Debt Free

As we come up on Super Tuesday, a look at the Republican Presidential Candidates and how they’re likely to affect the economy, and more importantly your money, is in order. In the next couple of days, I’ll take a look at Democratic Presidential Candidates and what they may mean for your wallet. You may agree or disagree. That’s the great thing about politics, it sure stirs up the hornet’s nest. 

Sadly, I don’t think I completely with any of the candidates on either side of the aisle. It seems the one’s I agree with the most fiscally and economically will give me problems socially. That’s why we need debate, and more importantly research on candidate’s backgrounds to glean some clues to how they would actually govern, irrespective of their stated positions (which many candidates conveniently change from time to time). Regarding to members of the media; I could care less if you are biased. Most people are. Some media members actually do an admirable job of remaining objective. For the rest: Just be kind enough to actually reveal those biases, so that your audiences can actually see here you are coming from. Contrary to the beliefs of some, talk show hosts are not reporters, they’re commentators, and so can be as biased as they wish. They typically leave no doubt as to where their biases lie.
 

One note here which will go a long way towards revealing my bias on the subject of taxes; those who would raise our taxes always speak about how much reducing or slowing the increase of taxes would cost. I think that says a lot about where their sentiments lie. They conveniently omit any discussion about where that money goes if our government doesn’t get it’s hands on it, and the ultimate effect on our nation’s you’re your personal) economy. Invariably, taxing a nation to prosperity has been shown to be an ineffective strategy for economic development. I’m not in favor of eliminating taxes, as obviously the government needs money to provide services. It would be nice however, if they would actually use our money efficiently and give less of it away. Now that that’s out of the way…..

How are the presidential candidates going to treat your money??

John McCain –
The Senator from Arizona got a nice kick in the pants from the winner take all Florida primary and the endorsement of ex-Mayor Rudy, who looks to have committed a major political blunder by overlooking the earlier primaries. What was he thinking? Who can tell, but I’m sure he has greater political minds than mine on his payroll. Let’s take a look at McCain’s record and statements regarding taxes and economic strategy.

On the Record Support of:

NAFTA – Yes (Nov, 2004)
GATT – Yes (Nov, 2004)
WTO – Yes (Nov, 2004)

Arizona tax burden as a percentage of income (CNN Money, 2006) - 10.1%

Position on Bush tax cuts of 2001: Voted Against. Why? "I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us, at the expense of middle class Americans who most need tax relief," A debate about who actually pays most of the taxes by total dollar amount, who can most afford them, and who creates jobs by investing and creating new business, as opposed to consumer spending in the economy will follow later. Ditto a debate regarding the relationship between total tax revenues and top marginal tax rates.

Voting record on taxes during terms in the Senate includes the following votes:

Most famous for his co-sponsorship of McCain-Feingold Campaign Finance Reform Act. It does seek to control campaign contributions, but from my admittedly biased perspective, I view this as an assault on the First Amendment (right to free speech). I’d rather let candidates have all the money they want from any sources, then force full disclosure, with positively draconian penalties in the event they failed to do so, or were found to be obstructing or confusing the disclosure process. At least we’d know who was buttering their bread. With the M-F piece of legislation the candidates with the personal resources can self-finance their campaign to whatever level they desire. The rest of us, who have to rely on contributions, are effectively screwed.

• Pay as You Go (SB 2020): Voted For (fully reinstate the pay-as-you-go requirement through 2010)–, 11-17-05 , Sponsor(s): Sen Feingold, Russell D. [WI]; Original Bill: Sen Grassley, Chuck [IA]
• Tax Increase Prevention and Reconciliation Act 2005 (HR4297): Voted For (provide for reconciliation pursuant to section 201(b) of the concurrent resolution on the budget for fiscal year 2006) passed Senate 2-2-2006 with 92% of Republicans supporting and 66% of Democrats opposing passage. Sponsored by Rep. William Thomas (R-CA)
• Increase of Top Marginal Tax Rate (S Amendment 2610 to SB 2020): Voted Against. This would waive the Budget Act to enable adoption of an amendment to restore the 39.6 percent income tax rate for individuals earning more than $1 million annually. It would also reinstate the pre-May 2003 capital gains and dividends tax rates, and repeal the scheduled phase out and termination of the limitations on personal exemptions and itemized deductions.
• Earned Income Tax Credit (S Amdt 2616 to S 2020), Senate vote date 11-17-2005: Voted For – This measure would accelerate marriage penalty relief for the earned income tax credit, to extend the election to include combat pay in earned income, and to make modifications of effective dates of leasing provisions of the American Jobs Creation Act of 2004.
  

McCain’s platform and/or stated positions what he would do with taxes if elected includes:

• Lower corporate income tax rate from 35% to 25%
• Maintain Bush tax cuts
• Change the estate tax rate to be 15% on estates over $10 million
• Eliminate the Alternative Minimum Tax (AMT) (Yea!!)

Mitt Romney –
Mitt Romney didn’t serve in the U.S. Senate. His political experience is an executive, rather that a legislator, as Governor of Massachusetts. As such it will be impossible to directly compare the 2 leading Republican presidential candidates on a vote by vote basis. However, there are many clues to how he would try to steer the U.S. economic policy. As CEO of MA, he had to contend with a democratic legislative body, similar to what he would face if he is elected President of the United States. He also has executive experience as head of the Salt Lake City Olympics Organizing Committee and CEO of Bain Capital Management, and head of the Republican Governors Association.

Did not seek reelection for Gov so he could campaign full time for the Presidency (I think all candidates should do this. Take a look at how much time candidates are spending campaigning, while they are being paid by their constituents to govern)

Governor Romney did fulfill his campaign promise to balance the budget without raising taxes, however he did impose some new government fees. This is a nice way of raising taxes without actually raising taxes. He attempted to close a number of tax code loopholes, but was stymied to an extent by the business community (where all the jobs come from) when he imposed fees and raised existing fees to the tune of $170 million for fiscal 2006. After the business community went nuts, about  half of these were eliminated. He earned the affectionate nickname of Fee-Fee while MA Gov because of his affinity for creating new fees and raising existing ones.

Massachusetts tax burden as a percentage of income (CNN Money, 2006) – 10.3%

Romney’s platform and/or stated positions what he would do with taxes if elected includes:

• Reduce the corporate income tax rate from 35% to 20%

• Reduce the bottom income tax bracket from 10% to 7-1/2%
• Eliminate the estate tax
• Keep the AMT, but index it to inflation (Would he first revise it, then allow the index to compensate for future inflation??)
• For taxpayers with an adjusted gross income of less than $200,000, Romney would eliminate interest, dividends, and capital gains taxes. (For those of you who think that’s just another “tax cut for the wealthy” take a look at your 401(k) or IRA, then pop off)
  

Romney quote-  “We have, in the federal government, 342 different economic development programs, often administered by different departments. We don't need 342. We probably need a lot fewer than 100 of those.”  Weather or not he would actually eliminate any government agencies or shrink government if elected is anybody's guess.

He was a frequent user of the line item veto (800+ times, 700 of them later overturned by the State Legislature) when Governor in an effort to reduce spending. He will not have that luxury as President, so what the heck is he going to do?

Stay tuned for more soon..