We have the second presidential campaign debate tonight.

I am wondering: What does the outcome of the election mean for investors? (I mean specifically for investors, not things that may impact investors indirectly, like estate or tax tax brackets).

I can think of  a few areas where there is little difference, and a few where the impact is significant:

1. Dividend Tax Rate
2. Capital Gains tax
3. Federal Reserve Interest rate posture
4. Treasury Secretary (and related appointments
5. Energy Policy
6. ?

I am sure there are more, but nothing is leaping out at me from the INVVESTOR’S PERSPECTIVE.


What say ye?

Category: Investing, Markets, Politics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

62 Responses to “OPEN THREAD: Election Factors for Investors ?”

  1. drewburn says:

    I honestly think that resolving the debt crisis, with BOTH Social Security/Medicare cuts AND major tax increases (particularly on the wealthy) would be a boon to the markets. Obama’s original proposal of summer ’11 would have made things much clearer by now. I am much less sanguine on what will happen if Romney is elected. He will have a great deal of trouble cutting a deal with the GOP on tax increases and the Senate won’t go along without that. Obama, on the other hand, is in a great position to make a compromise now if elected.

  2. Scott Frew says:

    Regulatory environment?

  3. Iamthe50percent says:

    I’ve got to disagree with drewburn. SS/Medicare cuts combined with major tax cuts would throw us back into double dip Great Recession which can’t be good for the markets.

    His plan would suck massive amounts of money out of the stream of commerce AND investment. The only winners would be Chinese bond holders.

  4. JimRino says:

    The issue for me, is the outrageous FRAUD we’ve seen the “Republican” party unleash on America when they get control of the SEC, and allow Broad and Deep FRAUD on Wall Street.

    The kind of rampant fraud against America is like a Crime Tax America has to pay when Republicans are in power. Vastly outweighing any inflation from “printing” money.

  5. Let me point out that Clinton, a Democrat, signed the CFMA and the repeal of Glass Steagall. They may have been GOP sponsored legislation, but it passed with Democratic complicity . . .

  6. JimRino says:

    Here’s a summary:

    Bank of America is a “raging hurricane of theft”
    Matt Taibbi
    - BOA: Defrauded anyone it’s done business with.
    - Cheated: investors, insurers, homeowners, shareholders, depositors and the state.
    - BOA: Ward of the State, that depends on state money to survive.
    - Corrupt schemes, overlooked by regulators.
    - BOA has $73 Trillion in derivative bets, moved to the federally insured part of the bank.
    - BOA sold hundreds of billions of worthless securities to pension funds, and unions.
    - Bogus overdraft charges
    - Lies to shareholders.
    - BOA has ignored court orders!


  7. JimRino says:

    Remember Barry Goldwater’s quote on Nixon and the party he created:

    “Too many lies, too many crimes.” – Goldwater.

    Nothing has changed.

  8. TennesseeTrader says:

    With regards to energy policy the two will likely pick different “winners” to funnel taxpayer money to. With regards to most of the other items I doubt there will be much difference at all. Does anyone seriously think that the “self-made” LBO king that benefited from the rigged system is going to appoint people who aren’t for continuing the rigged system? Faces will change and that’s about it. It’s a real shame we have nobody to vote for this election.

  9. 873450 says:

    How soon the inevitable TBTF Bailed Out Again crash buries the 99%

  10. Pantmaker says:

    Whoever wins the election will be president during the second phase of the great recession. I believe we are back in it now. It is Mr. Roarke and Tattoo on Fantasy Island if you think continued recession can be avoided with more of the same balloon blowing silliness. Things are that f*cked up. If Romney wins he will at least have a golden political opportunity to get rid of Bernanke, let interest rates move, dissolve TBTF banks in an orderly fashion, etc. and pin this whole mess on Obama. Opportunity doesn’t mean he’ll do it. Investors need to get short everything no matter who wins. Hopefully Mom and Pop may eventually get a bit of an interest rate to help buy necessities. Douche bag politicians screwed the savers.

  11. TennesseeTrader says:

    JimRino, with regards to fraud…. problem with your assertion is that Obama has done nothing to eliminate fraud. At least the Republicans are upfront about their support of a different set of rules for the banking oligarchy (implicitly supporting fraud). The dems do enough in name to pretend like they are addressing the issue, without really addressing the issue. I’m not sure which is worse. At least the Republicans are honest. Sadly, the same end result.

