Wednesday, October 29, 2008

Analysis of some issues

I've begun to compare the issues between the two candidates. It's difficult to sift through the facts; actually it's difficult to find the facts, which is why I suppose the rhetoric gets boiled down to generalizations and mud slinging. For my purposes I've tried to stick with and the Brookings institute, understanding that these things are written by people with inherent bias, as my writings will also have.

Morality (Abortion, Stem Cell research) - Winner: McCain

I actually believe this is a state rights issue and generally dislike federal legislation on moral issues. Intellectually I believe that life begins at conception and therefore believe that abortion is taking that life. I concede that others disagree with this stance. I have friends and relatives who have had abortions, so I am sensitive to their points of view. However, with this point of view, embryonic stem cell research is a mute point for me.

Housing - Tie

The "Emergency rescue" law already has a provision for the Treasury Department to help prevent foreclosures. A credit card bill of rights is interesting and should be explained in more detail, however, the answer for the consumer credit industry should probably be better directed at regulation that works in addition to transparency. My pre-teen kids were getting Capital One credit card offers! It was out of control. Both candidates positions are relatively the same given the circumstance of pre-existing legislation with the exception of Obama’s tax credits.

Immigration - Tie

I guess they’re in agreement on immigration. A 700-mile fence though? I like the idea of shoring up existing legislation. I dislike the idea that legislators believe they always need to create new legislation rather than improve existing laws. I agree that we need better border security. Of course, we could always annex Mexico and then levee taxes.

Economy (Taxes) – McCain

I think they both have bone headed ideas and I’ve been clear on my opposition of the currently constituted “bail-out”, which they both supported and neither made a concerted effort to make better. I oppose the idea of more “stimulus” (Obama) in that it’s good money chasing bad. Seriously, does anyone really understand what is being proposed by either candidate, specifically? Even the Brookings Institute says that neither candidate has addressed the tax issue seriously. The generalizations made by both Obama and McCain appear to be relatively accurate however as expected, exaggerated.

Under McCain’s plan the highest earners would get the largest cut, however it needs to be stressed that the highest earners are already the highest taxed. We live in a progressive tax system that progressively taxes earners based upon their income. McCain’s philosophy is that free cash will flow back into the economy in the form of business growth which will stimulate production.

Obama’s plan favors low-income earners and small business. The philosophy is that free cash in the hands of small business and low-income earners will stimulate the economy in the form of consumption. The top line difference is about 5% for high income individuals and 10% for corporations. This is significant by anyone’s standard.

I don’t think anyone truly believes that the average “Joe the plumber” earns over $250,000 annually. That said, there are many small business owners incorporated as S-corps whose personal income is, for better or worse, reflected as their share of their corporation’s income. Many of these small business owners will most assuredly make over $250,000 on their tax form, yet take home significantly less.

I generally believe that production stimulates the economy; however it seems that neither candidate has put a responsible plan together.

Obama’s plan seems more baked, but I oppose the level of entitlement programs and tax credits that are proposed. I'm not opposed to all entitlement, but I am opposed to indiscriminate spending. I think there has to be budget redistribution possible, which has been discussed very little in either campaign (and I do remember the scalpel versus axe comments)

McCain’s plan’s philosophy is more capitalistic and more to my taste, however it’s problematic in that it severely reduces tax revenue which would require spending control not demonstrated by previous administrations or Congresses. I think the idea of an across the board spending freeze is irresponsible and ad-hoc.

I am ok with the concept of giving smaller tax breaks to lower earners. The spread is dramatic. Under McCain, the lowest percentile will pay a mere 4.5% while the highest earners will pay 28.3%

Under Obama, the lowest percentile will receive a 0.4% credit (that is a tax rate of -0.4%) while the highest earners will pay a whopping rate of 39%.

Perhaps what needs to be examined is the ethics and regulatory abuses by those who are earning billions of dollars per year. It would be nice to have people earn large sums of money in an honest and ethical fashion rather than simply take more of their filthy money from them. Part of the problem with the Obama plan is that its ceiling is too low. Dual income homes will make more than $250,000 and still be living comfortably, but little better than hand to mouth. The ceiling needs to be raised by several orders of magnitude for this to make any amount of sense.

I've commented previously that the tax codes are too complex and complexity breeds corruption and manipulation. We need simplification.


Anonymous said...

Your comment about a Credit Card Bill of Rights is dead on, and this banker agrees. See his article "Does Credit Really Need to be So Complicated" at and at the bank's website at:

Dave said...

Thanks for the comment - it looks like he's on the right track with his credit ideas.