay and Training: Obama supports bonus pay for teachers and additional support and training for teachers and principals. Wants to make it easier to remove bad teachers from classrooms. Proposes that all teaching programs be accredited.

• Math and Science: Obama says math and science must be a national priority. Will step up recruiting of math and science teachers. Wants to enhance science instruction and enhance science assessments.

• School Choice: Obama wants to increase federal funding for charter schools from $200 million a year to $400 million, but wants to make it easier to close low-performing charter schools. Opposes school vouchers for private and parochial schools.

• School Funding: Obama’s early childhood and K-12 plans call for additional spending of $18 billion a year. Obama says cost of plan would be offset by spending cuts and reforming federal contracting procedures.

• Classroom Technology: Obama proposes a $500 million matching fund for technology in the classroom. Program will include more classroom technology and student performance data tracking. Will create a new technology-based curriculum.

• Higher Education: Obama wants to change the student loan program by eliminating the subsidies to private lenders and mandating that all federal student loans be provided through the federal direct loan program. Proposes a $4,000 refundable tax credit for college tuition; recipients of the credit will be required to perform 100 hours of community service.

Obama on Health Care

• His Approach: Obama would achieve universal coverage through an expansion of employer-based and government insurance programs, and create programs and incentives that will rein in health-care inflation.

• Coverage: Obama thinks all employers should be required to offer insurance or pay into a public fund, with subsidies available to small businesses. All children would be covered, Medicaid would be expanded, and a National Health Insurance Exchange created to offer policies to individuals not covered through their employers.

• Insurance Changes: Obama would prohibit the denial of coverage due to a preexisting condition.

• Malpractice Reform: Obama wants to reform malpractice while preserving patient rights by coming up with new forums for addressing physician errors.

• Drug Prices: Obama wants to allow re-importation of drugs and faster introduction of generics, and would repeal the ban against Medicare negotiating prices directly with drug companies.

• Technology: Obama wants to commit $50 billion to the adoption of electronic medical records and wider deployment of information technology.

• Quality of Care: Obama wants to support a national institute to monitor quality and set standards, and reward health-care providers for high-quality care.

Obama on the Financial Crisis

• Homeowners: Obama has proposed requiring financial institutions participating in the Treasury Dept.’s assistance programs to halt foreclosures for 90 days for homeowners living in their homes and making “good faith” efforts to pay. He has also backed efforts, including a law passed this summer, to encourage mortgage lenders and servicers to modify more loans voluntarily but requiring them to give up some of the loans’ value. As with McCain’s plan, and nascent Treasury loan-modification efforts, it is unclear how many such homeowner-relief programs would apply to mortgages that had been divvied up into tranches and sold to investors. Before the crisis worsened this fall, Obama proposed more scrutiny of the subprime mortgage industry, standardized disclosure of mortgage terms, and allowing judges to modify mortgage terms in bankruptcy, much as they can modify the terms of other loans.

• Unemployment: Obama also proposes temporarily eliminating taxes on unemployment benefits, and proposes to extend unemployment benefits.

• Jobs: Obama is calling for a temporary $3,000 tax credit for each net new full-time job companies create in the U.S. over the next two years. He also proposes a national, $50 billion program to improve roads and other infrastructure, and supports spending $150 billion on green-energy initiatives, both of which his campaign touts as fostering job growth.

• Other: Obama proposes short-term federal loans for cash-strapped state and municipal governments, which are facing dramatically lower tax receipts and gaping budget deficits amid the housing downturn and weakening economy.

Obama on Retirement

• Temporary Assistance: Obama proposes allowing working Americans to make withdrawals of up to 15% from IRAs and 401(k)s during 2008 and 2009, to a maximum of $10,000, without triggering the standard early-withdrawal penalty of 10%; the withdrawals would still be subject to income taxes. Like McCain, Obama supports temporarily suspending mandatory minimum withdrawal rules for retirees over 70½, but he also proposes to temporarily waive taxes on withdrawals for those who do withdraw up to those minimums.

• Retirement Plans: Obama proposes matching 50¢ on the dollar for the first $1,000 of retirement-plan contributions for families earning less than $75,000 a year, to encourage savings. He also has proposed requiring employers that don’t sponsor employee retirement plans to set up automatic contributions to IRAs for employees, with provisions allowing workers to opt out.

• Taxes: Obama proposes eliminating income taxes for seniors making less than $50,000, which the campaign estimates will save 7 million seniors an average of $1,400.

• Social Security: Obama supports increasing payroll taxes on annual income over $250,000, perhaps by 2% to 4%, to improve Social Security’s financial position; currently, only income under $250,000 is subject to the 12.4% withholding tax, which is split between employers and employees. He opposes increasing the age at which Social Security benefits may be collected, which is another commonly cited fix for the program, and also opposes privatizing benefits.

I sincerely hope that this was of help in your decision.  I want to be fair and will find what I can on McCain and economics.

What Is Behind The Afghan Talks?

The Wall Street Journal reported on US plans to open direct negotiations with Taliban leaders in Afghanistan. The fact that the Journal, a conservative financial paper, broke the story shows that it was not a journalistic exposé, but a deliberate public declaration of a shift in state policy.

