Published October 04, 2012
GOP presidential contender Mitt Romney's Intrade odds of winning rose to 34%, “back to where they were the day before the 47% video was released,” says Peter Boockvar of Miller Tabak, referring to the governor’s comment caught on video that 47% of Americans view themselves as entitled to government benefits.
Boockvar adds the odds are “up from 26% yesterday and 21% on Sunday.”
So what does that mean for the markets?
"Whether that is the reason for the bounce in the S&P futures this morning is unknown, but European markets are trading flat,” Boockvar notes. “As the S&P 500 has doubled during Obama's presidency, making a longer term call on the market based on who's President is always difficult.”
The broad picture for the market holds, as it has since 2008. “The actions of our unelected Fed for better or for worse may unfortunately be the driver of U.S. stocks in the next four years irrespective of who is president,” Boockvar says.
Still, the presidential debate was a lively, wonky fight over economic policies. Here’s a rundown:
Romney came out of the box attacking high unemployment. “Forty-three straight months of the jobless rate up above 8%,” he said, which shows “trickle down government doesn’t work,” to which the president rejoindered his plan is about “economic patriotism” that will help the middle class, whereas Romney’s tax plan will add $5 trillion to the deficit. The governor is asking for “a $5 trillion tax cut -- on top of the extension of the Bush tax cuts -- that's another trillion dollars -- and $2 trillion in additional military spending that the military hasn't asked for. That's $8 trillion,” the president said.
Romney then countered the $5 trillion figure was erroneous, that his plan will not add to the deficit, as he seeks to slash federal income tax rates, shut loopholes and wipe out deductions, on top of creating economic growth to bring in federal revenues, deploying many of the “same ideas as the Simpson-Bowles Commission,” the debt commission impaneled by the president, ideas which have since been set aside.
“I don't have a $5 trillion tax cut. I don't have a tax cut of a scale that you're talking about. My view is that we ought to provide tax relief to people in the middle class,” the governor said.
The governor went on to say that the middle class is getting “buried” under the president’s policies, using Vice President Joe Biden’s gaffe earlier in the week. The middle class, Romney said, is seeing its costs rise “$4,300” under the president’s policies, due to rising taxes, gas prices, costs for health care, and small businesses are getting slammed with higher taxes and regulations, while the president touts federal programs helping small businesses.
Romney then cited dozens of federal job training programs, saying he would ramp up fossil fuel production to create jobs. “Natural gas and oil production are up on private lands,” that’s why energy production has risen in this country due to private development, whereas under the Administration federal permits have been “cut in half,” the governor said.
The president then said his tax hikes, bringing the top rate back to the Clinton-era 39.6%, would not affect 97% of all small businesses. Romney countered that the “3% of small businesses hit with higher taxes employ half of all workers in the country” and that the tax hikes the president seeks would wipe out 700,000 jobs, citing a study from the National Federation of Independent Business.
At least three quarters of small businesses file federal income taxes at individual rates, says the National Federation of Independent Business.
The White House and Democrats in Congress have argued that hiking tax rates on small businesses that create jobs will get Americans working again and will lower the unemployment rate below 8%.
Remember, the president added about $5 trillion in new spending to the federal budget since taking office, equivalent to adding Germany and South Korea. That money went towards spending $825 billion on the president’s stimulus, Wall Street bailouts, automaker bailouts, housing bailouts, green energy bailouts, cash for clunkers, cash for white ware, cash for window sealers.
This 3% fallacy “is one of the more misleading statements in the long history of economic propaganda,” Kevin Hassett and Alan Viard of the American Enterprise Institute, have reported in The Wall Street Journal.
First of all, the 97% the president calls small business owners include people who sell whatever they can on eBay, and then report that income to the IRS as small business income, note Hassett and Viard. They don’t hire workers.
That 3% equates to some 940,000 small businesses who would see their federal income tax rates rise, according to the Joint Committee on Taxation (JCT).
According to IRS data, this 3% accounts for a whopping 53% of the $1.3 trillion in small business net income reported on individual tax returns that would be hit with higher taxes. Compare 53% to the president’s 3%, and you can see how habitually misleading the White House and Democrats are.
So that means more than $689 billion in small-business income will be hit with higher taxes if the president has his way.
The president wants to take out of small-business owners’ pockets tens of billions of dollars to pay for deficit spending that small businesses then won’t have to create jobs.
The president criticized Romney’s tax plan -- “math, common sense, and our history shows us that's not a recipe for job growth. Look, we've tried this. We've tried both approaches. The approach that Governor Romney's talking about is the same sales pitch that was made in 2001 and 2003, and we ended up with the slowest job growth in 50 years, we ended up moving from surplus to deficits, and it all culminated in the worst financial crisis since the Great Depression.”
Nowhere did the president or the governor cite the problematic Fannie Mae and Freddie Mac as aiding and abetting the financial collapse, entities which taxpayers now own, and which now have an unlimited bailout pipeline into the U.S. Treasury. Also not noted by either the president or the governor is the fact that the Dodd-Frank financial reform law exempted Fannie and Freddie.
Nor the fact that many Democrats, as well as Republicans, have been in elected office for decades helping to craft the same policies that either helped or didn’t stop the collapse. Vice President Joe Biden and Rep. Charles Rangel (D-NY) have been in office since the Nixon Administration. Democrat Sen. Max Baucus has been in D.C. since the Carter White House, and Democrats Nancy Pelosi, Harry Reid, Barney Frank, John Kerry, and Steny Hoyer have been in elected office since the Reagan era.