How Obama victory could affect areas of US economy

Upper-income Americans may face a tax increase. Auto fuel economy standards might be raised. Stocks of construction and engineering companies could benefit.
Associated Press
Nov 8, 2012

America's decision to re-elect President Barack Obama over Mitt Romney will affect all that and other elements of the U.S. economy and financial system — from the health care law to the overhaul of financial rules.

At the same time, a gridlocked Congress will limit Obama's influence. Tuesday's election kept Republicans in control of the House. Democrats still control the Senate, but without a commanding majority.

Here's how Obama's re-election could affect key sectors:


Obama has laid out some key themes for rejuvenating the economy: Extend Bush-era tax cuts for low- and middle-income Americans. Spend more to build and repair roads, bridges and other public structures. Provide targeted tax breaks to businesses.

Most immediately, Obama needs to persuade congressional Republicans and Democrats to reach a budget agreement to prevent the economy from falling off a "fiscal cliff." Without a deal, deep spending cuts and tax increases will start to kick in next year.

The combination of those measures could send the economy back into recession and drive the unemployment rate back up to 9 percent next year, according to estimates by the Congressional Budget Office. The rate is now 7.9 percent.

Analysts warn that Congress must break its stalemate for the economy to sustain its recovery.

"There will be a lot of brinksmanship, and that will hurt the economy and likely upset the financial markets," Mark Zandi, chief economist at Moody's Analytics, said Wednesday.

Still, the urgency of the crisis could "generate the political will necessary to get the deal done," Zandi said. And that could mean "much, much stronger growth" by 2014.

Others caution that even if the fiscal cliff is averted, the economy may continue to be hampered by slow growth, stagnant pay and modest job gains.

"Obama's re-election does not change the bigger economic or fiscal picture," Paul Ashworth, an economist at Capital Economics, said in a research note. "Over the next couple of years, the U.S. economy will remain saddled with an uncomfortably high unemployment rate and will struggle to grow by more than 2 percent a year."

The president has pledged to cut projected deficits by $4 trillion over 10 years. He says he'd do so in part by raising the tax on investment gains. He would also raise income tax rates for individuals who earn more than $200,000 and married couples who earn more than $250,000. And a minimum 30 percent tax would be imposed on incomes above $1 million.


Stock prices plunged Wednesday in the aftermath of the election. Investors appeared rattled by the impending U.S. tax increases and spending cuts and Europe's deepening recession.

Over the long run, though, the stocks of construction and engineering companies might get a lift during Obama's second term. The president has said more spending on roads, bridges and public buildings will boost the economy. If Obama's victory helps Democrats gain seats in Congress, he'll have more support for such spending.

Other categories of stock might stumble. Financial companies had hoped to weaken rules imposed after the 2008 financial crisis. Obama's victory may ensure that the rules will remain intact. Companies will have to keep spending to make sure they comply with them.

Obama also wants to tax dividends at a higher rate. That could make financial stocks, which often pay high dividends, less appealing to investors.

Defense stocks might suffer because Obama wants to limit the growth of military spending. And some energy companies may fall because some investors think his administration will tighten pollution regulations that affect energy extraction and coal-burning power plants.


Obama will likely seek to further boost fuel economy standards. He's already raised the standards twice. This year, he required automakers to double their vehicles' average fuel economy to 54.5 miles a gallon by 2025.

Obama set an ambitious goal in 2011 to put 1 million electric vehicles on the road by 2015. Fewer than 30,000 electric cars have been sold in the United States this year. He wants to raise a $7,500 tax credit for electric cars to $10,000.

The president has asked the World Trade Organization to rule on Chinese subsidies for autos and auto parts and its import duties on U.S. autos. He's awaiting a decision.


The boom in U.S. oil and gas production during the president's first term will likely continue, thanks largely to new drilling techniques. But drilling could slow if the Environmental Protection Agency toughens rules governing a controversial technique called hydraulic fracturing.

Obama backs the idea of a federal clean-energy standard that would require the country to use more low-carbon energy sources, such as wind and solar for electricity and advanced biofuels and batteries in cars.

But Republican opposition is so strong it's doubtful Obama could muster enough support in Congress for it. There would be bipartisan opposition to any administration effort to regulate emissions of carbon dioxide and other gases that scientists say contribute to climate change.