  12. drewburn says:

    Iamthe50percent: No, I said increase taxes. I should have said MOSTLY on the wealthy. Right now, the wealthy can bear that burden with zero economic effect. I would defer any tax increase on the rest of us. The cuts to SS and Medicare would be down the road, increase age eligibility primarily. Both those things would let the markets know that the US was serious. As far as I’m concerned, we could take the money from the wealthy tax increase and spend it on stimulus. I buy that the demand side is weak. Stimulate demand, by giving people jobs; there’s still all kinds of infrastructure in need of help. (One thing nobody ever mentions: The wealthy are just as capable of blowing money unproductively as anyone else! They’ll buy yachts, planes, etc. that have almost zero long term growth impact.)

  13. drewburn says:

    Tax rates on the wealthy following WWII were extremely high, double current rates. We had a mild, short recession after the war and after that, despite high taxes, times were very, very good for this country.

  14. RW says:

    Iamthe50percent has it right: Even if R&R reject their crank austerianism –highly likely since Republicans don’t give a damn about deficits and national debt fears were always a sop to the bamboozled base — they will almost certainly begin pressing for passage of Ryan’s budget (Romney’s version is actually even more draconian so I’m being generous) and the removal of the social safety net and that will collapse demand and decelerate money velocity.

    That alone will likely drop the country into recession but add the resurrection of Bush II policies — more deregulation and tax cuts accompanied by a return to war-making, increases in intrusive social laws, etc — and the place is going to begin looking downright hellish.


    6: Ryan Budget

  15. MidlifeNocrisis says:

    Bush appointed Bernanke in 2006 originally, and Obama kept him on…. I don’t see any “real” changes there regardless of who wins the Presidency. Meet the new boss, same as the old boss.

    Obama had the “perfect” time for bankster fraud/regulation. Not much happened. Democrats complicit in the repeal of Glass-Steagall, etc…. as already mentioned.

    I don’t imagine there will be significant changes for investors unless the Republicans get control of the Senate (does not appear likely). If the Republicans get the Presidency, the House, and the Senate, I’ll probably have to change my name to MidlifeCRISIS.

  16. Greg0658 says:

    not in – or + koolaid land – don’t matter when @54yo and no kids
    not enough to go around and stuck in an OpSys that has no leeway
    & a disfunctional one at that

    background tune:
    Stonebolt – The Shadow

    thats all I have to say on the matter
    oh “may you live in interesting times”

    this space keeps growing with emptyness to fill
    Meatballs (1979)
    “Tripper: And even if we win, if we win, HAH! Even if we win! Even if we play so far above our heads that our noses bleed for a week to ten days; even if God in Heaven above comes down and points his hand at our side of the field; even if every man woman and child held hands together and prayed for us to win, it just wouldn’t matter because all the really good looking girls would still go out with the guys from Mohawk because they’ve got all the money! It just doesn’t matter if we win or we lose. IT JUST DOESN’T MATTER!

  17. RW says:

    I’ve heard the argument that the Ryan budget and other reactionary policies won’t pass if the Democrats hold the Senate but this ignores the fact that Democrats have never been particularly amenable to party discipline — there are always some stray cats — and there are at least a half dozen Democrats from purple/red states up for election next cycle who cannot afford to unduly rile up their constituents.

    Shorter version, with Ryan as the vote tie-breaker, Romney can pass just about anything he wants just by picking off two or three Democratic senators. If Democrats do not gain a seat in the Senate this round and do not succeed in retaking the House (an unlikely event) then a Romney victory basically boils down to a sweep.

  18. Bob A says:

    Covering 40 million currently uninsured people obviously creates huge additional demand in the healthcare sector.

    Romney promises to kill that. But of course we can trust him thatt will be revived sometime over the next 200 years as each state one by one gets around to doing what they haven’t been unable to accomplish in the last 200 years, and most likely never will.

  19. Forget the politics (and the lizard parts of your brains that control it).



  20. boveri says:

    Markets historically have done somewhat better under a Democratic administration. Should not be any different this time considering that the Pubs want to cut spending – that would be recessionary.

