Obama Rises In the Polls and Stocks Decline
Wall Street Afraid of Democrats Strategy for the Economy
Oct 7, 2008
Obama's poll numbers increase almost daily and the prospects for winning the election on November 4, 2008 and becoming President of the United States seem more likely. Meanwhile investors have been deserting the stock market as a vote of "no confidence."
Investors Fears About Obama
Investors continue to have fears about Obama's economic plans in regard to spending and taxes. Writing for MSN Money, on July 14, 2008, "Why Wall Street Fears Obama", Jon Marksman, an investment expert, writes that it is Obama's intention to raise capital gains taxes from 15% to 28% that is creating the exodus. There is also the fear that the Democratic Congress is loathe to do anything that might give comfort to the Republicans running for office before the election.
There are concerns that with a Democratic President and Congress, it would bring about the abuse of power that were seen during the Bush Administration when both Houses were controlled by the Republicans. Marksman believes that when all branches of government are controlled by one political party, costly, idealistic, social or fiscal experiments take place.
Obama Plans for Wealth Distribution
Obama plans for wealth distribution were quoted in an Wall Street Journal article (July 17,2008) interview, saying that "globalization, technology and automation all weaken the position of workers" and argued that the government needs to make sure the fruits of success are distributed in a more evenhanded manner. Marksman maintains that this type of campaign talk may please laid off workers but are fighting words to those whose wealth is targeted for distribution. Those are the investors who own most of the nation's stocks.
Obama Tax Plans
Obama's tax plans, as interpreted by investors, would make the federal government even more reliant on the relatively few high-income people paying most of the U. S. taxes. Marksman believes that this would provide less incentive for business owners to augment their wealth by growing their companies. There appears to be a stampede of asset sales as investors rush to take their profits now to avoid the expected doubling of the capital gains tax.
There is indications the 2001 and 2003 Bush tax cuts will be allowed to expire in 2010 which could raise taxes on Americans by tens of millions of dollars. Obama is also expected to do away with the $102,000 FICA payroll tax cap which means anyone making over that amount would pay an additional 7 percent on earned income.
As the stock market continues to show signs of imploding, investors are becoming more pessimistic about an Obama/Biden presidency versus that of McCain/Palin and are showing their disquiet by withdrawing their money from the stock market and putting it in safe havens. Obama's activist political history in Chicago has added to the unease of investors . Why Wall Street Fears Obama explains why this is happening.
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