Obamanomics Vs. McCain

Did this for NGLCC BIZ -- a comparison between the two candidates' policies on four internal issues: taxes, health, energy and foreign trade. Broken into four parts, below is the first installment, on taxes.

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While comparing both the candidates’ economic agendas, one thing is quickly made clear – both have retained the basic economic thrust of their parties. That said, both claim to have tinkered where they can to add their own touches.

Obama, for instance, has admitted to being more accommodating of free market principles than many of his fellow democrats are, even publicly appreciating some of Reagan-era policies. His idea of solving an economic crisis may be setting up a government program to address a market failure, but then he’d also like to exploit market dynamics to drive that program in long-term. Also, in an interview with The New York Times, he proposes what he calls a more ‘moral’ capitalism. The best example of this ideology would be his proposal for a windfall profits tax on oil companies. It defies everything that free market economics teaches, and yet, according to his campaign, makes up for the unjustifiable tax breaks the energy industry has received in the past.

McCain on the other hand has tried to reaffirm his reputation as a reformer, by declaring an ambitious agenda to combat federal corruption and discourage corporate lobbying for incentives and tax breaks. Simultaneously, his plan has also retained the traditional republican thrust on cutting taxes and providing the largest investors the largest incentives, promoting the same economic trickle down formula made popular by Reagan – where the effects of reducing taxes on corporate investors are expected to trickle down to the entire economy and fund the budget deficit.

In this series of articles, I've looked at certain elements of the candidates’ economic policy from a business perspective – taxes, health care, energy and trade. This is the first installment, on their tax policies.



Taxes - Reading Between the Lines

Income Tax

Obama seeks to propose a tax-cut program that is friendlier to the lower-income families, but not so much to the wealthier class making more than $250,000 a year. Interestingly, despite not cutting taxes for the entire population like McCain will, Obama’s tax plan will produce annual net savings of $900 for the population on average, as compared to McCain’s $200. Research by the non-partisan Tax Policy Center (TPC) shows how traditional big tax breaks given by Republican governments in the past haven’t always benefited lower and middle families. A major reason for this is the fact that for lower and middle-income families, it is the payroll tax – and not the income tax – which takes the most away from them. Obama’s other major cut is a $500 credit applied toward income taxes based on payroll taxes already paid.

Although unsympathetic to the top income earners when put in context with McCain’s plan, whose biggest tax reduction is for those with incomes above $2.87 million, Obama’s tax increases don’t overburden the segment. They do take away Bush’s tax cuts, but still do not entirely reverse the huge pre-tax gains made by the top 1 per cent earners whose incomes have nearly doubled in the past decade.

McCain’s campaign has promised to permanently extend the 2001 and 2003 tax cuts, increase deductions for taxpayers supporting dependents, reduce the corporate income tax rate, and allow immediate deductions for investments in certain capital equipment. His greatest tax cuts – nearly 5% - are for those making above $2.87 million. His remaining tax cuts range from 1 to 3 per cent, applicable to those making between $66,000 and $227,000.

Corporate Income Tax

One of the key emphases of McCain’s tax policy has been how it benefits the business sector. McCain has promised to cut the corporate income tax rate from 35 percent to 25 percent, which will indeed result in a significant tax break for the C Corporations. For the small business sector though, this may not be as beneficial as a majority of small corporations are S Corporations, partnerships, limited liability corporations (LLCs), or sole proprietorships, none of which pay taxes at the corporate rate. In fact, the tax rate applicable to them is the owner’s individual tax rate.

Capital Gains Tax

Obama plans to raise the tax rate on dividends to 20 percent from the current 15% for those making over $250,000. McCain supports maintaining the current rate, set by Bush, and argues that higher capital gains taxes affect millions of middle-income Americans.

For small business owners, again, it is first important to consider that as all S Corporations and LLCs are prohibited from paying dividends, a business would have to have investment income or be a "C" corporation to be affected. That way only the very high-income taxpayers who report the most capital gains will benefit. Many more Americans make capital gains on corporate shares they hold within tax-deferred employer-sponsored retirement plans, on which they don’t need to pay capital gains taxes. Accruals within those accounts are tax free until distributed and then are taxed as ordinary income. Hence it is likely that the 5 per cent tax hike will not affect a majority of small business owners.

The Estate Tax

Both candidates have proposed to increase the estate tax exemption and reduce the estate tax rate compared with current law in 2011 and beyond. But McCain has shown a greater opposition for the estate tax, and would cut the tax much more than Obama. Under Senator McCain’s proposal, just about 4,000 estates would be subject to tax in 2011 - less than 0.2 percent of the 2.5 million adult decedents. Under Senator Obama’s proposal for estate taxes, about 8,000 estates would be taxable in 2011.

A near repeal of the tax revenue as suggested in the McCain proposal will primarily benefit a very small group of extremely affluent families, which is a less progressive tax structure. Also, it is undecided though just how much the estate tax affects the economy, as its effects on working and saving are not clear. TPC reports that where the tax may discourage some wealthy people from saving or working by reducing the size of their after-tax bequests, it may influence others who have a fixed target amount of wealth they want to transfer to save more, in order to make up for the expected tax liability. The tax may also encourage some potential heirs to work and save more because they are less able to live well off the proceeds of their inherited estate. Statistics show though that reducing the tax doesn’t greatly influence the overall economic activity.

