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  • Election 2012

  • Obamanomics: What You Can Expect if President Obama Wins the Election Now that we are left with a two-horse race for president, the markets are going to begin to handicap the November results.

    However, when the markets begin to handicap the race it will be about a lot more than just picking the eventual winner.

    Instead, everything will revolve around the policies and consequences that come along with the winner.

    The difference in approach promises to be stark with "Obamanomics" on the left and "Romneynomics" on the right.

    Each one comes with its own set of consequences, though.

    Today I'm going to look at "Obamanomics II," or the policies we will get if President Obama is re-elected.

    But those on the left shouldn't despair...In my next piece, it's Romney's turn.

    As for the horserace itself, it's too close to call, with neither side having much chance of winning a big victory.

    President Obama Has the Edge

    Even still at the moment, President Obama appears to be ahead. Apart from his modest lead in the polls, my former home state of Virginia appears to be swinging definitively toward the Democrats.

    Yes, Republican Bob McDonnell did win the Virginia governorship handily in 2009, but he was a very good candidate. Moreover, turnout in gubernatorial elections is normally low. Thus I believe the latest polls showing Obama with a 7% lead in Virginia are accurate, and without Virginia Romney has a very difficult path to the presidency.

    If we believe the presidential election will be close, then it follows that Congress and the Senate elections must be close, too.

    If Obama wins in November, the most likely outcome must be that the Democrats will hang on to the Senate, while the Republican House majority survives, albeit much smaller than at present.

    With this combination, the president's more extreme wishes (or those of his team) will be restrained. But as a newly re-elected figure he will nevertheless have more power to get what he wants than he does currently.

    Whatever the congressional numbers may be, the president's first task will be to face the "fiscal cliff" of January 2013, when the Bush tax cuts and temporary payroll tax cuts expire and automatic spending "sequestration" comes into effect.

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  • Election 2012: President Obama Can't Solve High Oil Prices with Trading Regulations The Obama administration lost its bid to get the Buffett Rule (which would have increased taxes for those earning $1 million or more) passed, so on Tuesday it shifted focus to another battle: Slowing the rise in oil prices.

    U.S. President Barack Obama's proposed solution to painfully high prices is to limit speculation in oil markets.

    The new bids that the president proposed seek more money ($52 million) for market enforcement and monitoring activities, call for loftier penalties for market manipulation, and require oil traders to put up more of their own cash for transactions.

    At a White House press conference Tuesday President Obama said, "None of these will bring gas prices down overnight. But they will prevent market manipulation, and help protect consumers."

    The move is in stark contrast with Republicans, who have been lobbying for more domestic drilling to help alleviate the near record-high gas prices. Paying more at the pump takes a bite out of consumer spending and has the potential to stall the slow-going economic recovery.

    The maneuver, however, may be focused more on political strategy than consumer interest.

    It is extremely doubtful that House Republicans will pass any measure that aims to implement more limits on Wall Street while the GOP looks to reduce regulation of the financial sector.

    House Speaker John Boehner, R-OH, called it a political ploy and disparaged President Obama for not using the means already at his disposal to deal with the oil situation.

    "The president has all the tools available to him if he believed that the oil market is being manipulated," Boehner said. "Where's his Federal Trade Commission? Where is the SEC? He's got agencies there. So instead of just another political gimmick, why doesn't he put his administration to work to get to the bottom of it?"

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  • Election 2012: The Real Reason President Obama Wants the Buffett Rule A new report from the White House today argues that making America's richest (those making over $1 million) pay a tax rate of at least 30% is more a basic issue of "tax fairness" than a way to generate lots of new revenue to the debt-saddled U.S. government.

    The tax proposal is dubbed the Buffett Rule, named for its main backer, billionaire Warren Buffett, who says it is unfair that he pays a lower effective tax rate than his secretary. The Buffett Rule ensures millionaires and billionaires do not pay lower percentages of their income than middle-class citizens.