Obama's victory preserves his health care overhaul, which aims to cover millions of uninsured Americans. The law requires everyone, with certain exceptions, to have health insurance or pay a penalty. It calls for the expansion of Medicaid. And it requires online exchanges where people can shop for coverage.

Health insurers that have struggled to increase enrollment in a tough economy will gain millions of new customers through the overhaul's coverage expansions. But the industry pays for that growth. Insurers will have to cover annual fees totaling $8 billion in 2014 and topping $14 billion by 2018. Those fees will go to the government to help cover the cost of expanded health care.

Among other restrictions, the law also limits how much insurers can vary pricing based on age and health.

Drug makers and money-losing hospitals may also get a boost. Hospitals typically provide charity care to uninsured people and are reimbursed for only part of it. Now, they'll be paid through insurance for more people. And drug makers will benefit from the law because starting in 2014, millions more will gain prescription coverage.

But the industry also faces new costs. Drug makers will have to give the government rebates on drugs bought through Medicaid. And they must give discounts to the elderly that will rise over time.

"In the past, it was relatively easy to just absorb increases in health care costs and pass them through to customers via higher premiums," said Matthew Coffina, a Morningstar analyst who covers health insurers. "That equation is sort of breaking down now, which is forcing them to be more careful on the cost side, to try to contain costs in whatever way they can."


The 2010 overhaul of financial rules marked a victory for Obama. Officials who are still carrying out the details of the law may now be more likely to take a tough stance.

One example is an oversight plan for derivatives — complex investments that speculators use to make bets and companies use to hedge against risk. Financial companies have fought for looser rules and exceptions for derivatives used by farmers who want to lock in prices before a harvest.

Obama's victory means financial companies, which mostly backed Romney, might lose influence in these negotiations. His re-election also figures to embolden the Consumer Financial Protection Bureau. The bureau aims to protect people from hidden fees and other unfair practices by financial companies.

Republicans want to give Congress authority over the bureau's budget. But without the presidency or a stronger majority in either chamber of Congress, they won't likely be able to slow the bureau's crackdown on banks, payday lenders and others.


Obama signed into law the America Invents Act to streamline the U.S. patent process. The idea was that inventors and entrepreneurs could turn their ideas into products more quickly and create inexpensive ways to resolve disputes.

Despite the law, major technology companies such as Apple, Google and Microsoft are locked in battles over the scope of their patents, particularly for smartphones and tablet computers. Tech companies and entrepreneurs say further patent reform is needed.

The president so far has resisted pressure to lower or temporarily waive corporate income taxes on the more than $1 trillion U.S. companies have piled up in overseas accounts from sales there. Many are tech companies that are keeping most of their cash offshore.

Some of the biggest hoards of foreign cash are held by Apple ($82.6 billion), Microsoft Corp. ($58 billion), Cisco ($42.5 billion) and Google ($29.1 billion). All favor a tax holiday so they could return the money to the United States without paying a huge bill to the government.

Obama hasn't ruled out a tax holiday. But he's indicated he'd consider it only as part of a broad tax overhaul.




Get ready ...........yrc


A 'somewhat' interesting article; where to invest now:

Uncle Ben's ZIRP policies are killin' savers and the money in your pocket is increasingly worth squat.

Democracies tend to inflate (money print) their way outa debt.

Are your food and fuel costs less than they were one yr. ago?

The govt. says there is no inflation. Is that what you believe?


i look around this country and what i see is disturbing. this country is no longer a great country made up of hard working people like it once was. the majority of the people in this country no longer view hard work as their way to success. the majority of the people in this country no longer want to take personal responsibility for their own lives. the majority of the people in this country no longer live for the necessities.

the majority of the people today in this country demand that others pay for their transgressions. they smoke, drink, have multiple i-phones, computers, gaming systems, get their nails and hair done, heavy credit card debt yet they complain that they can't afford food, utilities or shelter and demand that the gov't help them. their kids fail out of school because they fail to be good parents yet demand that the gov't provide for them when their kids have multiple kids by multiple fathers or they father many kids. they fail to prepare themselves or children for college by starting any kind of college funding yet demand free college educations. they believe that it is their god given right to have their lives provided for by the fed gov't.

to that i say get your worthless, lazy a$$es out of bed and do something. we see time again that many towns across america cut funding to parks. the downtown areas in most areas look like crap because of all of the trash laying around. well, here's your sign. i say no more freebies. you want the gov't to provide for then you provide your time to the gov't by mowing their parks and picking up trash. it is to much to expect. the person in the oval office has done nothing to make these people responsible for themselves rather says "come on down and get what you can for free".

americans from years ago, for the most part, worked for their handouts ie wpa. but, no longer. it is disturbing!