  21. whskyjack says:

    If Obama , we will see mostly more of the same, I’m seeing numbers that we won’t get this current mess cleared away till 2016.

    with Romney, option one – everything goes straight up, option 2- everything goes straight down, or option three- we will mostly see more of the same. All depending on which Romney shows up.

  22. Jim67545 says:

    Look for those who paid for the Presidency to prosper. Look for continued concentration in industries. Look for M&A creating virtual monopolies. I would hate to be a stockholder in the 4th or 5th largest company in anything. Those that pays gets. Forget too big to fail. They’ll get bigger.

    Look for appointment of “like minded” cabinet secretaries and the rest of the underling political appointees. Look for scuttling/castrating/non-enforcement of regulations. Buy companies that would benefit from relaxed regulation. Look for sweetheart deals for the biggies – who contributed big (or who have learned their lesson.) Buy those who have the most to gain by having a government that “cooperates” with (read: does the bidding of) business.

    As an example, look at the appointment of Powell’s son to the FCC under W. Just a few tweaks in the regulations at the request of the telephone biggies, all for reasonable sounding reasons, and goodbye to those pesky competitive local exchange carriers.

    Ultimately the goal is to develop a huge and impervious political campaign funding machine, so powerful that no one would dare contribute to an opponent or stand in the way or vote other than as told. We are so f**cked.

  23. bubbles says:

    It doesn’t matter both candidates support Wall St. and the Military Industrial Complex, so go long Multinational Corporations that benefit from Fascism and short Main St. if you’re into paired trades because it’s only going to get worse for mom and pop!

  24. 873450 says:

    What does the outcome of the election mean for investors?

    Outcome of the election means nothing.

    Since Barney Frank isn’t campaigning for re-election, there will never be another financial crisis.

  25. wally says:

    Investors, being also citizens, will be helped most by whomever gets the economy back up to full speed.

  26. nofoulsontheplayground says:

    Regardless who wins, I don’t think we’ll be seeing a Tobin Tax anytime soon.

  27. CSF says:

    The folk wisdom is that divided rule in DC is good for markets, yet recently I’ve heard “this time might be different”: ie, stalemate in DC risks danger of fiscal cliff and recession. Nearly as bad, a 3-6 month postponement of the fiscal cliff means lingering uncertainty that drags down business investment. A Democratic or Republican sweep, for better or worse, removes this uncertainty. I’m not sure I buy it. Too many variables. Also, see BR on the “uncertainty meme.”

    China policy – if Romney wins and follows through on pledge to declare China a currency manipulator or takes other steps that initiate a trade war with Beijing, look out below. Then again, his election posturing is probably just that.

    Dodd Frank implementation? SEC? TBTF? Does the election matter in these areas? Probably not.

  28. The Retired CNBC Sucks says:

    Barry, you cannot make a comparison on election factors for investors because whatever the Republicans say, it just isn’t true.

    Mitt Romney: It Just Isn’t True

  29. nice_guy_eddie says:

    Posted this on Josh’s site as well but this is my summary of tonight’s debate: http://www.youtube.com/watch?feature=player_profilepage&v=dX_1B0w7Hzc

  30. theexpertisin says:

    I agree with a statement made by a PIMCO official at a private investor meeting I attended three weeks ago:

    The problems are not going away regardless of the election. PIMCO is taking a strong look at selective foreign bonds based in local currency. This speaks volumes about the state of our nation and the decisions implemented by both parties to the detriment of our country.

    I’m diversified with multiple income streams and a crafted portfolio. I reside in a conservative (read SAFE) low tax area. I can survive and likely prosper under the worst of candidates – such as the ones running for President this time around.

    Eat, drink and be merry.

  31. JimRino says:

    Republicans will Create Jobs in CANCER CENTERS nation wide.
    Where do you think this fracking pollution is going to go.

    Barry, I read your book.
    Kind of surprising you bring up only one issue where Democrats were complicit, and not bring up the 19 others where they were not. Or, maybe you’ve forgotten your reading of Bill Black, Real Estate – Banking Fraud.
    - Didn’t you notice the nut Republican tea party Slashing SEC investigation funds last year?

  32. JimRino says:

    I’ve never seen Republicans change policy from popular protest, unless to make things worse for the 99%.
    I have seen Democrats change policy from popular protest.