    U.S. President Barack Obama, on a campaign fund raising trip, spoke in favor of the Buffett Rule yesterday (Tuesday) in Florida. Democrats are now working on a bill that would incorporate the Buffett Rule into the current tax code, with support from the White House.

    The proposal is set for a vote next week in the Senate, and the president has made it a principal element of his plan for deficit reduction.

    The White House says the Buffett Rule would make it more difficult for the nation's wealthiest to lower their tax bills and would ultimately make the tax code fairer for everyone.

    Critics, however, say it is nothing more than a political ploy in the months leading up to the 2012 presidential election.

    The Buffett Rule: Key Campaign Tool in Election 2012

    The Buffett Rule is a key theme in President Obama's re-election campaign.

    Republicans object to the Buffet Rule as a punitive tax hike on rich that will have little impact on the federal deficit. If the GOP succeeds in blocking passage of the Buffett Rule, the president can paint the Republicans as advocates of an unfair tax policy that benefits only the country's most prosperous citizens.

    White House officials acknowledged Monday that the controversial Buffett Rule would yield just $47 billion in additional tax revenue over a decade. That amounts to a paltry 0.6% of the $7 trillion in federal deficits projected for that 10-year period.

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  • Obamacare in the Balance: Key Takeaways from the Affordable Health Care Act Hearings
    Three fast-paced days was all it took for nine justices to grill advocates arguing for and against the Affordable Care Act - better known as Obamacare.

    A decision is expected in late June, just months before 2012 presidential elections.

    Although it is notoriously difficult to predict U.S. Supreme Court decisions purely based on their questioning, here are my takeaways from these momentous three days.

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  • Keystone XL Oil Pipeline Project Back in Election 2012 Spotlight U.S. President Barack Obama announced today (Thursday) approval for part of the Keystone XL oil pipeline project - but his move was more about election votes than the country's energy needs.

    President Obama said he is expediting approval for the southern portion of the Keystone oil pipeline. That section runs from Oklahoma to the Texas Gulf Coast.

    The president told workers in Cushing, OK today that he was making that part of the Keystone XL project a "priority." The president said he remains committed to the project and defended his earlier rejection of the pipeline.

    He blamed Republicans for insisting upon an application approval deadline that caused a rushed decision.

    "Unfortunately, Congress decided they wanted their own timeline," President Obama said. "Not the company, not the experts, but members of Congress who decided this might be a fun political issue decided to try to intervene and make it impossible for us to make an informed decision."

    The southern segment of the pipeline, however, is already planned to start construction in June, and is not the focus of the project's controversy. In fact, more than 99% of property owners in the southern route where the pipeline will run agree to it.

    Instead, the president's announcement was more politics than progress - and triggered ample criticism from Republicans.

    Many GOP members bashed the president's announcement as "meaningless."

    A spokesman for Rep. John Boehner, R-OH, compared the news to "the governor holding a press conference to renew my driver's license -- except this announcement still leaves American energy and jobs behind."

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  • GOP Candidates 2012: An Investor's Guide This year the Republican field is as competitive as I've ever seen. You can make a case for multiple candidates winning the caucuses, and any candidate could be boosted into the thick of the race by a strong finish.

    For investors, there are two criteria when looking at presidential candidates: First, how well will a candidate's ideas and personality play in the market and in the U.S. economy? And second, how likely is the candidate to beat President Obama in November?