John Harville

@Mikel. So sad, your distorted view of America. Painting in broad generalities with no actual facts to support your positions. Despite what you've been told, people drawing UE or food stamps or other assistance still have to work. I don't know where you live that the parks look like crap. I'd like to know that. Of course there are people who try to 'work' the system - at BOTH ends of the wealth/wealthless system.
It's unfortunate that the blessings you enjoy have been wasted on such a bitter, greedy person.
You've never told us where your paid-for-by-me kids are getting their educations so that they are not utilizing ANY government/taxpayer money.
You've never told us whence will come the money to keep you in your old age if you end up needing long-term care. Presumably, you and Contango and others on here have benefitted very well from low tax rates and the wisest of investments made with abundant salaries. As has been said before on here, I pray your understanding is NOT increased by some event, illness, disaster for which you didn't plan - like the great majorities on the East coast didn't plan on a hurricane AND a blizzard.
May God continue to bless you Mikel.
Meanwhile I'll continue my self-gratification by doing all I can to help the less fortunate or just encourage those who are attempting to move up a bit in society. Somewhere in your past are immigrants who made possible the world in which you live.
Oh... you forgot you have an immigrant past?


Moderators have removed this comment because it contained Personal attacks (including: name calling, presumption of guilt or guilt by association, insensitivity, or picking fights).


absolutely not true.


Mikel: I understand your view. I agree. However, we lost and so will have to live with this for the next four years. I heard one man ask another who he was voting for. He said "romney". The other said "What? You're not voting for a brother?" This is why we lost. Gays want same sex marriage. Blacks want a black president, welfare reciprients want more free stuff. Most people only voted for their particular agenda. They didn't look at the overall picture. I hope things get better, but if they haven't made a dent in the economy in four years, I don't see it happening in another four.


Im going to become a freebee person anybody want my things sell


then ill be able to get food stamps free phone ETC..ETC..ETC


And the ETCs goes on and on


hey Jerry, what do you have for sale ? I'm looking for a couple of books..... "Learn to Speak Chinese for Dummys" and a "Koran Study Guide". Might as well get a head start (puns and sarcasm intended lol)


This article advises that Obamacare will cover millions of uninsured persons ???????

Three Sundays ago AkzoNobel had a 3"x 4" ad in this paper advising they were having a "job fair" I would think that if they were going to hire some persons that they would have applications on file and would just interview some persons then hire who they thought would do the best job. However a person might think that if a company is having a job fair that they are looking for several persons to hire,

The description of what they are looking for is "long term part time employees willing to work 16-28 hours per week. I think the 28 hours would place them under the radar for Obamacare.

I have no idea what the full time persons working there get now I guess I just assumed it would be 40 hours pay and a decent health care program. Now there will be many persons limited to 28 hours with no healthcare and at 28 hours I do not think the government could expect that they could support a family and in addition secure their own healthcare insurance.

This is not the only company that I have heard of that will be skirting around Obamacare ergo there may actually be more persons uninsured in lieu of less.


The government still needs to determine how they will "Administer" and "Operate" the new health care bill. Not knowing how you're going to operate such a massive program is huge.

Until then, businesses will do their best to try to make the best of what they have to work with



looking around

Mickle, you crack me up. You think the majority of this country that voted are worthless non-working freeloaders? Last time I checked the majority in this country are still working or retired from life time employment. The issues that were considered by those that gave President Obama both a popular and electoral vote win went well beyond welfare and food stamps. Most that I have spoken with were hard working middle class voters who were down right tired of the constant attack on their well being and the unfair advantages given to those who would continue to erode the middle class before accepting that they share in the burden, adhering to various regulations, paying their share in taxes. No one wants to see abuses in the programs designed to help the dis advantaged, but simply stopping these programs is not the cure. Yes we need tighter controls and programs that are proactive in getting these people to a point that they may be productive. These are challenges that are bi partisan. I'd rather see money spent to help out those in need before giving some guy that doesn't need it a huge tax break and grant him write offs for his private jet that he fly's around the world selling off American manufacturing jobs to foreign interests.

