The Obama Economic Plan
I’ve previously published my analysis of the McCain plan, which I recommend that you read in addition to this one. Having all of the facts is important for people engaged in a discussion, and it seems that a lot of people like to discuss the economic plan of their candidate for the Presidency when very few seem to have actually researched the topic. This is evident in statements like, “Obama is going to tax us all to death!” and/or, “McCain will give the average American a tax break.” The simple fact is that neither statement is true, and no amount of flinging them around will make them true.
The first thing that one notices about the economy page of the Obama website is that the brunt of the economic plan resides on a single page, navigable by way anchored links. While website aesthetics have no real bearing on the validity of either candidate’s plan for th economy, I can say that I immediately felt a bit of relief upon noticing Obama’s design. This was due simply to the fact that having had to navigate between 9 pages (1 index page and 8 talking point pages) on the McCain site in order to complete my analysis, the simplicity of interpreting a single page seemed somehow more convenient.
This may have an impact on undecided voters as well. Most anyone in the web design business can tell you that a typical visitor only gives you a few seconds—just barely enough time for a few cursory glances and headline scanning—to convince them either to stay or to go. Because it is vital to a candidate that they actually convey a message rather than just demonstrate their prowess with html, this seems like a smart choice for the Obama camp. The Obama site is likely to convey more of their message faster. Now, let’s take a look at that message.
The economic plan page begins with a quote taken from Senator Obama in September of 2007:
“I believe that America’s free market has been the engine of America’s great progress. It’s created a prosperity that is the envy of the world. It’s led to a standard of living unmatched in history. And it has provided great rewards to the innovators and risk-takers who have made America a beacon for science, and technology, and discovery…We are all in this together. From CEOs to shareholders, from financiers to factory workers, we all have a stake in each other’s success because the more Americans prosper, the more America prospers.”
The next most impressing fact about the Obama website is that there are ten bulleted items for discussion, up two from McCain’s eight. And they aren’t just fluff, either:
- Jumpstart the Economy
- Provide Middle Class Americans Tax Relief
- Trade
- Job Creation
- Support Small Business
- Labor
- Protect Homeownership and Crack Down on Mortgage Fraud
- Address Predatory Credit Card Practices
- Reform Bankruptcy Laws
- Work/Family Balance
Immediately following this list, just before diving into the meat of these ten issues, is something that is conspicuously absent from the McCain economy page, and something that is typically missing from most political campaign websites—a link to a form that allows the visitor to provide feedback on the Obama policy, and to provide their own insight into the important issues of this election. Called MyPolicy, this is perhaps the smartest and most inclusive move that a politician has made in my lifetime:
“The best, most comprehensive plan for change in our country will include your ideas and your feedback. America needs a president with a mandate from the people, and everyone deserves a voice in shaping our next president’s agenda.”
Next, Obama does yet another thing that McCain did not do with his site—he lists two major problems with the current economic picture before launching into his solutions. Flat wages and rising prices, including the rising cost of college tuition, are mentioned first. Tax breaks for the wealthy are listed as the second major problem, outlining again the stance of the Obama camp that America needs to stand behind the middle class. Giving tax breaks to Americans who make over $1 Million dollars per year is indeed a problem for someone such as myself, who for the last 4 years straight has filed an average annual income of $8,000.
The first item under this category is likely to hit home with most Americans. Through the enactment (re-enactment, actually) of a windfall profits tax Obama would provide an immediate $1000 emergency energy rebate to help address the rising cost of energy in all forms during this time of economic stagnation. This tax, to be place upon oil company profits is designed to recover some of the “excessive” profit being raked in by the industry.
While one may be quick to jump into an argument over what exactly “excessive” means, it is certain that only a very small percentage of Americans can logically relate to an opposition of such a tax. Americans have been paying more for their energy than ever before, all the while oil companies have been reporting more profit than ever before. True, speculation and investment markets create a sort of buffer, or delay in gasoline pricing. But it does not require a genius to see the inequity inherent in this situation.
If my income remains flat, or that of any other American who is not taking home the 7-figure incomes of contemporary oil executives, why should we pay more for our energy? Why should the executives be paid more and more and more money while we are paid the same as always, all the while expected to simply eat the rising costs of energy? Honestly, do you think it would possible for them to take home so much money if you weren’t paying more at the pump?