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  • Four Things to Know About Super Tuesday 2012 Usually by the time voters reach Super Tuesday, the party has a clear leading candidate. This year, however, could bring a little GOP shake-up. There are ten states holding a primary election or caucus on Super Tuesday2012. Former Massachusetts Gov. Mitt Romney is slated to take about four of them, but has faced increasing competition from previous underdog former Pennsylvania Sen. Rick Santorum. Santorum surprised the Romney camp Feb. 7 when he swept three states - Minnesota, Missouri, and Colorado. While Romney has won the most elections so far, there is still a large number of Republicans he has failed to win over. Some GOP members think he's too liberal to represent the party in Washington. With some surprise wins for Santorum already this year, tomorrow's Super Tuesday battle could further rattle Mitt Romney's lead. As we enter one of the most closely watched days in Election 2012, here's what you need to know. Super Tuesday 2012 Which states are key? There are 437 delegates in the Super Tuesday states, more than double the amount that already voted. Only 422 technically are up for grabs tomorrow, since the rest are superdelegates and unbound to the results. That's still more than one-third of the 1,144 delegates needed to clinch a nomination. Here's how they break down per Super Tuesday state: To continue reading, please click here... Read More...
  • The Mitt Romney Tax Plan: Trying to Please Everyone The Mitt Romney tax plan, released by the candidate yesterday (Wednesday), aims to give everyone a little something by cutting taxes across the board - but without dramatic reform.

    Romney's tax plan shows a series of mild tax cuts for all income earners and corporations. The GOP hopeful's plan isn't as aggressive as his rivals, but also adds less to the federal deficit than their plans do.

    Basically, there's no one standout winner - except maybe Mitt Romney.

    While this middle ground could prove too timid, it could also dodge heavier criticism directed toward other candidates - and push Romney a step closer to the White House.

    The Mitt Romney Tax Plan

    Romney attacked President Obama's increases in taxes and spending when he released his tax plan Wednesday. He promoted his as more balanced and fair than the president's.

    "The right way forward is a flatter, fairer, simpler tax system that generates the revenue we need to fund a smaller government that is restrained to its historical size," said Romney.

    Here's what Romney has proposed for individual and corporate tax rates:

    • Make an across-the-board 20% cut in marginal rates, including:
      • Reduce the top income rate from 35% to 28%.
      • Cut the lowest tax bracket rate from 10% to 8%.
      • Reduce middle-bracket tax rate from 25% to 20%.
    • Maintain the current 15% rate on income from qualified dividends and capital gains, except eliminate taxes on interest, dividends and capital gains for taxpayers who pay less than $200,000.
    • Repeal the alternative minimum tax (AMT) for both individuals and corporations.
    • Eliminate the estate tax.
    • Cut corporate tax rate from 35% to 25%.
    • Employ a territorial corporate tax structure.
    • Enforce the R&D tax credit.

    "My plan sends signals of stability to business leaders and investors around the world, conveys a process for accomplishing these goals, and draws on my leadership skills and real-world experience to integrate and implement a comprehensive economic policy," said Romney.

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  • President Obama’s Corporate Tax Rate Plan Won’t Get Anywhere in 2012 The Treasury Department today unveiled U.S. President Barack Obama's corporate tax rate plan, in an effort to get ahead of Republican candidates who will be promoting their plans this week.

    President Obama wants to lower the corporate tax rate from 35% to 28%. He wants an even lower rate for U.S. manufacturers to encourage corporations to produce at home.

    Although the move could benefit U.S. corporations down the road, right now it's much more a political tactic than a realistic policy change.

    "This is a very cynical move," Greg Valliere, chief political strategist at the Potomac Research Group, told Bloomberg Television. "It comes one day before a Mitt Romney speech in Detroit in which Romney will outline his tax proposal. So in effect the White House is saying, "Hey, we're in favor of tax reform,' even though they know there's virtually no chance of getting anything done this year."

    This year will likely mark the start of serious corporate tax rate discussions, but with an election in the fall and bipartisanship in Washington, don't expect a tax rate change in 2012.

    "This is such a bitterly gridlocked and divided Congress that something this enormous I think has no chance of making it before 2013," said Valliere.

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  • Iran is Now a Full-Blown Crisis, Stage Set for $200 Oil Just when it looked like we could take a breather from the Strait of Hormuz, all attention is back on Iran.