Tax Cuts and the Budget Deficit

Economists have stated that both candidates’ tax plans will cause huge budget deficits. Both have promised to offset the deficit with spending cuts. For instance McCain emphasizes cutting down on earmarks and federal corruption; Obama wants to cut down on war spending and call the troops home. But both candidates sorely lack key details about all the measures they will take to stop the federal deficit from ballooning in the next five years.

TPC has found that Obama's tax-reduction plan would increase the national debt by $3.5 trillion by 2018. McCain’s plan to leave existing tax cuts in place rather than let them expire would add $5 trillion to the debt.

The non-partisan Congressional Budget Office (CBO) also offers a dismal forecast, projecting a record deficit of $438 billion in the coming year due to the slowing economy, which would decrease tax receipts to the Treasury. CBO has said that the deficit is a result of decrease in tax revenues and increase in federal spending in the past years. How do the candidates then plan to sustain the huge tax cuts each has promised?

The reason for their elusiveness, apart from election politics, may be that every action they take with regards to tax credits or other spending ultimately depends on the actual budget realities they inherit once they come into office.

Lastly, it is also important to consider that each candidate’s plan stand much greater chance of implementation if the candidate’s party controls part (or all) of congress – an advantage that Obama clearly has over McCain at this point.

Stop ignoring Kucinich!

I don't care if most of America and all of television media consider Dennish Kucinich a nutjob -- his speech at the DNC deserved at least a few minutes of airtime on cable TV, so joyfully dedicated to 'election historians' and coverage of sullen Hillary supporters.


Instead of sticking with good old CSPAN that broadcast the convention SANS the historians and commentators, we decided to support the usually wonderful PBS which, sadly, turned out to be way too dedicated to David Brook's analysis of whatever it is that he thinks he's analyzing. When it wasn't letting David Brooks analyze whatever it is that he thinks he's analyzing, its anchors imitated their more glamorous peers at other cable TV networks in incessantly theorizing about what Hillary will say and how Hillary's supporters will feel and what Hillary supporters needed to feel. As much as I love Lehrer and Ifill and Woodruff, they can't just talk over the entire ten/fifteen minute speech of a recent presidential candidate getting the crowd on its feet right behind them, right as they speak.

Predictably, Hillary's speech was the only uninterrupted one throughout the day other than keynote speaker Mark Warner's speech. Poor Mark Warner, who made a pretty decent speech, was ignored largely by the commentators who even then just couldn't finish analyzing what Hillary will say and what Hillary's supporters will feel.

BOO! Watch Kucinich's speech here.

Chomsky on Pakistan

AAJ TV - February 2, 2008

Eighteenth Century Toilets and Writing for No Reason

So there were no desi food stalls to stuff my face at, no green flags, no national songs. Just my crystal clear memory of torn little paper flags kissing the ground, and buildings wasting electricity in the name of celebration. But looking so criminally beautiful in the process.

Instead, over the weekend, there was my family (insert smiley here) and George Washington's darkly sparse mansion: gaudy paint, thousands of acres of beautiful slave-grown plantations, unmarked graves of the slaves who had toiled at them, and eighteenth century toilet drawers. Literally drawers actually, removable and all.

Also, the incredibly dull air and space museum...how does aviation history manage to be so supremely fascinating and supremely dull at the same time? I figure it's punishment for not getting in line for the simulator rides and relying on the engines for entertainment instead.

I suppose you could call that a rather productive weekend. And today, I'm home with the rare chance to sign in here and write aimlessly for a change, without feeling once that my sole prowess (?) should be contributing toward my economic progress at this time of the day.

It hasn't come to this yet, but for certain types of flighty individuals, the best way to end up hating the things they love to do most, is to acquire them as a profession.

Happy independence day

August 14, 2008 -- Happy independence day to all Pakistanis (and to all Indians who celebrate their independence tomorrow).

So I'm trying to find out what homesick Pakistani-Americans in DC are doing this weekend to celebrate, it being my first independence day as one. I need something to anchor my once-a-year patriotism with -- basically stuff my face with food at desi stalls blasting forgotten national songs and forget that really, there is way too much to feel cynical than optimistic about this independence day. As it's been for a long, long time.

World's Worst Person Decides to Go into Marketing

'I'm Thinking...Marketing,' Says Horrible, Horrible Man

New York, July 31, 2008 — Twenty three year old Louis Deenan, undeniably the most detestable, loathsome individual ever to walk the earth, willfully decided Monday to devote his miserable life and all of its awful ambitions to the field of marketing. "I think it's the career path that will best utilize my networking skills and my ability to think outside the box," said Deenan, whose smug, gloating tone and shit-eating smile just make you want to punch his goddamn teeth in. "So I'm definitely thinking marketing. Either that, or PR." Deenan's mother refused to comment on why she didn't abort the despicable pile of human excrement when she had the chance.

