Why I am Voting Obama A former Republican, turnedindependent’s views on this election
Why am I doing this?• I am making this guide to show my family and friends the effects of Governor Romney’s plan• I support President Obama in many efforts and disagree with him in others – With that said, I find myself largely in agreement when his policies are contrasted to Governor Romney• I realize many people don’t have too much time to spend on this stuff, so this is my effort to make things easier• Every source from my research is included
Contents• Tax Policies – I will show you projections (backed by hard data) on what Romney’s plan means to you. How it will affect you and the rest of the country.• Reckless Defense Spending – I will show you Romney’s defense spending plan, how it compares to what the Generals want, and how it trends.• Very Short Sighted Energy Policies – I will present a case for why this might be the biggest issue no one talks about…• The real reasons for the huge debt during the recession – I will show graphs to show where federal dollars are being spent.• How does our recovery look? Are we headed in the right direction? – We are trending in the right direction in almost every facet. More importantly, we are outpacing the rest of the world.
Governor Romney’s Tax Plan (Individual)• Make permanent, across-the-board 20 percent cut in marginal rates• Maintain current tax rates on interest, dividends• Eliminate taxes for taxpayers with AGI below $200,000 on interest, dividends, and capital gains• Eliminate the Death Tax• Repeal the Alternative Minimum Tax (AMT)• All of this must be done while maintaining revenue neutrality (total taxes collected will remain the same, just a different distribution)• Source – http://www.mittromney.com/issues/tax
My Research on the Plan• The basic tenet of lowering rates while reducing deductions is a great architecture. Unfortunately the math does not hold up.• The plan will raise taxes on lower income families to finance tax cuts for the most wealthy – Romney claims this promotes growth, but historical data does not support this – A report from the Senate sheds light on this assertion and proves it false • http://www.dpcc.senate.gov/files/documents/CRSTaxesandtheEconomy%20Top%20Rates. pdf• Even so, the only way the plan can remain revenue neutral is to rely on higher levels of economic growth than seen since WWII. – This is very unlikely to magically happen, so the plan will likely ADD to the deficit in any case• The following graphs summarize the Tax Plan’s effects very well• Sources for the following graphs: – http://www.taxpolicycenter.org/UploadedPDF/1001628-Base-Broadening-Tax- Reform.pdf• For more information on the assumptions and a quick FAQ, check out this link – http://www.taxpolicycenter.org/UploadedPDF/1001631-FAQ-Romney-plan.pdf
How do the Tax Rate Cuts and Deduction Cuts affect families?• Base Broadening is a euphemism for deduction elimination or caps. This is not a bad idea if done right. Unfortunately, Romney has taken several deductions off the table• Once you include the Base Broadening (elimination of deductions), we see that families making less than 200K receive a net tax increase, while the most wealthy see a larger and larger decrease!!
How will Romney’s plan affect my income? • The column with the blue circle shows the effect of the 20% tax cut, the green oval shows the effect of the base broadening, and the red oval shows the net change. A positive number means taxes go up, a negative number means taxes go down. • When you finally look at how it affects income, one sees that a revenue neutral proposal following Romney’s guidelines raises income levels for the top 1%, with an emphasis on the top .1%. • Everyone outside of the top 1% will see a net decrease in income level. You will have more money taken away with this plan while the most wealthy pay less.
How does this affect the majority of Americans? By percentage of income?• Everyone outside of the top 5% will see a net decrease in income level• The top 0.1% see the largest effects of the policy, with a 4.4% gain for income
The Gist• The general plan here is to get larger cuts to the most wealthy and rely on that wealth to spread to the lower classes.• Historically there is no correlation between lower tax rates for upper income and greater prosperity. In fact, the trend is the opposite – The following paper shows there is no correlation between the two – http://www.dpcc.senate.gov/files/documents/CRSTaxesandtheE conomy%20Top%20Rates.pdf• Even so, can you justify financing tax cuts for the most wealthy at the time when middle class families are struggling? I cannot.