There is a direct correlation, I assure you. Otherwise, we could pay pennies on the gallon for our gasoline without endangering the salaries of the big oil executives. This is a move that we’re not likely to see happen. If you’re a business person, think of this as akin to informing your customers that you’ll be raising prices on your goods and/or services simply because you feel that it would be nice to have more money. Think you’ll hold onto your clientele with a policy like that? But when it comes to oil we—the customers—have no choice. It’s not as if we can set up a refinery in our back yards, now is it?
One popular argument against a windfall profits tax is that the income tax supposedly addresses such issues by the nature of it’s scalability. If you take more home, you pay more to the government. But this does not address the ability of the oil industry to “hide” or protect profits by diverting them to proprietary assets rather than to salaries. But let’s say for a moment that every penny of profit were to go straight into salaries, thereby allowing the income tax to “do its job.” The highest of the American income tax brackets, which taxes its members at a rate of 35%, begins at the $349,700 per year level, and extends ad infinitum.
But since the low end of oil company CEO compensation sat at the $15 Million level last year, it’s pretty hard to see where a top end tax bracket of just under $350k per year would have any impact on record income. In fact, it would have none. Every last oil company executive already makes more than this, so how exactly the income tax addresses windfall profits seems to be something of a mystery.
In reality though, it’s not a mystery at all. The income tax simply does not address windfall profits whatsoever. A windfall profits tax such as the one supported by the Obama/Biden ticket would help to balance the inequities between the cost of gasoline—and other forms of energy such as natural gas production—and the salaries of executives versus those of the average American. Rather than making them even richer, Obama would divert some of that money back to Americans who will see an immediate impact on their bottom line.
The next item under the jumpstart bullet is a $50 Billion dollar plan that is designed to protect over 1 Million already existing jobs, and to ease the pain of economic stagnation at the state and local levels. $25 Billion would go into a State Growth Fund designed specifically to prevent cuts in those budgets to vital services such as health, education, and housing. It would also attempt to negate the current trend of economically harmful hikes in property taxes, tolls, and fees.
Clearly the Obama/Biden ticket “gets it” when it comes to addressing federal issues without turning Washington’s back on state issues. Such a fund would alleviate the pressure placed upon state and local governments to provide services in an environment of shrinking budgets. Just the other day Colorado Governor Bill Ritter announced a partial hiring freeze and other measures that he intends to put in place to address a $100 Million dollar budgetary shortfall in this state.
The second $25 Billion would go to a Jobs and Growth Fund intended to prevent cutbacks in road and bridge infrastructure and to fund school repair. Such a measure would allegedly save 1 Million pre-existing American jobs. While we all want to hear about the creation of jobs, which Obama does address later in his economic plan, one cannot expect such news without first having the ability to protect the jobs that are already out there.
If $50 Billion sounds like a lot of money to you, consider the $700 Billion tax dollars that Congress and the president seem all too happy to give to American banking institutions just to prevent them from having to feel the pangs of closing their doors. If they get $700 Billion to bail them out of a situation that they themselves have created, then $50 Billion for American job protection and service/infrastructure support at the state and local levels begins to seem like chicken feed. Personally, I’d like to see those two numbers flipped. $700 Billion into growth, and $50 Billion to greedy Wall Street. Actually, I’d let Wall Street fall on their asses. Call me crazy, but when a bank fails based on bad mortgages that they themselves chose to authorize, I only see one loser: The Bank. I say let the banks fail, and let American homeowners “win the lottery.” Free homes for all who bought from failed banks. But then, I am not a policy maker.
Whatever happened to the conservative axiom of pulling oneself up by their own bootstraps? After all, it is the conservative right that wants to hand over 30% of my nation’s 2007 tax revenue. Seems to me that the American financial sector has a pretty tight grip on my bootstraps, having kicked off their own footwear some time ago. In 2007 the IRS collected 2.5 Trillion dollars from taxpayers, private and corporate alike. That’s 2,500,000,000,000 if it helps you to see all the zeros. Now, pull out your calculator and do the math. $700 Billion ($700,000,000,000) divided by $2.5 Trillion equals .28, or 28% of all the money that the IRS collected in 2007 in the form of taxes. To be sure, there are other sources of federal revenue: tariffs, fines, etcetera, but 28% is a massive chunk of our tax revenue.
