The confetti has settled, the polls have closed, and the billboards are coming down — after a long campaign, Americans have chosen President Barack Obama to lead them toward a brighter and more prosperous future.
While all the pomp and circumstance of an election may have briefly diverted Americans’ attention from a sluggish economy and a poor job market, it won’t take long before everyone wants to know: What can this administration do for me? Although no one should expect an instant economic boost, there are some ways the new regime may influence your financial situation. We checked in with experts from around the country to find out what the next four years may do for your wallet.
What will the Obama administration do for my investments?
The top 2% of earners in America have already braced themselves that they’re going to be paying more in taxes, says Ken Kamen, President of Mercadien Asset Management in Hamilton, New Jersey. Thankfully, the majority of Americans will find their tax rate unchanged.
“For someone who is going from making $400,000 a year to $380,000 a year, life isn’t really changing,” Kamen says. “However, everyone — regardless of income level — is going to see an increase in capital gains taxes.”
In 2013, the long term capital gains tax rate could be increased from 15% to 20%. Additionally, a tax of 3.8% will be added to help cover growing Medicare costs. This means that long term capital gains taxes will stand at either 18.8% or 23.8% moving into the New Year. Taxes on dividends are also expected to increase.
“Obama wants to raise taxes to reduce the deficit. Right now taxes on dividends are slated to go from 15% to 43% for the highest income earners,” says Brian Greenberg, President of Brian C. Greenberg and Associates, a CPA firm based in Marlton, N.J. “If this occurs, stocks whose value is derived from their dividend payments will go down, and investors will be receiving less of the company-paid dividend.”
What will the Obama administration do for my healthcare costs?
Employers, employees, and providers will see numerous changes to the healthcare system under the changing rules of Obamacare law, says Roy Laux, President of Synergy Financial Services in McKeesport, Pennsylvania. States are charged to regulate many of the provisions of Obamacare, and there may be a “scramble” to comply as 30,000,000 newly insured individuals are integrated into the system.
“Health care costs will continue to rise, but millions of people will find more affordable health insurance once the exchanges are opened in 2014,” says Steven S. Smith, Director of the Weidenbaum Center on the Economy, Government, and Public Policy and professor of political science at Washington University.
One of the lesser-known provisions of the Affordable Care Act is a requirement that non-profit hospitals publish their financial assistance policies, and give patients who need assistance time to apply for it before taking extraordinary collection efforts, says Gerri Detweiler, Credit.com's Personal Finance Expert and Dimespring contributor.
“This will help prevent complaints about aggressive debt collectors hounding patients for debts they may not even know they owe or that they can’t afford,” says Detweiler. “And since more people will be covered by insurance, that should mean more affordable and more predictable costs.”
Detweiler says she is encouraged by the current bi-partisan support in Congress for the Medical Debt Responsibility Act which would require that collection accounts related to medical bills be removed from credit reports 45 days after they are paid or settled.
What will the Obama administration do for my college and career?
When it comes to college, the number of students receiving Pell Grants has increased under Obama by about 67%, which has alleviated some of the debt for students, says Lee Boggs, professor of political marketing West Virginia University. However, critics say that the amount of grant money has not kept up with the rising tuition cost.
"Since the average college student graduates with over $26,000 in student loan debt, that can hamper one’s financial freedom for quite a long time,” Boggs says.
However, Kamen says that there’s been some talk about capping what the loan repayment would be as a percentage of a person’s income until the loan is paid off.
“There have been a lot of bold ideas thrown around for helping students, but the reality is this issue isn’t going to heat up until spring of 2013 when people start filling out their tax returns,” Kamen says.
Currently, the Consumer Financial Protection Bureau (CFPB) is helping student loan borrowers make better decisions before they take on debt by offering improved disclosures and education about unfair debt collection practices.
“Hopefully those two issues will converge and the CFPB will take a close look at debt collectors who collect student loans, and some of the abuses borrowers are experiencing,” says Detweiler.
As for career, Kamen says that the job market will improve when the two parties in Washington learn to work together — and the next few months have a lot of potential.
“The logjam in Washington is starting to loosen, and if Obama starts doing more work across party lines, we’re going to see a lot of money rolling out and a lot of investments being made in job creation,” says Kamen. “It’s just been so bad. The fact that it made headlines around the nation when Chris Christie and Obama went for a walk on the beach together just shows you how uncooperative everyone has been. When that improves, the job market will definitely get better.”