Posts by Rick Newman
Rick Newman at Yahoo Finance 1 day ago
There’s supposedly no reason to worry about the latest tax hikes proposed by President Obama, since there’s little chance Congress will pass them. But Obama’s plan is a blueprint of sorts for what’s going to happen when federal coffers finally run dry and there’s no choice but to raise taxes—including some that will inevitably hit the middle class.
Budget softies argue there’s no need to worry about a federal money crunch now, since Washington’s annual deficit is falling, the economy’s picking up, and the Treasury can still borrow at remarkably low rates. All true. But barring an economic miracle, the coming crunch is a matter of simple math. The soaring cost of entitlement programs is already crowding out other types of spending, and the mass retirement of the baby boomers is going to drain Social Security and Medicare for good, if nothing changes.
Rick Newman at Yahoo Finance 2 days ago
The rising cost of healthcare is a big budget-buster for many families, and a lot of them fault the Affordable Care Act for straining their finances. But the controversial healthcare law appears to be getting far more blame than it deserves.
New analysis by the Commonwealth Fund examines data explaining the biggest increases in healthcare premiums for certain plans, and essentially lets Obamacare, as the ACA is known, off the hook. The study found that rising medical costs are the biggest cause of higher insurance premiums — which has been the case for years. About 30% of insurers didn’t cite any cost increase linked to Obamacare. Among the other 70%, new taxes and fees associated with the ACA -- and that started in 2014 -- accounted for about one-third of premium increases. But many of those fees will decline and some will phase out altogether.
Rick Newman at Yahoo Finance 3 days ago
President Obama and many other poobahs in Washington, D.C., say it’s essential to simplify the U.S. tax code. But for now, it’s necessary to complicate it.
Obama’s tax proposals for 2015 include a new “second earner” tax credit, an expansion of the earned-income tax credit, new tax incentives to help cover child-care expenses, and several provisions meant to make higher education more affordable. Economists say they’re generally sensible ideas, yet they’d make the burden of filing a tax return even more onerous than it already is. “The IRS would have to figure out how to put all these pieces onto a two-sided EZ tax form,” says Roberton Williams of the nonpartisan Urban Institute. “There’s nothing ‘EZ’ about this.”
Obama claims his tax plan would simplify a few minor parts of the tax code, by consolidating the number of education tax credits, for instance. Yet Republicans say they’ll never agree to tax hikes on the wealthy-- which Obama wants to offset the cost of his tax cuts for the middle class--that could total more than $30 billion per year. So Americans may be spared any further tax complexity, for now.
Rick Newman at Yahoo Finance 4 days ago
President George W. Bush famously stood before a “Mission Accomplished” banner in 2003, when U.S. forces still faced many bloody battles in Iraq. Could President Obama be making the same sort of mistake by describing the economy as healed and insisting that the “shadow of crisis has passed?”
For the first time in his presidency, Obama spoke in victorious terms when describing the economy during his 2015 State of the Union address to Congress. He described 2014 as a “breakthrough year for America” and said, “We have risen from recession freer to write our own future than any other nation on Earth.”
Obama’s facts are generally correct. It’s true, as he pointed out in the SOTU address, that job growth in 2014 was the strongest since 1999—which was a boom year for the U.S. economy. His short list of accomplishments—“a growing economy, shrinking deficits, bustling industry, booming energy production”—are all legitimate.
Rick Newman at Yahoo Finance 4 days ago
When President Obama delivered his first State of the Union address in 2009, 53% of Americans considered themselves middle class. Six years later, just 44% of Americans define themselves that way.
It’s no secret working Americans have been under duress for more than a decade, as wages stagnate, computers and robots displace human workers and wealth becomes concentrated among an alarmingly small portion of the population. Obama has promoted policies meant to help the middle class throughout his six years in office, yet the problem today is quite different than when he started the job in 2009—and it’s not clear Obama fully grasps the change.
The middle class itself, however, has changed notably during the relatively short time Obama has been in office, as the chart below shows. The portion of Americans who consider themselves middle class has dropped (as has the portion considering themselves upper class), while the ranks who call themselves lower class have swelled.
Percentage of adults self-identifying as each social class:
Rick Newman at Yahoo Finance 8 days ago
Cram a lot of horsepower under the hood of a car and strap on some comically large tires, and auto critics will drool over it -- even if sales are likely to be limited to Silicon Valley royalty and a few oil sheikhs.
That’s why the new Ford GT and Acura NSX supercars have dominated media coverage of this year’s Detroit auto show. But the most important car at the show may be one that got far less attention: the Buick Avenir sedan.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success . Follow him on Twitter: @rickjnewman.
Rick Newman at Yahoo Finance 9 days ago
A gradually improving economy—and plunging gas prices--have finally brought President Obama a modest boost in his long-depressed job-approval rating. But the voters who are least impressed with Obama are the middle-income Americans every politician needs to succeed—and the very people whose interests Obama claims to be fighting for.
The latest poll numbers from Gallup put Obama’s approval rating at 46%, the highest reading since the summer of 2013. But there are telling disparities among income groups that help explain why Obama’s Democratic party lost control of both houses of Congress during the last two midterm elections, and why Obama may be able to accomplish little during his last two years in office.
A breakdown of the numbers since 2009 shows that the president has enjoyed higher support among low earners than among middle earners for all but four weeks of his presidency, as this chart illustrates:
Rick Newman at Yahoo Finance 10 days ago
Flip on cable news, and it’s a pretty safe bet some pundit will be howling about taxes assessed by Uncle Sam. But taxes at the state and local level—which get a lot less attention—are the ones causing the most pain for millions of Americans.
A new study by the nonprofit Institute on Taxation and Economic Policy finds that the lowest 20% of earners pay 10.9% of their income in state and local taxes, on average. For a family earning $30,000 a year, that’s $3,270 in taxes. In the most heavy-handed state — Washington — the same income group pays 16.8% of its income in state and local taxes. At the federal level, the tax burden on people in that same income bracket is effectively zero, by contrast, although low earners do have taxes deducted from their paychecks to help fund Social Security and Medicare.
Here’s ITEP’s list of the “Terrible 10” states with the most regressive tax systems:
Rick Newman at Yahoo Finance 11 days ago
Companies that break ground with new technology usually protect their competitive edge as long as possible. Yet electric-car maker Tesla (TSLA) is practically begging other automakers to go electric and even offering its technology free of charge.
Tesla CEO Elon Musk reiterated his plea at this week’s Detroit auto show. “Invest in electric vehicles," he urged his fellow automotive CEOs. "You won't regret it." Musk’s hour-long speech and Q&A session was one of the auto show’s top draws this year, yet in a way it backfired for Tesla. Musk declined to report December sales numbers, as he did last year around this time, generating speculation that the numbers must be weak. He also said Tesla won’t be fully profitable until 2020, several years later than some analysts had been expecting. The company’s stock fell by more than 6% following Musk’s remarks.
Rick Newman at Yahoo Finance 11 days ago
Republicans who now control both houses of Congress have promised that seeking approval of the controversial Keystone XL pipeline would be their first order of business in 2015. It might be the first order of business in 2016, too.
The House has already passed legislation that would grant oil firm TransCanada permission to build the 1,200-mile pipeline from Canadian oil fields to Steele City, Neb., where petroleum would be transferred to other pipelines transporting it to the Gulf Coast for shipment throughout the world. Similar legislation has passed key hurdles in the Senate and will probably pass soon, with some Democrats voting for it. A final bill is likely to hit President Obama’s desk within two weeks.