That’s nearly 30% of our 2007 tax dollars being spent to bail out these irresponsible executives on Wall Street. Suddenly, spending $50 Billion on job protection and economic growth seems almost inadequate, certainly not excessive by any means. State and local governments, as well as average citizens, will all benefit greatly from the Obama/Biden jumpstart plan. But their support of American families by no means ends here.
Provide Middle Class Americans Tax Relief
Here is where the Obama/Biden economic plan outshines, outstrips, and outperforms the McCain/Palin plan in spades. In fact, it could be said that this one item is the reason behind my analysis of both plans. I hear way too many working Americans—not executives taking home enough money to make that top 35% tax bracket, but people who truly work hard for what they have—saying that they are afraid of Obama’s tax hikes. Folks, if you’ve been told that Obama will raise your taxes, there’s a 95% chance that you’ve been lied to.
According to the Tax Policy Center, less than one percent of American taxpayers report incomes of over $160,850 annually. Actually, it comes out to .4 percent in each of the top two income brackets. Taken together, that’s still only eight-tenths of one percent of all American taxpayers. Fact: both sides will raise taxes somewhere, the difference between campaigns lies in where those hikes will fall. But because Obama’s tax hikes start at the $250,000 level, 99% of taxpayers won’t see any increase in their taxes. Now, that’s 99% by my math, but Barack Obama has stated over and again that 95% of Americans will see no tax hikes. The typical line from the McCain camp is that, “Obama will tax us to death.” Take this McCain ad for example:
An interesting ad when you consider that Obama has made it very clear that his policies are actually exactly contrary to the claims made in the ad. Read on to see what I mean. Obama intends to eliminate taxes completely for seniors making less than $50,000 per year. This will eliminate income taxes altogether for 7 million seniors, and rescind the obligation of another 27 million seniors to file at all. Increase the size of government? Obama is taking measure like eliminating the need for the federal government to process 27 million tax returns. I don’t know what that translates to in terms of man hours, but it’s got to be massive.
Then there’s Obama’s Making Work Pay tax credit, which will give American workers $500, up to $1000 per household. This would nullify the tax burden of another 10 million Americans. It truly begins to smell a bit when you hear Obama’s opposition talking about how he intends to tax us into oblivion. All it takes are five minutes on the respective candidates’ websites to see that Obama is the only one that has tax alleviation in mind for those of us in that lower 99% of the country who don’t have the money to pay higher taxes.
Obama also intends to simplify the filing process for millions of Americans and his plan for doing so is bold. He would make available the option of pre-filled tax forms, requiring only the verification and signature of the taxpayer. True, not all Americans have taxes that would lend themselves to such simplicity, but millions do:
“Experts estimate that the Obama-Biden proposal will save Americans up to 200 million total hours of work and aggravation and up to $2 billion in tax preparer fees.”
The Obama website lists 5 main points under the category of Trade:
- Fight for Fair Trade
- Amend the North American Free Trade Agreement
- Improve Transition Assistance
- End Tax Breaks for Companies that Send Jobs Overseas
- Reward Companies that Support American Workers
Admittedly, the first two come across as a little vague, but then again if we’re talking international free trade law, not many of us are going to be able to read a full dossier on the approach to be taken and understand what we are reading. Suffice it for now to say that Obama and Biden intend to make adjustments to NAFTA, CAFTA, and possibly other Free Trade Agreements that they label as having been, “oversold to the American people.”
The last three items on this list of five deal mostly with supporting the American worker when the market is shining less favorably upon their industry. Obama would make retraining assistance available to Americans who are losing their jobs, before they actually see termination. Also, in order to keep good jobs right here on American soil the Obama/Biden ticket would create incentives for U.S. businesses to avoid the exportation of our national labor needs. They seem to truly understand that it is not okay to pay someone in another country less than they would pay an American simply for the purpose of improving profit margin.