    That one fact should be the deciding factor in what party deserves to be put into Government.

  33. JimRino says:

    American needs to vote Democrat this year.
    Then build a base of Progressives for the next election.

  34. Iamthe50percent says:

    OK, market factors only.

    If Romney wins dump healthcare stocks, buy defense industry stocks. That was the sector that did best under Bush.
    Stay away from Real Estate no matter who wins. Likewise watch close and be ready to jump out of bonds (and into stocks?) as bond yields rise despite Bernanke attempts to keep them low.

    I avoid banks stocks like the plague. I know they rose well, but the banks are securitizing and writing derivatives on student loans and this time they are sure that they are TBTF. The next bank collapse will be worse and probably impossible to paper over.

  35. JimRino says:

    One last point:

    “Go for a business that any idiot can run, because sooner or later, any idiot is probably going to run it.” -Peter Lynch

    ExxonMobile the perfect example.
    They should be spending 20 Billion a year, 50% of profits, to move into Wind and Solar now.
    What are they spending their money on? A massive Propaganda effort, as if this were Communist China.
    Continuing to confuse America with rubbish “science”, while the world melts down, with ocean flooding in Florida, the US in a massive drought, and this being the warmest September in the last 100 years, with 2 more degrees of warming predicted in the near future. This is unconscionable.

  36. CharlesII says:

    Some market issues in the debate:

    1. Trade wars with China and Latin America
    2. Currency effects and interest rate effects of deficits and/or gridlock
    3. Effects on medical insurance companies of recession and cutbacks in Medicare/Medicaid

  37. Joe Friday says:


    I honestly think that resolving the debt crisis, with BOTH Social Security/Medicare cuts AND major tax increases (particularly on the wealthy) would be a boon to the markets.

    Exactly HOW would “Social Security/Medicare cuts“, which are NOT the drivers of our federal budget deficits, “be a boon to the markets” ???

  38. beaufou says:

    I find it funny that Wall Street is absolutely absent from those debates, Gas prices, Education (loans), healthcare?
    Wall Street is at the core of the debate but seems to be above the fray. Which is bullshit.

  39. thegreatwhitenorth says:

    You Americans are funny. The polarization is just silly and stunting. You can’t engage in a meaningful discussion because you have to support your party no matter what. The debate told us nothing. How can anyone even figure out what is true and what’s a lie or a bend of the truth. To answer Barry’s question my take from up north of you is if Romney can do a decent portion of what he says then economically you should generally all benefit. If the economy is moving in a positive direction we should be able to win as investors. But of course that means we believe Romney’s numbers and that he’ll acutally do it, and after he does what ever he does will there will be any way of measuring the results or will it all just be polarized, manufactured reports pro and con… It’s a viscous circle you’ve trapped yourselves in. How can you ever know what you’re being told is real? And thus to the question – I guess it’s all pretty meaningless in terms of trying to figure out how we can benefit from this election as investors.

  40. Cassandrabelle says:

    It’s astonishing that no one discusses the Fed action of devaluing our currency in these debates. Looks like the people get financially raped from both sides of the aisle…

    I’m a Mike Taibbi fan…and sadly believe the Central Bank Mafia controls all governments–regardless of the figurehead puppets..

  41. Joe Friday says:


    It’s astonishing that no one discusses the Fed action of devaluing our currency in these debates.

    Eh, could be because the ‘DXY INDEX’ is UP, not down ?

  42. Futuredome says:

    Bernanke wants long rates to rise and short rates to fall. The inability for the econ-blogging herd to see this represents the moral decline of America. Go through the fog and understand.

  43. Futuredome says:

    “Eh, could be because the ‘DXY INDEX’ is UP, not down ?”

    Econ-blogger 101: I don’t know anything other than what my toad told me on some site where they mouth off their financier’s talking points.

    Casse’s post represents this failure.

  44. Frilton Miedman says:

    Barry Ritholtz Says:
    October 16th, 2012 at 8:34 pm
    “Forget the politics (and the lizard parts of your brains that control it).


    Thoughts? ‘


    An increase on cap gains taxes changes nothing, not for investment, nor dividends…I don’t know anyone who decides to stop making money or profiting based on tax payment, especially not over a 5% increase.