Obama’s plan• Obama’s plan is not perfect by any means either.• It calls for a raise in rates to those in the two highest rates.• This would affect everyone making over 200k a year.• The rates would increase to the Clinton-era levels.
What is Romney’s Defense Spending Plan?• “…with the goal of setting core defense spending—meaning funds devoted to the fundamental military components of personnel, operations and maintenance, procurement, and research and development—at a floor of 4 percent of GDP.”• Source: – http://www.mittromney.com/issues/national- defense
Four percent? What gives?• Tying defense spending to GDP essentially handcuffs spending to wartime levels (3.4% currently)• We are expected to get out of the Afghanistan war in 2014• This means that we will continue to spend more money on defense, even after the end of our wars• How does this trend? Not well…The next few charts tell the tale well
Let’s explain the next slide…• The following chart details military spending across a wide range of years. – Source: • http://ricks.foreignpolicy.com/category/topic/defense_spending• You can see the spikes for spending during our various engagements – Spike in 1950 for Korean War – Spike in 1969 for Vietnam War – Spike in 1980s for Cold War – Slight spike in 2000’s for Iraq and Afghanistan • Note, President Bush never included the Iraq and Afghanistan wars in the official budget • They were recorded as “Emergency Measures” and kept off the books. If they were included the number would be higher than the Korean war spike – This is part of the reason why the deficit suddenly grew, as Obama put the wars on the official budget on his first day of office
Defense Spending Trend• The Romney Ramp up assumes it creeps up by .1% every year until reaching 4%• The Romney Immediate plan pegs it at 4% on day one• The Sequestration are the automatic budget cuts that the whole debt ceiling thing led to• This results to an additional 2 TRILLION in spending OVER what the Generals want!!!
Seem fishy? Let’s look at reports by different sources…• CNN money projects the same 2 trillion addition – http://money.cnn.com/2012/05/10/news/economy/r omney-defense-spending/index.htm
Another source’s input. This one is the CATO institute!• Even the CATO Institute (a right leaning libertarian group) thinks this plan is insane and corroborates the 2 TRILLION number – http://www.cato.org/publications/commentary/romneys-$2-trillion- gimmick• “The most striking thing about Romneys proposal is the staggering cost. Based on the most likely of three different sets of Congressional Budget Office projections, defense spending will total $637 billion (or 2.7 percent of GDP) in 2021. Romneys plan in that same year would cost taxpayers $900 billion. Cumulative defense spending for the ten-year period from FY 2012 to 2021, according to CBO projections, would total $5.811 trillion. Romneys plan would cost $7.857 trillion, a difference of $2.046 trillion.”
Where we are now in terms of defense spending...• 53 Cents of every tax dollar goes to defense spending• See this link for a short video detailing our current spending• http://www.youtube.com/watch?v=TNrRkL48 zio• Do we really need to increase the amount of money we spend on Defense?• Right now we spend more than the next 16 countries combined.
Governor Romney’s Plan• Empower states to control onshore energy development• Open offshore areas for energy development• Pursue a North American Energy Partnership• Ensure accurate assessment of energy resources Restore transparency and fairness to permitting and regulation• Facilitate private-sector-led development of new energy technologies• His likely choice is Harold Hamm, an Oil man who holds rights to more American Oil than anyone in the world. – http://ethanolproducer.com/articles/9231/profiling-team-romney- continental-resources-harold-hamm – http://en.wikipedia.org/wiki/Harold_Hamm
Why is this important?• Romneys plan is focused on domestically produced oil• It would greatly permitting process and allow for more drilling on federal lands• The claim is that this will result in energy independence for the U.S.• There are some questions though…
How much oil do we have access to?
Seems like North America has quite a bit.. • While North American independence can be achieved, that unfortunately does not keep us from the mercy of the rest of the world • Oil is a global commodity, meaning that even if we produce more oil domestically, the price is set by total demand. • The growth for price of oil will be at the mercy of increase global demand coupled with diminishing supply…
Global Demand is expected to grow…Alot• Global demand is expected to increase by over 50% by 2030• This means increased prices assuming constant production• How does our production look?