“Barack Obama and Joe Biden believe that companies should not get billions of dollars in tax deductions for moving their operations overseas. Obama and Biden will also fight to ensure that public contracts are awarded to companies that are committed to American workers.”
Following the structure of the Michigan 21st Century Jobs Fund, Obama would create an Advanced Manufacturing Fund to, “…identify and invest in the most compelling advanced manufacturing strategies.” He would also double funding for the Manufacturing Extension Partnership, which has seen budget slashing under the current administration.
“This highly-successful program has engaged in more than 350,000 projects across the country and in 2006 alone, helped create and protect over 50,000 jobs. But despite this success, funding for MEP has been slashed by the Bush administration. Barack Obama and Joe Biden will double funding for the MEP so its training centers can continue to bolster the competitiveness of U.S. manufacturers.”
Under the Obama/Biden plan, $150 Billion would be invested in clean energy over the next ten years in order to bring about vital change in a multitude of green energy areas. In fact, a commitment to clean power that producers can benefit from and consumers can rely upon is another area where the Democratic ticket is pulling no punches. They make it very clear that clean energies are a priority.
Not only do they intend to invest in new technologies, but also in job training programs that will be necessary to fill the personnel needs of companies who embrace, and therefore grow within this plan for a new, greener American energy climate. The Obama/Biden website also mentions their intent to create a federal Renewable Portfolio Standard that will require 25% of U.S. energy production to originate from clean/green sources by 2025—a real, tangible goal that can actually be obtained. Also, they state that they would like to extend the Production Tax Credit for renewable energy.
But the Obama/Biden job creation package certainly doesn’t end with clean/green energy:
“Barack Obama and Joe Biden believe that it is critically important for the United States to rebuild its national transportation infrastructure – its highways, bridges, roads, ports, air, and train systems – to strengthen user safety, bolster our long-term competitiveness and ensure our economy continues to grow.”
A National Infrastructure Reinvestment Bank would be created under Obama’s leadership, with the directive to invest in America’s transportation infrastructure. This bank would be funded with $60 Billion over the course of ten years to accomplish that end. Though the original funding would be federal, the bank would be independent in nature, ensuring that the market has the ability to lend the proper incentives required in order for such investments to succeed. This means that the overall size of government would not be changed by the creation of this bank; improved care for our transportation infrastructure without expanding government, an excellent approach indeed. This plan is projected to create around 2 million new jobs and would create an estimated $35 Billion of new fiscal activity.
Also included under the Job Creation category are the following points:
- Invest in the Sciences: A reversal of our current Administration’s policies would see the doubling of R&D funding and a return to science-based initiatives that are necessary to open the door for the creation and stimulation of tech-sector jobs. This is vital for any nation wanting to compete in the new, globalized economy.
- Make the Research and Development Tax Credit Permanent: Continuation of this incentive will allow American companies to make the tough decision of investing scarce resources into long-term R&D projects. This will be key in maintaining a healthy tech-sector.
- Deploy Next-Generation Broadband: Making data sharing and communications networks more available to a larger number of Americans will mean expanding digital trade, safeguarding and growing broadband technology jobs, and continue America’s march down the path of technological innovation.
Through tax relief and $250 Million in funding annually for a national network of small business incubators, particularly in disadvantaged communities, the Obama/Biden ticket would lend assistance to small businesses in their initial phases. They would work to lessen the burden of double taxation which occurs as the result of a small business owner having to pay both the employer and employee sides of the payroll tax. The $500 “Making Work Pay” tax credit would enable the reduction of this burden.
Yet another area where the Obama plan easily wins out over the McCain strategy is in the area of supporting the working and middle classes. The Democratic nominee clearly understands the vital role that Labor plays in our economy. While giving huge tax breaks to a corporation my be a great way to simulate the growth of that company, it simply has no impact on the take home wages of those workers who find themselves on the bottom and middle rungs of our American economic ladder.
Actually, this is precisely where the “Trickle Down” approach to economics fails because no matter how much money a company makes, the lowly worker can only make as much money as a 40- or 80-hour work week will allow them to make. If they are salaried the amount of additional money that they will see is linked directly to the whims of management, who would more often than not prefer to invest in either expanding the size of their markets or in compensating their executives with disproportionate levels of wealth and privilege.