    IMO, the only factor that will effect the market/economy is a policy that focuses on demand instead of promoting even greater tax advantages to line the coffers of corporate America, whom already sports a $2 Trillion+ cash hoard sitting on the side while food stamps are at an all time high.

  45. SecondLook says:

    I”ll take a shot at some investment consequences:

    If the Republicans win, the situation in the healthcare industry is mixed. Little change for the drug companies, and health providers, but quite possibly, very damaging to the insurers. Why? Because any repeal of the Affordable Healthcare act is very likely to omit ending the two most popular features; no pre-existing ban, and continuing to be able to carry children until they are 26. Without a major widening of the insurance pool keeping those are going to put a hit on earnings for the insurers, unless they substantially raise rates – and that will lead to enormous pressure on Congress (led by companies), to start regulating insurance rates, a la how utility rates are regulated.

    Energy, Oil: Despite all the rhetoric, no real effect. Perhaps a short lived rally if the Republicans win, but the reality is that oil companies large and small pretty much are exploring and drilling at full capacity (side note: one of the constraints on E&P has nothing to do with policies, but a limit on how many skilled workers are available, in the case of some specialties, the retirement rate is exceeding the number trained new personnel).

    Energy, Alternative: Easy call, if you think Rommey will win, short the stocks, if you Obama will, go long.

    Energy, Coal: The same as above, but switch the positions.

    Retailers: A good chance of reaction sell off if the Republicans win, especially companies like WalMart – while I don’t really believe that Rommey would be foolish to get into an economic shoot-out with China, why risk being in those stocks, until it becomes clear what is going to happen?

    Financials: Sharp rally if Bain wins, followed by a hangover the next year. Not obvious what would happen if Obama wins.

    Consumer cyclical: Short term, the election is irrelevant. Longer – well, personally, I think the Republican plan is more likely to do harm than good; then what the Democrats are offering is tepid. Still, I wouldn’t want to be more than lightly long in those companies, if at all.

    Industrials: Same as Consumer.

    Tech: Off in its own world. Election, what election? Got another can of Mountain Dew?

    Telecom: This isn’t one of the sectors that gets much mention, but a more big is better philosophy in the White House will work to its advantage, i.e. Rommey should be good for them.

    Well, that’s some offhand guesses about how it might play out.

  46. wiiilbur says:

    Good question. The UK and other countries are previewing what happens when you elect a conservative government in a country recovering from a financial crisis. If Romney wins we can look for debt and spending reduction efforts leading us into a second recession.

    If Obama wins we will continue in a slow recovery.

    Both of the above answers change depending on house and senate composition. For example if Obama wins, but Republicans win the house and senate, there would be a number of deficit reduction activities such as increasing the payroll tax. This would then slow/stall the recovery.

    Markets react to the economic news accordingly. Given all the evidence we now have that austerity kills a recovery, it is possible markets react to governmental action well before the economics play out.

  47. CSF says:

    Exactly HOW would “Social Security/Medicare cuts“, which are NOT the drivers of our federal budget deficits, “be a boon to the markets” ???

    Because as the boomers retire, Medicare becomes the biggest driver of federal deficits. This is not debatable. The debate is what to do about it.

  48. MidlifeNocrisis says:

    @ CSF

    A few quick searches indicates that military and defense spending this year was somewhere around $1.4 Trillion, depending on the source. It appears that Medicare spending was around $550 Billion. The last time I checked, a Billion was less than a Trillion.

    Defense/war/military industrial complex spending is the biggest driver of federal deficits.

  49. Greg0658 says:

    BR I slept on your plea to get real .. I’m not the trader your requesting info from / I’m the trader who the traders you asked of advice relys on .. a guy who believes that there is a status quo social fabric world to have faith in, wake up into and work in

    I have stocks & bonds in social security, a pension and 2 paid for properties I pay yearly dues to keep – those 2 plats are filled with stuff that I keep warm with gas & electrticity and still have the paperlady bring a dead tree version to (with a car) (I did w/bike as a kid) … that news tells me my state IL is ill and that my electric rates will be rising 15% – and I know from bar talk their frig’s & hvac useage will rise the cost of my beer (or they will dump some frig’s)

    lifes good but I see the cliff – like everyone does (imo) .. I can cut the newspaper, the land line and cable tv-web and still have the good life via other avenues my personal provisions & our community offers

    whats next after those measures ? well I would think something like an Anatevka wagon to a better place .. wheres that ? ummm …


    a whisper – “big boys don’t cry – big boys don’t cry”

    Akrio: “Why do you cry?”
    Subotai: “He is Conan, Cimmerian. He will not cry. So I cry for him.”