According to the Journal, “The US is actively considering talks with elements of the Taliban, the armed Islamist group that once ruled Afghanistan and sheltered al-Qaeda, in a major policy shift that would have been unthinkable a few months ago.” It reported that such talks were included in a “draft recommendation in a classified White House assessment of US strategy in Afghanistan.”

These plans seek to address a serious deterioration of the US position in Afghanistan. Violence has spread through the country and into neighboring tribal areas of Pakistan, whose US-backed government has been discredited by its acquiescence in US bombings and ground incursions into Pakistan against Taliban militants. The US war on the Taliban has also antagonized important US allies that helped the US organize the Taliban militias in the interests of US pipeline politics in the mid-1990s: the Saudi clerical establishment and Pakistan’s powerful military espionage agency, Inter-Service Intelligence (ISI).

Notwithstanding US “war on terror” rhetoric, which portrays the Taliban as monsters, US-Taliban talks are not new. The 2001 US invasion of Afghanistan deployed relatively few troops and the US occupation of the country has depended on manipulating Afghanistan’s fractious tribal elite. A State Department official told the Journal: “We and the Afghans negotiate with the tribes every day on the district level. Sometimes they’re Taliban or their supporters. Often they say: ‘If we get what we want, we’ll lay down our arms.'”

US officials have, however, been constrained in their attempts to create a workable Afghan policy by restrictions on negotiations with the Taliban. An intelligence official told the Journal, “some US officials quietly conducted informal outreach to Taliban leaders, but the military was more interested in taking them into custody.” The leaking of plans for US-Taliban talks is a signal to opinion-makers, as well as to observers abroad and particularly in Afghanistan and Pakistan, that Washington will no longer impose such limits on itself.

This policy shift is particularly significant in that the candidate now considered the likely winner, Democrat Barack Obama, has long attacked the Bush administration for being distracted from the war in Afghanistan and called for strikes against targets in Pakistan.

Is There Nuclear Safety?

Potential threats make it necessary for the United States to maintain a nuclear arsenal for many years to come, Defense Secretary Robert Gates said Tuesday, and called for steps to ensure the nation has the ability to build such complex weapons.

Gates, in a speech at the Carnegie Endowment for International Peace in Washington, embraced former President Bill Clinton’s “lead and hedge” nuclear approach. Under this approach, Gates said, the United States should take the lead in seeking to eliminate such weapons while also hedging its bets by maintaining a deterrent nuclear arsenal.

He pointed to the nuclear programs and ambitions of nations like North Korea, Iran, Russia and China as reasons Washington must take steps to ensure the nation’s existing nuclear force is ready for launch, and also make sure industry and government have the technical expertise to build new versions.

He urged Congress to alter its recent practice of stripping money in annual Pentagon budget requests for the Reliable Replacement Warhead (RRW) program, which he said would “reinvigorate and rebuild our infrastructure and expertise.”

Many skeptics argue pursuing a new program would hurt Washington’s ability to keep other nations from getting “the bomb.” They say because of this, and because the nation’s existing arsenal can be maintained for 50 to 100 years, the RRW program should be delayed for some time. Still other critics simply oppose all nuclear weapons.

But yet Washington is pushing nuclear programs for Egypt, India, and others.  Yes, they are nuke power programs, but as with Iran, how long would it be before the bomb is to follow?

Is It Another Great Depression

History may never repeat itself exactly, but you wouldn’t know that from the spate of recent articles comparing our current economic plight to the worst economic contraction since the Plague. I confess to a grim fascination with the subject, which has had me brushing up on my U.S. history. It’s fascinating reading, even if you don’t have to get very far to recognize that the comparisons are pretty off base. There’s no doubt the global economy is under tremendous stress with still-indiscernible consequences, but the Great Depression this is not.

This seems so obvious that I’m not going to dwell on the well-intended but seriously misguided economic policies that made the Great Depression so bad, and recent steps that should help ease the stresses that have developed this time. But for the sake of our parlor game, let’s cast all that aside. Let’s say we are in another Great Depression and that markets will be every bit as bad as they were then. What should investors do?

For stock investors, the headline for the Great Depression is usually that the S&P 500-stock index lost 86% of its value, falling from 31.86 on Sept. 16, 1929, to 4.40 on June 1, 1932. Obviously, it was a terrible time to be holding stocks.

The early years of the Great Depression were marked by deflation, or falling prices, a relatively rare occurrence during which bonds traditionally outperform other investment classes, since their interest payments buy an ever increasing number of goods and services. It’s the opposite of inflation, when the value of fixed-interest payments is eroded. U.S. Treasury bonds also offer almost risk-free returns. For the same reason, even cash does well in a deflation

This is from an article in the WSJ written by James B. Stewart…Basically this article was trying to help keep the people in the markets, especially in the T-bonds.

Sexual Trauma And The Female Vet

Veterans who reported sexual trauma, such as rape and threatening sexual harassment, were three times more likely to be diagnosed with a mental illness such as depression or post-traumatic stress disorder.