    There are three reasons for this - all happening within the last week:

    1. First was Tehran's successful launch of a satellite, viewed by all in the region as being for military intelligence.
    2. Second, in his toughest talk to date, Iranian Supreme Leader Ayatollah Ali Khamenei voiced defiance to Western sanctions and pledged open retaliation if they are instituted.
    3. Finally, last Thursday, U.S. Secretary of Defense Leon Panetta expressed concern that, if matters continue, Israel could attempt an air-strike takeout of Iranian nuclear facilities within a month. Iran has been frantically moving essential components of its nuclear program underground to withstand such an attack.
    All of this is, once again, leading to a rise in crude oil prices.

    What's more, the EU decision to stop importing Iranian crude starting July 1 will cripple any chance Tehran has to combat escalating economic and political turmoil at home.

    Yet Khamenei's defiant tone during his Friday prayer meeting speech indicates that Iran's religious leadership will not wait for the system to unravel.

    And that is what makes this both a full-blown and an intensifying crisis.

    Brinksmanship in the Straits of Hormuz

    So what's being done?

    Washington has little - leverage, save its ability to temper an immediate escalation by Israel (leverage the U.S. can still apply, at least for the moment). It also has some indirect influence on what the E.U. does.

    Meanwhile, Saudi Arabia also is a wild card. It will not tolerate a nuclear Iran.

    And yes, there are ample indications that American and Israeli intelligence have concluded Iran will achieve the ability to develop nuclear weapons in the next 18 to 24 months.

    Some elements of that process will be available earlier, but remember: A weapon is of little value unless it can be controlled and delivered. The logistical and infrastructure considerations need to be in place first.

    Yet with such an inevitable conclusion staring them in the face, the West has decided to embark on a risky path...

    The target here is not the nuclear project at all (over which there is less and less outside control). Instead, it has become about creating massive domestic instability to bring down a regime.

    Now, this is not about ending the theocracy. With or without Mahmoud Ahmadinejad as president or Ali Khamenei as supreme leader, Iran will remain a Shiite-dominated country. Religion decisively controls politics, and the clergy oversees the society.

    The West is seeking a more moderate application of what will remain the Iranian cultural reality.

    However, as the brinksmanship intensifies, so will the price of crude oil. Tehran, in this dangerous game of international chicken, really only has one card to play - the Strait of Hormuz.

    There has been much misinformation circulated about the strait. Here are the facts.

    On any given day, 18% to 20% of the world's crude oil passes through it.

    According to the Energy Information Administration, the Strait's narrowest point is 21 miles wide; however, the width of the shipping lane in either direction is just two miles, cushioned by another two-mile buffer zone.

    Of greater significance, though, is the fact that most of the world's current excess capacity is Saudi. (This is the oil that can be brought to market quickly to offset unusual demand spikes or cuts in supply elsewhere.) And, unfortunately, Saudi volume must find its way through the same little strait.

    If we're unable to access the Saudi excess, that loss guarantees the global market will be out of balance. That will intensify the price upsurge - an upsurge that is already happening.

    Now for the question I'm being asked several times a day in media interviews...

    Just how bad can it get?

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  • Romney Avoids Nevada's Housing Market Problems with a Tactic That Could Work – for Now Mitt Romney is expected to take Nevada by a large margin this weekend - even though he joined fellow candidates in failing to address the staggering number of foreclosures plaguing Nevada's housing market.

    A poll released early Friday gave Romney a 20-point lead over former Speaker of the House Newt Gingrich.

    But Romney's win would come without the former Massachusetts governor sharing plans for the frightening number of underwater owners in Nevada's housing market.

    Housing market issues are especially sensitive to Nevada voters. Nevada is the No. 1 state for foreclosures. In Las Vegas about 70% of... Read More...
  • NEWSFLASH: Mitt Romney Has Rich "Friends" Campaign fund documents show that Mitt Romney is far more dependent on very wealthy donors than any other presidential candidate, making him even more vulnerable to accusations that he's too close to the rich.

    The former Massachusetts governor has raised just 9% of his campaign funds from small donors - contributions of $200 or less, an analysis by the Center for Responsive Politics has revealed.