John Harville

...and his fancy dancy horse. The Rich Boys ultimately lost because they demonstrated no personal knowledge of life in real America. Romney was born to wealth and went to college on his parents' investments. Ryan is from one of the richest families in America which made its milllions off federal government construction contracts. He went to college on SS after his father died. Mikel talks about 'hardworking' but never mentions what that 'hard' work entailed. Same with world-traveler Contango. And Marsh. And Darwin.


And yet he is a pauper next to the vast majority of Hollywood celebs that were falling at the feet of Obama.


Please explain any hard working job that your messiah has held? I want to hear this! The grandma is a bank vice president, Private schools all paid for, Gets a job as a lawyer doing who knows what, A rabble rouser and then in the government. Please explain how everything wasnt handed to him?


@ looking around:

Frosting on a rotten cake. This county is up to it's eyeballs in debt and climbing higher.

Through waste, fraud and abuse, Medicare alone loses around $60B annually.

The kleptocrats in DC are the "real" 1%. What do they produce other than rules and regs????

Seven of the ten richest counties in the U.S. surround Washington, DC. Seven of the ten went for Mr. Obama.

Don't those facts mean anything to you?

Entrepreneurship is dead in this country, the bureaucrats in Washington have the money AND the power.

John Harville

@Contango... which also happen to be Military (Pentagon, academies, bases), Banking, commerce, retirement communities... Numbers 4, 5, 6, 8 are NJ... so that may be changing. But how did Colorado sneak into #9?
Next 5 md ny my va ny. In the next 10 com Tenn, Cal a coupla times, Utah (?).
The ten poorest counties are through the south.
So WHAT is your point?
We should make our judgments on 7 of 10 counties in the most concentrated populatoin areas with the most banks and milliltary bases and commerce and ignore the fact there almost 3,400 counties in the country? Just keep pullin' those figgers out to make them fit your argument.


@ John Harville:

So isn't the myth that only the rich vote Repub?

What list are you using?

Actually CNBC used a different list wherein 8 counties went for Mr. Obama.

Better start redistributing that wealth!

John Harville

@Contango... and what should we make of the fact Ohio has 203,404 millionaires - 27.8 per 1000 housholds - and ranks 27? Can you guess who is first with 43% of its households? Nj, Va, NY and Fla rank 2, 8, 9, 10. Should we be concerned that so many millionaires - almost 28% of households - around us have household wealth of AT LEAST $1 million?


@ John Harville:

Mr. Obama and the socialists use annual income as the criteria for rich; maybe the amount of total assets should be used?


mikel, maybe you'd be better off moving to China or Korea. Let me know if you need help packing your bags. Of course, I'm sure you'll have all kinds of excuses as to why such a move wouldn't be possible, but you "would if you could". LOL


@ Wald:

Kinda strange don't you think that the Asians have been learning capitalism while we Americans have been having a love affair with communism?

Actually, the U.S. is about the only country in the world that taxes you on the way out if you decide to give up your citizenship.

An extreme example, but you'll get the idea:


This entire article could have been completely covered with one sentence:

"Get ready for prices to go up and incomes to go down."

As part and parcel of that, you may as well start preparing yourself for the loss of still more liberties while you're at it...

Erie County Resident

Hey Sam let me paraphrase this for you...
Ben Dover here it comes!!!

To the soon to be former USA may you R.I.P.

John Harville

And yet all of you claim your freedom of speech is abridged. Can you imagine what would have happened to you in Contango's 'Soviet' or with Darwin's "Hitler"? If it's soooooooooo bad to come, why not contribute to the downfall by withdrawing all your money and moving out... oops Canada and most of Europe have socialized medicine and same-gender marriage. I hear there's still room in Kenya...


Hah. And most of Europe has got severe money problems thanks in large part to socialized medicine (and free education, and lots of welfare), and is well along the road to an effective Islamic takeover. Why would I go THERE to get away from it HERE?

Is there anywhere in the world better to live, even now, than the United States of America? No. But that's like saying I'd rather have a broken leg than be diagnosed with cancer! Sure I would. But that doesn't mean a broken leg is any fun! Personally, I'd rather be healthy. I'd rather be FREE!

By the way, just because I realize there's nowhere better doesn't mean I should sit down, shut up, and let this country continue it's downward spiral, does it?