This is why it is so vital for government to step in and support “the little guy” in a free-market, capitalist economy. It simply is not in a company’s fiscal interest to increase compensation of their employees, no matter how well business is going. Barack Obama has a plan for aiding the American worker.
“Obama and Biden will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. Obama and Biden will ensure that his labor appointees support workers’ rights and will work to ban the permanent replacement of striking workers. Obama and Biden will also increase the minimum wage and index it to inflation to ensure it rises every year.”
Protect Homeownership and Crack Down on Mortgage Fraud
Here again Senator Obama’s plan is favorable for the Middle Class, an important category of homeowners to be sure. His plan would provide tax credits to 10 million homeowners, most of whom earn less than $50k per year. His STOP FRAUD Act would establish a legal definition for mortgage fraud, expand funding for federal and state law enforcement programs, create new penalties for offenders, and enable more responsive, internal regulation.
Obama and Biden would also require lenders to accurately convey the obligations of a borrower when entering into a mortgage through the implementation of what they call a Homeowner Obligation Made Explicit (HOME) score. Comparable to the APR metric, it is intended to be a simplified, standard metric for use by potential borrowers to compare loan products before buying. Buying a home can be one of the most complicated experiences in a person’s life, and Obama clearly understands that this does not have to mean that lenders will take advantage of that complexity to improve their standings.
Obama would also close a loophole in bankruptcy laws that prevent changes to the monthly payments for mortgages in cases of bankruptcy. They clearly indicate that illicit behavior within the sub-prime markets is currently “shielded” by federal law, and that they intend to change that. Predatory lending in any situation is bad, and Obama will work to reduce the impact of such illicit behavior even outside of the mortgage markets, as evidenced by the next issue on their website.
Address Predatory Credit Card Practices
One thing about Obama’s website that I find to be highly valuable is the fact that he does not just feed you fluff text. He gives very specific ways in which he intends to accomplish very specific goals. This was a trait that I found to be altogether lacking from the McCain website. This category of his economic plan includes many of those specificities that I mention.
“Obama and Biden will establish a five-star rating system so that every consumer knows the risk involved in every credit card. They also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.”
As a former card holder myself, I can say for certain that a five star system would have been very useful in making my selection of service providers. I have since sworn off of credit cards in all forms and refuse to open even a line of credit at a department store because of the fact that I wound up paying so much more than I had borrowed. But the credit card rating system is not the only way in which Obama would establish protections for credit consumers. He would also implement a Credit Card Bill of Rights.
This list of built-in, consumer protections would provide the following benefits to consumers:
- Unilateral changes would be banned.
- Interest rate increases would only be applicable to future debt, not retroactive with respect to already existing debt.
- Interest charged on fees would be banned.
- Universal defaults would be prohibited.
- Prompt and fair crediting of payments made by consumers would be mandated.
It just doesn’t get any more specific than that.
The Obama camp also plans to reform bankruptcy laws with the goal in mind to, “protect working people, ban executive bonuses for bankrupt companies, and require disclosure of all pension investments.” In the current American economic climate, these steps are incredibly important. It’s bad enough that Wall Street and corporate executives take home millions more than the average worker in salaries and benefits per year, but to allow such disparate compensation to continue even when those executives have caused the financial collapse of their business interests is pure insanity. Obama and Biden would put an end to such nonsense.
Payday loans have become an extremely unfortunate part of an increasing number of Americans lives. Not only are they a bad choice for someone who already has too little money to make ends meet, but they are a very dangerous one because they can very quickly become cumulative as Americans take out new payday loans to pay off their old ones. It is a vicious cycle that has put more than one person that I personally know on the coals, so to speak. In fact, I myself have an ongoing dilemma with a payday loan provider.
Obama would extend a 36% cap on interest charged for payday loans to all Americans. While 36% may sound high, consider the current ceiling of around 400% and you can begin to appreciate the measures that Senator Obama would like to take to protect us all from these money sapping traps. He would also encourage legitimate lenders to provide small-dollar and short term loans to responsible consumers to help drive the predatory payday lenders out of business.
