I was checking out Obama's economic plan since that is what will probably affect my October decision-making process whether to actually vote for the guy or not. Some of the stuff looks very interesting and could be great for certain stocks going forward:
1. Provide Middle Class Americans Tax Relief: Obama will create a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family.
This seems like a pretty good deal depending on where he will draw the "middle class" line. If it is people making less then 100k a year or something then sign me up. If it is for people making like 20K or less then I am 100% against it.
2. Simplify Tax Filings for Middle Class Americans: Obama will dramatically simplify tax filings so that millions of Americans will be able to do their taxes in less than five minutes.
I'm not sure how he is going to do this but if I don't have to fill out that damn list of gains and losses on investments then I am all for it. Also the idea that the government will fill out a tax form for you is fraught with possible errors and omissions. I can see the government short changing you on a refund and you not contesting it because after all you did get a refund. In any case the current 1099EZ is a massive joke and it seems is only good for college students or part time workers so that does need some reform.
3. Fight for Fair Trade: Obama will fight for a trade policy that opens up foreign markets to support good American jobs.
These suggestions seem to be to get rid of NAFTA and try to force open foreign markets for our goods. He also wants to pressure the WTO to stop unfair tariffs and other things. As long as he isn't a trade protectionist then this stuff doesn't seem too bad on the surface.
4. Technology, Innovation and Creating Jobs: Obama will encourage the deployment of the most modern communications infrastructure to reduce the costs of health care, help solve our energy crisis, create new jobs, and fuel our economic growth.
This is the red meat of Obama's economic message in my mind. He wants to double federal funding for basic research, push green manufacturing, create green technology jobs (green-collar jobs?,) and make 25% of electricity generation come from renewable sources by 2025. This would be a massive boost to the solar industry and should push clean coal initiatives as well. So an Obama presidency would mean that First Solar and Sun Power and other solar stocks would go through the roof. However some of these renewable sources better be nuclear though. If Obama is anti-nuclear energy then I am against him. We can't reach these goals with solar energy alone.
He also wants to create more next generation broadband, enforce net neutrality, and push more broadband to rural areas. If Obama creates broadband penetration rates nearly as high and a network that is as fast as it is in South Korea then his potential presidency would be a great success. It is a disgrace that a technology that we pretty much invented is such a joke compared to what they have in other countries. If he does creates a "Broadband for Everyone" initiative then that will actually sway my vote.
5. Labor: Obama will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. Obama will ensure that his labor appointees support workers' rights and will work to ban the permanent replacement of striking workers. Obama will also increase the minimum wage and index it to inflation to ensure it rises every year.
I don't like this one at all. Increased labor strife is something this nation does not need. This would be bad for all sorts of industries from fast food to garbage men. Let's say the US is hit by a nationwide dock worker strike. Billions of dollars would be wasted and our country will grind to a halt just so that one small slice of workers would get a 5% pay raise or cheaper health benefits. Plus, Obama would probably not send out the National Guard to break the strike so something like this would strait-up paralyze the country. The last thing we want to do is to follow the French strike mania system.
Also tying the minimum wage to inflation would seem like a good idea but it would make companies like McDonalds and Wal-Mart raise their prices to compensate. So Americans might get hit by both regular inflation and wage inflation at the same time. Or these companies might just reduce headcount every year by 3% just to keep costs in line.
6. Protect Homeownership and Crack Down on Mortgage Fraud
Obama will crack down on fraudulent brokers and lenders. He will also make sure homebuyers have honest and complete information about their mortgage options, and he will give a tax credit to all middle-class homeowners.
Most of this stuff deals with subprime mortgages and would probably be a moot point in a few years. I have a feeling that no bank will issue a subprime mortgage that is not heavily regulated in the next 4 years. Also variable rate subprime mortgages are now synonymous for pain and foreclosures so most consumers wouldn't sign up for them again under any circumstances.
7. Address Predatory Credit Card Practices: Obama will establish a five-star rating system so that every consumer knows the risk involved in every credit card. He also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.
This seems like a very good idea to me. I think many consumers are still mystified by credit and don't know that it usually takes decades to pay off their credit card bills if they pay the minimum every month. It would be nice to just sign up for a so-called 5 star credit card and now that the spending limit would always be set to $10K and the interest is always 18% or something like that. This would be bad of MasterCard and some banking stocks though since some revenue and most fee growth will go out the window.
8.Reform Bankruptcy Laws: Obama will reform our bankruptcy laws to protect working people, ban executive bonuses for bankrupt companies, and require disclosure of all pension investments.
The bankruptcy law reform would allow a person to file for a "medical bankruptcy" and it might be problematic. Let's say your family is facing a medical crisis and depending on the criteria you could could max out all of your credit cards and buy a bunch of crap and then declare for bankruptcy and get everything for free. Also if you can forgive all of your medical expenses when you file this "medical bankruptcy" then that would have ramifications on the entire medical field. I guess the tax payers will have to pay for all of the drugs and the procedures that that person essentially got for free.
The executive bonus part makes some sense since those execs shouldn't get paid to run a company into the ground Also the pension investment part may be interesting to see what those various multi-billion dollar pension funds actually hold from quarter to quarter.
9.Work/Family Balance: Obama 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.
This seems like a bunch of pro-family stuff that doesn't apply to me. The single person has to foot the bill again so that married people with children can get even more breaks. Also expanding that Family Medical Leave Act so it hits every employer with 25 or more employees would magically make many more businesses carry only 24 employees to compensate.
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