A study released in 2007 found that 22 percent of female veterans and 1 percent of male veterans reported sexual trauma in VA health-care surveys conducted in 2003. That study looked at veterans of all types, not just from Afghanistan and Iraq.

The new study found that these men and women were three times more likely to be diagnosed with a mental illness than those who didn’t report experiencing sexual trauma.

Among women who reported experiencing sexual trauma, 76 percent were diagnosed with a mental condition, compared to 47 percent of other female veterans. The rates were similar in men.

According to the study, the most common mental health conditions among the Iraq and Afghanistan veterans were depression, post-traumatic stress disorder, anxiety disorders, adjustment disorders (which cause stress and other problems during certain situations), and drug addiction or alcoholism. All were more common in men and women who reported sexual trauma; post-traumatic stress disorder was much more common in women than men in that group.

Learn more about sexual trauma in the military from the VA.

It is truly sad thgat a female vet has more to worry about than some militatnt taking her life.

Will The FED Cut Interest Rates Again?

The Federal Reserve is widely expected to cut interest rates again next week. But could the Fed soon go where it has never gone before and bring them below 1%?

The Fed lowered its federal funds rate, the benchmark overnight lending rate at which banks lend to one another, by a half-percentage point to 1.5% in an emergency announcement Oct. 8.

Many investors believe the central bank will cut rates by at least another half-percentage point following the end of a two-day meeting on Oct. 29.

In fact, the fed funds futures on the Chicago Board of Trade are now pricing in a 26% chance that the Fed will cut rates by three-quarters of a percentage point to 0.75% by that meeting.

Fed Chairman Ben Bernanke has said in recent weeks that economic weakness is likely to continue into next year, despite rate cuts and other recent moves taken by the Fed and Treasury Department to try and fix the credit crisis.

Rate cuts have been a key tool the central bank has used in the past to boost a weak economy. A variety of lending rates, including credit cards and home equity lines, as well as the prime rate used to set many business loan rates, are pegged to the fed funds rate.

So lower rates usually lead to cheaper credit, thus spurring businesses and consumers to spend money more freely.

But in the current credit crisis, with banks afraid to make loans due to worries about their firms’ own need for cash in the near term, already relatively low short-term rates have done little to get credit flowing. (The Fed cut rates seven times between September 2007 and April before holding them at 2% for several months.)

Some economists argue that another rate cut may be the least important step the Fed can take in its effort to solve the crisis.

But I thought all the bailouts and cash thrown at Wall Street were suppose to stop the problems in their tracks.  But I guess more is needed.  Damn!  You people are so gullible!

Needed Medicare Reforms

In the reform plan now being promoted by many activists, the federal government would cover the cost of both Part B and the 20 percent gap. By taking that step, the insurance carriers can almost be eliminate from the process. The savings from dumping the insurance carriers, could be as much as $15 billion annually, according to some sources, including the Obama campaign.

The 2003 Bush MMA legislation did more than just hand money over to the insurance carriers. It also set up a new drug plan to feed the profit addiction of the big pharmaceutical companies. The MMA was supposed to reduce the cost of drugs to seniors, an issue which had become a national disgrace. Although the Medicare Part D did reduce the cost of drugs to some recipients, the basic problem remained: some Medicare beneficiaries in middle-income brackets – the infamous “donut hole” – were excluded from the plan.

The root of the problem is that Bush demanded that before he would sign the MMA, the legislation had to outlaw federal negotiation of the price of prescription drugs, as is the case with Medicaid and the Department of Veterans’ Affairs. Eliminating that provision could result in billions more for the Medicare program, and since congressional Democrats supported that position during the MMA legislative fights in 2003, a solid win for the Democrats in this election could result in a renewed effort on their part to revise the MMA.

Another flaw in the present system is that when the original Medicare law was passed, Congress failed to put the program into the hands of a reliable administrator – the Social Security Administration – to run the program. Instead, they paid insurance carriers to do that. This also must change. The highly successful Social Security Administration should be expanded to include Medicare. That makes sound fiscal and managerial sense. It would also mean a reduction in the duplication of government administration and provide the efficiency and reduced bureaucracy Republicans are always clamoring for.
Lowering the Medicare eligibility age to 55 is another needed reform. Originally raised in the 1990s and pushed by former Sen. George Mitchell (D-ME) after the failure of the Clinton health care plan, such a move could benefit a large number of retirees not yet eligible for Medicare and would dramatically reduce the number of uninsured Americans.

A strong and expanded Medicare program would also reduce the financial pressure on negotiated labor contracts. Now, many unions negotiate with employers for health benefits for retirees. They negotiate to have Part B and the 20 percent gap covered by a labor/management contract.

Lowering the Medicare age to 55 also makes early retirement more feasible for workers who continue to work just to keep their benefits. In fact, some unions negotiate health benefits as an added early retirement feature. So lowering the eligibility age to 55 would reduce the cost of retirees for many industries struggling with costs related to retiree health care.

Taking these pro-worker, pro-labor steps should ease the worries that many union leaders have concerning congressional action for national health care. It could encourage them to be more solid advocates for a national health program.

A beginning, for we must start somewhere.