Barack Obama And Basic Economics

I was listening to NPR this morning, and they were discussing the candidates “economic reform plans” and how they’ve recently revised them in preparation for tonight’s debate, where they’ll surely come up.
You hear McCain in a sound bite talking about lowering the Capital Gains tax to try and stimulate investment in companies, etc., etc.
And then they go to a sound bite of Obama saying, and I “quote/paraphrase”, that he doesn’t know anyone who’s had gains in this down economy, and that because of that, frankly, a capital gains tax decrease is useless.
Barack, you fucking moron.
The point isn’t “who’s had gains so far”, the point of a capital gains decrease is to increase the incentive to potential investors, who may be understandably skittish about putting money in the market now. The point is to make it more attractive for people to get in now in what could be described as a “buying opportunity”, while the market is low. Putting that money into the market now, would shore up the equities market, improving the economy.
That Obama doesn’t “get” that fundamental concept, and just sees it as a “tax cut for people who don’t need it”, tells me that Obama is just as fundamentally stupid on economics as McCain showed himself to be with that crazy “let’s buy up all the failing mortgages with your tax dollars” idea he pulled out of his ass at the second debate.
Whichever one you pick, America, they’re going to drive you into ruin, it’s just a matter of which road they take to get you there.
Bob Barr‘s my man, I tell you. Since Ron Paul didn’t do an independent run.

7 thoughts on “Barack Obama And Basic Economics

  1. I’m pretty much right there with you. Obama has no clue what drive our economy, and to pander to his base he says he’s going to “redistribute the wealth”. WTF is that all about.
    Barr is most likely going to get my vote, but with a Democratic Congress (and a possible supermajority) I don’t see anything good happening over the next two years.

  2. Do you think taxes are keeping anyone out of the market? If anything, they would prevent people from getting out. You only pay capital gains when you SELL!
    Now, I encourage all of you who aren’t voting for Obama to vote for Bob barr. he’s a fine man, deserving of your vote.
    I’ll vote for the Winner. As a Yankee fan, you can appreciate rooting for the winning team. I mean, if you think back far enough.

  3. @Dan: Capital gains taxes only come into play on GAINS, and there’s few GAINERS at the moment.
    For me, I vote for the person I feel is best for the job, whether they’ll win or not. 🙂

  4. There are many gainers. Intra-day trading is still seeing pretty good volume. Someone’s winning. You can’t gain, though, unless you sell.

  5. Actually, to a certain extent, Barrack is right on this one. The only people making “gains” in this market are:
    1) short term investors, who are gambling on the movement of the market, and actually fuel the slides with short selling and such. Benefiting these people does nothing to help the overall economy or the market.
    2) people selling off positions held for a long time such that they are still above water. Helping these people is ok, but what you really want is for people to slow down on taking money out of the market and getting people to put money back in. As Issac said, cutting capital gains taxes helps people who sell. There is an incentive to invest in the first place if the take out taxes are lower, but there are better ways of manipulating taxes to add money back into the market. If you want to encourage investment in the now by way of a tax cut, make 401k contributions on behalf of employees more attractive to employers, and/or do a government match (ie a tax break on 401k contributions beyond them being pre-tax, such that employers would apply some of an employee’s withholdings to the employee’s 401k account instead of sending it to the government). I am having a hard time finding a number for the annual contributions to 401k, but I suspect based on the 50 million participants(1), that even a 1% increase in the total contribution could add money in the billion dollar range to the market. (and that is a 1% increase in contribution total, not a 1% increase in contribution relative to salaries — that number would be MUCH bigger).
    (1) http://www.marketwatch.com/news/story/account-balances-rise-401k-savers/story.aspx?guid={B188BE1C-DD3F-4BAD-A7D9-7A2CBB01136D}&print=true&dist=printMidSection

  6. @Josh: I couldn’t disagree more. You’re falling into the same trap Obama is. It isn’t about “who’s making gains today by selling their stock”, it’s completely 100% about convincing people to put their money INTO the market right now, knowing that they’ll make an even better ROI on their money because they won’t be charged as much in capital gains tax when the market rebounds and they start their profit-taking.

  7. Umm, actually what needs to happen is to convince people that the market WILL rebound and that they will have profits to pay taxes on when they sell… I really don’t envision people sitting on the sidelines worried about how much tax they’ll pay if they put their money into the market and actually make money. People are worried that if they put their money into the market that they’ll LOSE money.
    Your logic is the same thing as saying more people will seek employment if income tax is reduced. While people would prefer to pay less tax, having an income to pay taxes on is better than not having an income. The difference in the investing scenario is not the tax on gains, it’s the risk of loss. Right now people are not investing because they don’t think they’ll make money, not because they will pay taxes if they do make money.
    Until people think they will make money in the market, a tax cut on the gains does nothing. Get over that hump, and maybe a tax cut can help build on momentum by sweetening the reward, but until you get over that hump, it really doesn’t help.

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