Obamanomics - July 2008

Change! Barack Obama based his hard fought Democratic primary victory on that single word. He gave lots of speeches and issued even more talking points about how he was going to change our country for the better.

And now he is taking that campaign promise of change to his general election contest against Republican John McCain. But what are the changes he is promising and how will they impact you?

In this month’s column I will focus on several of the economic changes an Obama presidency will bring to our country. In the months ahead, I will shine my spotlight on his intended changes to other domestic and international policy issues.

Some say change is all that most tax payers will have in their wallets when Barack finishes with his restructuring of the tax code. No Presidential candidate has won a general election in recent times by promising to increase taxes on most voters. Let’s hope that trend continues.

Barack believes increasing the dividend and capital gains tax on investments on the so called rich will not affect the middle or lower classes. He believes such passive income should be taxed the same as earned wages. Of course he does not mention that the funds originally invested to earn those dividends and capital gains were already taxed once when they were earned as wages. And that tens of millions of Americans count on those ongoing dividends and gains to supplement their wages or retirement funds.

Perhaps the biggest impact of Barack’s economic plan will be its impact on small businesses. He wants to increase the annual wage level to which social security taxes are collected from the current $ 102,000 cap to a higher level or to a secondary starting point which he is still calculating. That would subject small business owners’ additional wages to the already high 15.3% tax. For their higher paid employees, the small business owner will also be responsible for paying the employer’s 7.65% matching FICA tax on the employee’s higher wages. Those increased taxes will either be passed along to customers or will lessen the pool of funds available to hire new workers, give raises, or invest back in the business.

Barack Obama’s lack of understanding of basic economics is also evident in his plan to impose a “windfall” profit tax on the oil industry. It is too bad Barack is not old enough to fully remember that concept failed during the Carter presidency. The fact is that oil company profit margins are typically lower than most other industries in this country and that any windfall taxes would simply be passed along to the consumer in higher gasoline costs. But Obama does not care about $ 4.00 gasoline since he recently said that he only wished that the increased gas prices had taken place more slowly. Apparently his plan for the greening of America is to hope that conventional energy sources get so expensive that only alternative sources will be desired by the consumer.

I wish I had more space in this column to detail the countless other failings of the Obama economic plan including his failure to talk about reducing government spending. But I have confidence that John McCain will do that job for me as the presidential campaign continues in the months ahead.