  50. cognos says:

    Tax rates dont actually matter much.

    See 1950s, 1960s.

    See Scandanavia (they are RICH, high taxes).

    Its a massively overstated issue. Now low to zero cap gains = lots of weath at the top = bubbles. Simple stuff.

  51. constantnormal says:

    How about …

    * policies that promote a more stable society (less risk in stable societies than in banana republics)

    * “grow the pie” philosophies (e.g., Fordism)

    * creating more incomes, not larger-but-fewer incomes, concentrating on boosting the mean income, to offer a better footing for the top incomes …

    I know, these border on being more social issues than investor issues, but I doubt that this is an area where there are really any sharply-defined lines, more shades of gray … if you doubt that these notions can make you rich, take it up with the ghost of Henry Ford … and the many many investors and customers whose lives he made better, and all of the spin-off and support industries he created when he created our late great manufacturing economy …

  52. gordo365 says:

    I see Romney as big risk (more uncertainty) , little likely benefit ( I don’t get his plan).

    I think Romney would greatly increase uncertainty. EVERYONE’s tax situation would change if we cut taxes 20% and eliminated loopholes. Even if changes were net revenue neutral – some would go up. Some would go down. How is that good for the economy? Simplifying tax code unleashes job creators? Even if they pay the same net amount? I don’t get it.

    Sounds like a shell game at best. At worst, a disingenuous “look at the birdy” maneuver for real plan which is to reduce capital gains/earned income tax burden on rich.

  53. AnnaLee says:

    @CFS says: “Because as the boomers retire, Medicare becomes the biggest driver of federal deficits. This is not debatable. The debate is what to do about it.”

    You mean the debate between paying for dying or just killing old grannies before they cost too much? Or do you mean deciding how much is “too much” money and just letting them die on the streets after their allotment is done without putting them out of their misery? Or maybe you mean addressing a more humane euthanasia law so they can chose between the misery of dying without expensive care or dying peacefully.

    People will take offense to my language but the situation remains that the biggest part of the cost is the dying itself, something everyone faces, not just people over 65. So when we choose as a society we may just be choosing for ourselves. Never can tell what might happen.

    When people quit saying Medicare (and/or Medicaid) and start saying health care, the real cost problem in this country, I will quit making snitty remarks like the one above.

    I have been seeing more and more about doing the same “fixing” for our veteran costs. I guess we just hurt too many young men and someone kept them from dying. Oops? I think we have finally lost any claim to being a nation of admirable values.

    As far as the original question. Doesn’t it depend on the definition of just who belongs to the investor class? It seems to me that retirement money is either deferred or, to a small degree, Roth-ed. So income tax decisions dominate. Almost all the rest of retirement money is money market/CD. That money is doomed until rates go up. So really dividend and capital gains must mostly a non-worker non-blue-collar thing. For the 47% tea-party Romney is a disaster. Which Romney will move into the Whitehouse? I honestly cannot help BR answer this question until I find out who is running against Obama.

  54. NoKidding says:

    As a right winger I should write something rabidly libertarian about Obama’s soak the rich tax policy, however its been four years since he promised it, and he has made no effort to actually do it. I am thus lead to the conclusion that neither the president in particular nor his party in general have any such desire. It is mere talk.
    So far as econimic outlook goes, the big difference for an investor will be the selection of government-backed winners and losers. Someone already said so, but yeah that would probably the biggest actual change. Bye bye Elon Musk, hello Gordon Gecco.

  55. Bokolis says:

    Politics matters in that the question to be answered is, in his second term, will Obama depart from the prevent defense he’s been playing- keep his job vs doing his job- in order to bully through legislation (read: “Change”) necessary to get this taco stand back in business? Or, will he play the role of Clinton, the best Republican president we’ve had?