    And that doesn't include money given to the Romney-friendly super PACs, which have collected many... Read More...
  • How Presidential Candidate Ron Paul's Campaign Could End the Fed Led by presidential candidate Ron Paul's "end the Fed" mantra, Republicans have made their attacks on the U.S. Federal Reserve into an election year rallying cry.

    It's one that could turn ugly in November if the GOP manages to score big.

    Where Paul has been the lone voice in the wilderness criticizing the central bank for years, others in the GOP recently adopted the Fed as a scapegoat for the financial crisis of 2008.

    Many of the Republican attacks include calls to fire Fed Chairman Ben S. Bernanke and to scale back the Fed's mandate - or in Paul's case, eradicate it altogether.

    And while Paul - who actually wrote a book called "End the Fed" in 2008 - has little chance of becoming the nominee, his campaign does have a larger philosophical objective.

    "It is Paul's goal to permanently establish within the Republican Party a group that is dead set on not having the Fed," Douglas Holtz-Eakin, chief economic adviser to Sen. John McCain, R-AZ, during his 2008 run for the presidency,told MarketWatch. "This is not going away."

    Ron Paul Scores Big With Younger Voters

    Although Paul's overall support generally hovers in the low double digits, his message is very popular among younger Republican voters.

    Paul won 48% of the under-30 vote in Iowa, 47% of the under-30 vote in New Hampshire and 31% in South Carolina. It's a demographic every candidate covets.

    Paul's resonance with young voters, combined with the public's dim view of the Fed has set off an all-out GOP assault on the central bank.

    For added juice, Republicans in general have sought to tie their criticisms of the Fed to U.S. President Barack Obama and the Democrats.

    "If you are a [Republican] running for Congress - those freshmen in the House - they thought that Bernanke was walking around talking about buying assets for Obama to make it easier for him to spend," Holtz-Eakin told MarketWatch. "It lit the fuse."

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  • Five Things Obama Didn't Want You to Hear in His State of the Union Seeking to put the best possible spin on his message, President Barack Obama took some liberties with the truth in his State of the Union address.

    Although the president never actually lied, he repeatedly left out facts that contradict his claims of success.

    President Obama hadn't yet left the House chamber when the reality check started. And it didn't take long to find some pretty big the holes in the State of the Union address.

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  • Restoring the Dream: State of the Union Pitches an Economy "Built to Last" In a speech before the nation last night, President Obama's State of the Union Address spoke of a new American economy that is "built to last."

    Of course, in the wake of the dot com bubble, the subprime mortgage fiasco and the funny money of the last decade, that's certainly an objective all of us can heartily agree with.

    The American Dream is in need of repair.

    The good news is that with one exception the President's State of the Union Address did outlined some useful steps that could be taken to help boost the economic recovery.

    Naturally though, I think the details could use a little tweaking!

    The Worthy Goals in the State of the Union Address

    To start off with, the President outlined his primary strategy to help bring manufacturing jobs back to the United States. That's an entirely worthy objective.

    What's more, this goal actually has a decent chance of being met--- at least partially.

    Here's why...

    Chinese manufacturing costs have been rising rapidly over last few years, since its workforce is now demanding a larger share of the profits in the country's new found prosperity.

    Also the President was correct when he claimed that there are several intrinsic advantages to manufacturing here in the states. As a result, the cost equation has been swinging pretty rapidly in favor of bringing manufacturing jobs back home.

    His example of the Master Lock plant in Milwaukee running at full capacity for the first time in fifteen years is just part of a greater trend.

    The President's proposal to lower corporate tax rates, while eliminating the loopholes that allow companies like General Electric to pay almost no U.S. taxes, will also undoubtedly help to bring even more manufacturing jobs back home.

    Not only is this sensible, the President's proposal is politically clever as well.

    After all, it's always pretty smart to call for something already starting to happen. That way your success is almost guaranteed!

    Unfortunately, some of the President's other ideas were less satisfying...

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