Oil Discovery is dropping dramatically• Global production will eventually feel the hit of decreased discoveries• Do we want to tie ourselves to Oil, knowing that it’s days are inevitably numbered?
What’s the Alternative?• Brazil has a hugely successful Ethanol automobile market. They transitioned to Ethanol to run their cars after the 70’s oil shortage – Ethanol accounts for 50% of their energy source in their automotive market – http://en.wikipedia.org/wiki/Ethanol_fuel_in_Brazil• We actually produce more ethanol than Brazil! – If legislation is passed to incentivize flex-fuel cars, we can put a larger dent on oil imports – Other countries will then be incentivized to increase production, creating larger markets and availability
How did the Debt begin to Pile on? Is it Obamas fault?• Most of the debt is due to three sources – Iraq/Afghanistan War – Bush’s 01/03 Tax Cuts – Economic Downturn• Lets look at another version of this chart to get the details…http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/05/the-three-best-charts-on-how-clintons-surpluses-became-bush-and-obamas-deficits/
Reasons for the Debt• As can be seen, the huge effect of the Bush Tax cuts cannot be understated – They were passed without decreasing spending – Raising Taxes during a recession makes it larger, so the tax cuts had to stay• Wars are also hard to get out of. – Although we will be out of Afghanistan in 2014, we will continue to pay interest on the debt for years• The stimulus and TARP pale in comparison – They are the two smaller blue areas just above the gray
Did the Stimulus work?• The following few slides highlight figures from a presentation that followed several economic indicators before and after the collapse – http://www.businessinsider.com/charts-that- should-get-obama-reelected-2012-10?op=1
Ok, the Stimulus seems to have done well. What about unemployment though?• When President Obama entered office we were losing 800,000 jobs a month. – That is almost a million jobs every month – That is TWO Miami’s worth of people losing their job every month• The Stimulus helped reverse dropping confidence and has resulted in a slow, but consistent growth.• We have added jobs for 25 straight months! – Lets look at it detailed
Job Record• Notice how it mirrors the graph in slide 35• http://www.barackobama.com/jobsrecord/
How do we compare with the rest of the world? Has our recovery been slower or faster?• This is a graph for Unemployment. The lower the percentage the better.• The dark blue and yellow are Europe, Red is the US, Light Blue is Japan• http://www.theatlantic.com/business/archive/2012/08/a-graph-that-makes-obamanomics-look-good/261249/
Let’s Focus on the Recovery…• As you can see, Europe continued to trend upwards in terms of unemployment• Japan is started to move down to normal historical levels• The US has seen the fastest recovery, with unemployment dropping much faster than Japan• Overall the trend is very positive.• Assuming we don’t hit another bump we should be back to normal numbers in a couple of years.
What about Healthcare??• This is way too long of a topic to hold to a few slides• Overall, our current model is unsustainable and the most expensive in the world – We spend 17% of GDP on Healthcare, the closest country spends 12%• The Healthcare Law passed by President Obama is not perfect, but it will improve access to majority of Americans• Best of all, it is modeled after PROVEN Healthcare models (Switzerland) that have been shown to alleviate the issues we see in our system• It is better to tweak the existing model than to hope for a more patient friendly model to pop up• For more information see this great editorial – http://fareedzakaria.com/2012/03/19/health-insurance-is-for- everyone/
Where to we move now?• President Obama has done a commendable job getting us out of the recession• Even business-friendly publications admit that the overall job he has done has been great• NYC Mayor Michael Bloomberg backs Obama – http://www.bloomberg.com/news/2012-11-01/a-vote-for-a- president-to-lead-on-climate-change.html• The most respected Business Magazine in the world, The Economist, backs President Obama – http://www.bloomberg.com/news/2012-11-01/a-vote-for-a- president-to-lead-on-climate-change.html• It is because of this that I ask you to vote for our President. He has done a good job and deserves another four years to continue the path