    As it is, the money still dictates policy and presidents don’t blow bubbles, so there is little intermediate-term impact to the investor.

  56. Joe Friday says:


    Because as the boomers retire, Medicare becomes the biggest driver of federal deficits. This is not debatable. The debate is what to do about it.


    A) The rising federal deficits as a result of national healthcare spending is decades and decades away.

    B) Even then, the not-for-profit and very efficient Medicare is NOT the problem, as it’s costs are rising far slower than the for-profit inefficient private-sector healthcare industry which Medicare must purchase it’s medical care from.

    C) How does Social Security, which is self-financed, contribute to the federal debt ?

  57. Joe Friday says:


    Defense/war/military industrial complex spending is the biggest driver of federal deficits.

    Actually, that’s a distant second.

    According to the independent non-partisan Congressional Budget Office, far and away the number one contributor to our current and mid-term future federal deficits & debt is the massive decline in federal income tax revenue as a result of the numerous rounds of tax cuts which overwhelmingly benefited the Rich & Corporate, enacted by Chimpy Bush and the Republican Congressional Majority during the previous administration.

  58. formerlawyer says:

    I would echo Secondlook’s comments but I am less sanguine about the Financial Sector – the TBTF has to go. If the Republican Party is looking like it will be getting its act together (ie. getting the radicals out of the discussion which is imho not likely) in time for the 2016 elections, President Obama will likely turn populist and trust-bust the TBTF. This can be done by executive directions without legislation which is unlikely to pass in the probably Republican House.

    Romney/Ryan vacuous “tax plan” is a disaster – the arithmetic does not add up – either he blows up the deficit, he rejiggers the deductions to affect the middle class or creates a national regressive sales tax to obtain revenue for his budgetary “principles”.

    I also take a longer view mainly based on the power of appointment to the Supreme Court which one of the executive powers. The next president will have at least one retirement, 2 most likely if President Obama is re-elcted. Aside from the challenge to Roe v Wade, there remains a whole host of corporate friendly issues coming before the Court not just the Citizens United decision. Financial disclosure, shareholder’s rights, SEC enforcement, the new Consumers Protection Bureau and a whole host of regulations (ie. the requirement for a cost/benefit analysis of a proposed regulation) are under legal attack. While judicial appointments do not always work out, I anticipate that if Governor Romney is elected he will appoint friendly judges – friendly to the 0.0001% not the bulk of the mom&pop investors (assuming they exist) or other investors. Those appointments will have long lasting consequences.

  59. MidlifeNocrisis says:

    Thank you Joe Friday. I was thinking in terms of spending, not taxation (or the lack thereof). No doubt you are correct.

  60. Business week commented in a past issue that both candidates will continue to let debt climb and will not address the spending problem. Thus after the elections, look for the same: more hoping, more dispair, more worry.

    Business as usual.

  61. diogeron says:

    FOREIGN policy, since 17 of Romney’s FP advisors were Bush people. Wars on credit cards cost $ and, most importantly, lives. The costs down the road with vet benes (stipulated deserved) will be astronomical. The same neo-cons who gave us Iraq are leading Mitt’s FP team. This has economic consequences for investors.

  62. a2ricedgti says:

    My #6 is the fiscal cliff. My thoughts are similar to user CSF above. Additionally- if Romney gets elected and the sequestration is scheduled to start almost two months before he is in office how is any sort of agreement going to be reached? The delay, especially if exacerbated by the brinksmanship we saw at the end of 2011 by the Tea Party, would put a substantial downward pressure on the markets. This would probably be followed by a quick (stock market index) recovery once some stability is achieved.

    Romney’s lack of clarity on his tax plan is also of some concern and may cause hesitation by those who are planning on making investments that have favorable tax consequences. Like Obama or not, he is far more predicable than Romney.

    Regarding #1 – Dividend Tax Rate. Corporate profits are high right now and they are spending that money via dividends (also high right now) rather than reinvesting/expanding contributing to high unemployment. If dividends were made less attractive via increased taxation that might push more companies into useful allocation of capital rather than directly returning it to shareholders. As far as the investor impact…if dividend tax was increased I might shift more in to higher growth small/mid-cap stocks, but if cap gains was increased at the same time I might move money from the markets to pay off my mortgage.