Perhaps most importantly though, Obama and Biden would reverse the changes made to bankruptcy law by President Bush and his financial advisors, which have cut American consumers off from any protection they might have enjoyed from financial ruin that is directly related to a medical emergency. Bush and his team have changed laws so that when a person files bankruptcy, medical bills are not wiped away. This has meant that if the average American household were to undergo a serious, unexpected medical emergency, they could very have to watch as their ability to earn a comfortable living was destroyed, because no matter what they might do, they would be stuck with the massive medical bills of an exorbitantly overpriced health care industry.
Essentially, this reduces life in working and middle class America to a crap shoot. Will you live a happy life? Roll the dice and see if you get sick. Sorry Jack, but this is an approach to government that I simply cannot support. This is one of the biggest reasons that I feel more comfortable with the Obama economic plan; McCain simply has not built in the kinds of middle and lower class protections that Obama has. If you have any doubt that Obama is doing more to look out for you as a member of these American social classes, just read their policies for yourself. Senator McCain has put very little effort into assisting those of us who bring home 4- and 5- figure incomes as opposed to 6- and 7-figure salaries—a luxury enjoyed by less than one percent of Americans.
Finally, but certainly not least importantly, comes the ever important struggle of “Work to live, or live to work.” Obama and Biden understand that while America remains strong, she does so because of the innovation and solid work ethics of the American people. Even so, it would be unwise to allow a person’s professional responsibilities to trump their personal lives. This is particularly important for Americans who are raising families.
“Obama and Biden will double funding for after-school programs, expand the Family Medical Leave Act, provide low-income families with a refundable tax credit to help with their child-care expenses, and encourage flexible work schedules.”
The Family and Medical Lave Act would be expanded to include businesses that employ 25 or more employees, more inclusive than the current requirement of 50 or more employees. It would also be adjusted to include more instances of need. This means that it would expand to include time for employees to participate in their children’s academic activities, to address domestic violence, and even to care for elderly family members.
Additionally, Obama would create a $1.5 Billion fund to assist state governments with the adoption of paid leave systems. He would double funding to the 21st Century Learning Centers program which would provide upwards of a million American children with access to quality, after school programs, an essential tool for supporting hard working American families. He would also reform the Child and Dependent Care Tax Credit in order to provide up to a 50% refundable credit towards the cost of child care. Also on the list of items under the Work/Family Balance header are protections against caregiver discrimination and the expansion of flexible work opportunities for American workers, including within the federal government.
Barack Obama’s Record
The Obama economic plan wraps up with a list of specific examples which illustrate the Senator’s record of backing the American worker and promulgating job growth and fairness within the workplace. I found this to be a refreshing close to this section, as the McCain site pretty much left me up to my own devices when it came to researching their actual contributions to the forwarding of policies that address the issues at hand.
My Summary
Clearly, I support the Obama economic plan hands down over the McCain plan. I’ve done my best to provide an objective analysis of the two, though I am aware of the fact that I have clearly been outlining the benefits of the Obama plan over the McCain plan from the start. For this, I apologize, but the bottom line remains the same. The McCain plan looks and smells like a Trickle Down, born of Reagan himself kind of mess.
The simple fact is that for as long as we Americans work for hourly compensation, no amount of fiscal vitality is going to improve our standard of living. Our employers could quadruple their profits and we would still be limited to our 40- or 80-hours per week paycheck. It is for this reason that under the “trickle down” model of economics, the wealth reaches down only as far as the pockets of those who own the means of production. The average worker sees zero benefit from this approach.
Obama seems to truly understand the unique position that lower and middle class Americans find themselves in today. And after all, because we comprise some 99% of the population, one would think that we should demand some sort of fair compensation. But while hoots and calls of “socialism” have been tossed around with regard to the Obama plan, the majority of such opinions are wholly uninformed and designed solely to play off of your natural inclination to oppose such ideologies.
Neither Obama nor Biden have any interest in doing away with American capitalism. For, while it is rife with inequity and laden with greed, it is also many thousands of times better than the next thing going. They stand for a strong American economy, based on a strong American worker. And that is why I support them. Hopefully, that will be why you support them now as well.
Thank you for your time.
JMK
Buy me coffee! Sphere: Related Content