Reported by The Onion

Mamma Mia: Good for Laughs, Chest Hair

So Mamma Mia!...was an unlikely choice for a movie I'd go to the theatre to watch. Not just because it's a bag of sap and some seriously over-the-top acting (although that should be my prime reason) but because it's a musical. Musicals and Madiha don't go together, not even when they're oscar-nominated, artistically gory ones like Sweeney Todd. But I gave in to the secret, appropriately-ashamed Abba lover sitting inside me. Who knew? (I didn't, for one)

Ironically, I hadn't heard more than three or four of Abba's songs before watching the movie with both of my sisters in law this Sunday. I'd only heard a few: Thank You for the Music, Mamma Mia!, and I fail to remember the third one. But I always hummed along them whenever I heard them. In all of the bubblegum pop I've had the fortune to hear in my life, their brand was definitely the hummy-ist (Most hummable? Hummy-ist sounds better). And then I saw that gynormous advertisement in Times Square a few weeks ago and felt the silliest and strongest urge to go watch. Some advertising.

Anyhoo, so I saw the movie, not the advertised broadway musical because I love Meryl Streep more. It's silly as hell, contrived as a twenty year old musical usually will be, and plus it's poorly directed. But listen, those songs...they make you want to get up on your seat and dance. Or at least sing along under your breath and shake a little if you're in a movie theatre (recommended). And a couple of hours of mindless laughter, watching Collin Firth pull another man into his arms and Pierce Brosnan tear off his shirt (and then dance in a chest-open spandex suit) is worth the ten bucks.

At all other times though, you find yourself marveling at the nerve of the film-makers casting a male lead in a musical who cannot sing to save his life. Which also made me think of the following points:

1. Why can't the prime difference between a movie musical and a broadway musical be having the option of casting non-singing actors solely based on their acting/dancing/box-office value? And giving a job to a lesser known voice-over singer. After all, Broadway actors won't carry a Hollywood movie, Hollywood stars will. Why be a stickler for a rule that can ruin the musical aspect of your musical? There's too much to lose!

2. Is Pierce Brosnan the only hot 55 year old in Hollywood with the full chest of hair defining the Abba-era? (Maybe, which explains why he was cast despite his pain inducing singing)

Oh whatever. PASSED, for guilty pleasures are the most fun:)

P.S. Warning: The writer's perception of the musical might be seriously flawed, since she was laughing throughout the movie, even through the mother-daughter weepie scenes. Serious Abba fans and moms with daughters might not want to use this review as a fair valuation of the movie.

Dancing Fool

Don't know much about dancin'
Thats why I write this song
One of my legs is shorter than the other is
'nd both my feets too long

-Frank Zappa in "Dancing Fool"

The Cartoon Mocking the Cartoon

Now here's protesting done in style:). Gotta love Tom Toles.

Much ado about nothing

So there's the expected hue and cry over the latest cover of The New Yorker which shows a cartoon depicting Obama in the oval office, dressed in the republican-fantasized MuslimTerroristAttire (good detail. The shalwar is just a tad above the ankle). Bumping fists with him is an angry Michelle Obama with a menacing afro, touting a machine gun and caustic smirk that seems to transmit a call for the white man's blood. Burning in the fireplace beside them is the American flag.

I personally thought the cartoon was funny when I first saw it. It isn't much of a work of art really, that should even warrant the disussion that it has sparked. In fact the joke's rather simplistic. A no-brainer for the average reader of the sophisticated magazine; just poking a bit of fun at the the outrageous Obama rumor-brigade run by the right-wing media and politicians throughout the country.

The cartoon would have made no story if it had in fact been limited to the eyes of the readers of The New Yorker which, incidentally, is not even usually available at your average newsstand, especially not to the innocent, easily-led sheep in the rural heartlands of America.

But as it goes, it's four months to the election and anything smelling of Obama controversy is tasty meat for the media at this time. Obama campaign issued a hurt, angry response; Obama supporters called for an apology and rejected the 'satire' arguement. Some furiously explained why an exaggeration of untruths about Obama does not compare up to older cartoonic depictions of exaggerated truths about Bush and Cheney that have graced the magazine's covers in the past.

Of course, many left-wingers are less perturbed. That's The New Yorker for you, they say. They're just making a joke which isn't even very new.

Here's what I think: I understand the fears of Obama supporters, that the monstrous Fox News and its followers won't get the satire and instead probably end up using the cartoon as their desktop backgrounds to remind them of Obama's general badness.

Yes, they will.

But, as Taimoor pointed out to me earlier this morning, the publicizing of the cartoon keeps Obama on the cover and for most part, does make everyone who might have forwarded an Obama rumor email in the past look like an idiot. At least to the others, if not themselves. Unfortunately though, satire is not the most popular medium of information and most popular media like Fox News are very literal and easy on intellectual stimulus. So for all those who watch Fox News for News, nothing much will change. The cartoon will just be a minor reinforcement of beliefs which weren't going anywhere anyway.

For those who don't watch Fox News for their news though, one look at the cartoon should just make them smile derisively and consider the ridiculous in the Anti-Obama rumor machine. Again, a minor reinforcement of an opinion they probably already had.