Now that the 2012 election, and the uncertainty of the extremely long campaign season, is over, what will President Obama’s re-election mean for you and your money?
Obamacare will be Fully Implemented and its True Costs will be Known
Many business leaders and economists claim that one source of economic uncertainty over the last few years has been the Obamacare national health care legislation (officially known as the Affordable Care Act).
The reason why is that the more than 2,000 page document had so many provisions in it that were left up to the interpretation of those who would implement it.
And the implementation was being rolled out piecemeal over several years.
As a result, businesses that provide insurance for their employees and insurance carriers didn’t have a firm understanding of what Obamacare would mean for them and how much it would really cost. This caused many companies to think twice about bringing on new workers, and led some to let workers go, claiming it was because of increased health care costs.
Polls showed that a majority of Americans wanted to see Obamacare repealed, and Mitt Romney and the Republicans in Congress promised to do just that if they won the election.
But now that President Obama has been re-elected, there seems to be no chance of seeing Obamacare repealed.
Pending any other challenges against it in the Supreme Court, everyone can count on Obamacare’s full implementation over the next two years.
And the proof will be in the pudding as to what it will really cost, and who – employers, employees, or tax payers – will really end up paying for it.
Health Care Sector will be a Good Investment – Long Term
All Americans are required to buy health insurance under Obamacare. That, and the fact that the huge baby boomer population continues to age and experience the resultant increased healthcare issues, means, I think, that the health care sector will be a good financial investment.
In the long term.
In the short term, it may be difficult to determine which health care stocks are a good investment.
In general, I think healthcare device manufacturers and pharmaceutical companies will be good investments because of the amazing pace of innovation that we’re experiencing.
But will health insurers be a good investment? Will they survive under Obamacare and be able to make a profit, or will they end up being the losers when “managed care” becomes “managed cost”? I’m not sure. But time will tell over the next couple of years.
And what about healthcare providers? Will hospitals be able to make a profit under Obamacare? I think they’ll come out as one of the winners over the long term.
Part-Time Employment May Outpace Full-Time Employment Growth
The Wall Street Journal reported last summer that the only reason the unemployment rate saw improvement was because more people are finding part-time work, not full-time.
Sadly, I think this trend will continue, especially with the full implementation of Obamacare.
In fact, a few of my business owner friends tell me they already know that their health insurance premiums for their employees will increase by double digits next year, which may lead them to move many full-time employees to part-time status to keep their healthcare costs down.
If you feel or hear that your employer may start cutting full-time employees to part-time, I’d recommend you develop a side hustle or part-time business that could be ramped up to full-time if needed.
More People will Depend on Government
Entitlement transfers have grown 727% over the last 50 years, proving that America is becoming a society of takers, not makers.
Call me cynical, but I think one reason for the growth is that politicians want to get more and more people hooked on benefits so the recipients will vote for them. This, of course, perpetuates the cycle over and over.
Both parties are guilty, but it seems to me that the Democrat party takes the lead in creating a dependency class.
In fact, the Weekly Standard reported that in Obama’s first term, food stamp growth outpaced job creation by 75%. CNS News reported that one in five Americans are now on Medicaid. Sadly, I think we’ll see more growth in government dependency in his second term.
That will likely mean an increase in taxes to pay for those benefits. And as Greece, Spain, and other such countries have recently discovered, when you continue to rob Peter through taxation to pay Paul, eventually all the Peters will become Pauls.
The American Dream is in Jeopardy
For most of America’s history, each new generation enjoyed a better lifestyle than their preceding one. People were motivated by the “American dream” of having the opportunity, like no place else on earth, to be able to work hard and create a better life for themselves and their families.
That hard work and innovation made America the most prosperous nation on earth. But she didn’t stay there. Sadly, today the US isn’t even in the top 10 of the world’s most prosperous countries.
I think the growth of the entitlement society is killing the American dream. Too many Americans take the Eeyore approach and seem content to take whatever life brings them, instead of being motivated to live their legacy by creating the life and lifestyle they want.
We May Go Over the “Fiscal Cliff”
The day after the president’s re-election, stocks tumbled over worries of the impending “fiscal cliff”.
The “fiscal cliff” many are concerned about includes a total of $1.2 trillion in mandatory federal budget cuts (also known as sequestration) set to take effect on January 2, 2013 thanks to the president’s Budget Control Act of 2011.
Half of the budget cuts, about $600 billion, will come from the nation’s defense budget, with the other half coming, across-the-board, from about 1,000 discretionary non-defense programs.
Some think this massive budget cut (about 9% of the federal budget) would derail the economic recovery and likely lead to another recession.
I wonder if it isn’t worth the risk, though. After all, don’t we need to take bold action to reduce the growth of the federal government?
Taxes Will Increase
Another aspect of the impending “fiscal cliff” is the Bush tax cuts, which are set to expire on December 31. If those tax cuts aren’t renewed, millions of Americans will be faced with tax increases.
This despite the fact that the president in 2009 said that a recession or economic downturn are the worst times to raise taxes on anyone.
Income tax rates are set to rise for couples making over $250,000, capital gain rates will increase for most filers, some itemized deductions and personal exemptions will be decreased, the child tax credit falls from $1,000 to $500 per child, the American Opportunity Tax Credit expires and the Earned Income Tax Credit eligibility expansion expires, the marriage penalty relief expires, and the estate tax levels increase while the exemption level falls.
Obama’s Harder, Longer Road to Recovery
I wish I could believe that President Obama’s re-election means we’re on the fast track to economic recovery. And that Americans will see a growing increase in economic opportunity and prosperity.
But as the president said in his acceptance speech at the Democrat convention in September, his path is harder and his road is longer.
That’s the plan the majority of Americans voted for. Will it eventually “leads us to a better place” as the president has said? We’ll see.
Personally, I’m not waiting on the president or the government or anyone else when it comes to my financial future. What about you? What do you think the president’s re-election means for the economy and your money?
Brick By Brick Investing | Marvin says
I think his re-election is unfortunate for our country but electing Romney would have ended in the same result. Obama is a “fast poison” as one could put it. Our country will never get back to what it once was until our citizens wake up. Its like the old adage “People don’t change until it’s too painful to stay the same.” I believe that is where America is headed right now. Everyone who is on entitlements will soon find out that the game of musical chairs eventually ends and nobody wins…
Romney was not my choice, but he was better then the alternative. I have to agree that our county must change direction, or we are headed towards Greece. I see the same thing for our economy the next several years, unless he will compromise with republicans. High unemployment, unstable stock market, higher taxes, higher cost for healthcare, and higher cost for goods and services.
Nate Fancher says
Thanks. Great article. I saw 2016 by Dinesh D’Souza and was pretty rattled when I discovered what might be the real Obama’s agenda. I say might because it D’Souza’s theory. But it’s a pretty solid one when you consider a big portion of his source material was Obama himself in his Dreams From My Father book.
At best we become a little more like Europe. At worst we become what D’Souza predicts. If we become a little more like Europe it will simply mean it’s time to buy and not sell… We just need wisdom on how to protect ourselves and be on the right side of the massive wealth transfer that’s headed our way.
I could be wrong about this, but at least we can be certain that God is sovereign, and His economy never goes into recession…
Thanks again for your insights!
Nate, thanks for sharing your comments! I haven’t seen 2016 yet, but plan to sometime. I actually met D’Souza back in the early 90’s when he came to speak for a student group I was involved with in college. I was saddened to hear of his marital problems recently.
My Money Design says
Great editorial! I’ve got to really second your notions about entitlement. I think we’ve got a real problem growing in our society where people think they don’t have to work as hard to get the finer things in life.