Software Nerd

Tuesday, October 14, 2008

Gathering Storm Clouds

If Obama is President, with a Democratic house, what economic damage would be added to our woes? I think such a government would focus on changes that do not increase the deficit too much. Within that theme, there are lots of bad possibilites:

Social security: Obama wants to raise the tax. This will fund the system, which recently slipped into deficit. On paper, this will also show the so-called "fund" increasing, thus appearing to push social security problems further into the future. With the recent stock-market collapse, alternatives like privatization would be laughed at. So, politically, there's a good chance this will pass. Also, the Dems might claim this is friendly to retirees. Florida is going to be important in 2012.

Unions: Democrats have been trying to push through a "card-check" system that would make it much easier for unions to move into companies like Walmart. In addition, there may be some subtle moves toward protectionism. These would likely be selective, seeking to protect unions in Ohio and perhaps in Michigan. With the dollar already low, U.S. exports are looking more attractive around the world; chance are the government will make some small protectionist moves and claim that the growing exports are their doing! Instead of restrictions on imports, expect hidden subsidies for U.S. companies -- something that will not be too cut-and-dried if other countries protest to the WTO. Expect things like the recent $25 billion guarantee to auto-companies.

Carbon Cap and Trade: Some scheme seems almost certain, since both candidates are pushing for it. The government might try to combine this with giving special offsetting favors to industries in Ohio (and maybe Michigan). Carbon caps can be structured to give existing companies a monopoly advantage. So, expect ertain businesses and unions, to be supporting the environmentalists.

Health Care: The government is going to try to push something through. They probably won't mess with the current employer-sponsored scheme for a while, but we can expect at least some tax on businesses that do not provide health-care. Perhaps they might come up with some rules that raise costs on places like Walmart, by claiming that Walmart let's the government subsidize their health-care costs. I don't think Obama will push to take over private insurance. The country is not ready, and he won;t want those costs on the budget in his first term.

Summary: Those are the most obvious moves that I could think of. The theme will be: important changes, but nothing that requires a tough political fight; only things where today's left-tilting electorate has been well-prepared.

I figure one might as well prepare one's activism and one's portfolio for these things today!

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