Three Stories That Tell the Story

Three stories from the Associated Press yesterday tell the whole story for me as regards next week’s election.

In the first story, the Commerce Department reports that Gross Domestic Product (GDP) fell at an annual rate of 0.3 percent in the third quarter. Consumer spending, which accounts for two-thirds of the economy, dropped by the largest amount in twenty-eight years during the same period. The Labor Department concurrently reported that applications for unemployment benefits remained at elevated levels. Many analysts believe GDP will decline even more in the fourth quarter and will continue negative in the first quarter of 2009.

This translates to a looming recession of indeterminate severity and length. Unemployment is up and consumer confidence is down. A whole lot of people are hurting out there right now.

Despite all of this, in the second AP story, Exxon Mobil gleefully reported earning $14.83 billion in profits during the third quarter. Exxon said its net income jumped nearly fifty-eight percent and revenues rose thirty-five percent during the period. Exxon was able to achieve their success despite nagging concerns over sagging production numbers. The profits reported represent an all-time high for a U.S. corporation. Exxon broke the previous record set by them just last quarter.

In the final story from the AP, American Express announced it plans to cut seven thousand jobs, about ten percent of its workforce, as part of its efforts to slash costs in 2009. The company is also suspending management-level salary increases and instituting a hiring freeze. American Express says the cuts are necessary because its customers, who tend to be more affluent than other credit card users, are nonetheless having trouble paying off debt and are pulling back their spending.

American Express says job cuts will be across various business units but will primarily focus on management positions. This translates to middle class professionals. The sort of folks New York Times columnist David Brooks likes to refer to as “patio man.”

When I look at those three stories, my choice for the next President of the United is clear. One candidate wants to structure tax relief at those seven thousand middle class families who have just lost an income provider during a recession. The other candidate want to structure tax relief at big corporations like Exxon and their CEOs. I stand with the former.

I readily admit my own bias in the evaluation. See, I have three stories of my own to match the national picture.

First, I lost my job of twenty-three years in May 2007 as part of a reduction in force by my then-employer. I was one of the lucky ones and found another job three months later. Some of the people laid off at the same time as me are still looking. When my Director let me go, he explained his boss’s boss told him to cut expenses immediately so our earnings would stay high. I guess it was not enough because I learned last month that twenty-eight of the forty-three people who remained in my old department will have their jobs outsourced to India at the end of this year.

Second, my 401K retirement account is worth less today than it was when George W. Bush took office. He is the first President in my adult life, the first President for whom I personally voted (in 2000), under whose watch this has occurred.

Third, I have long had a home equity Line-of-Credit account from my mortgage company. I only used it once in the past decade but it was always nice to know it was there to handle any large, unexpected emergencies. Better to pay six percent interest rather than credit card interest of fifteen percent, twenty percent, or more, I reasoned. In August, the mortgage company informed me of the indefinite suspension of all of its Line-of-Credit accounts, due to falling home values.

I am not in any immediate, desperate straits. However, when I think about how hard the loss of security from these types of downturns hit me, it is not hard to image how frantic and hopeless others must feel who are living from day to day.

Independent analyses of the two Presidential candidates’ tax proposals were just completed by the Tax Policy Center and the accounting giant Deloitte. Both found that individuals and families making less than $100,000 per year would pay fewer taxes under Senator Obama’s plan as compared to Senator McCain’s. Those making $100, 000 to $250,000 per year would fare about the same under either plan. Those making more than $250,000 per year would pay fewer taxes under Senator McCain’s plan.

According to the Census Bureau, the median U.S. household income is $50,233. The Tax Policy Center found that married couples with two children and both parents working at this income level would pay $284 less in taxes under Obama’s plan. Deloitte found such a couple would pay $300 less in taxes under Obama.

Conversely, married couples with two children and both parents working who earned $500,000 per year would pay $3,363 less in taxes under McCain’s plan. Deloitte found such a couple would pay $3,100 less in taxes under McCain.

McCain has particularly lambasted one aspect of Obama’s plan, dubbed a “Making Work Pay Credit.” If enacted, some low-income couples now paying no income taxes might receive a $1,000 refund because of it.

McCain is telling audiences that Obama “gives away your tax dollars to those who don’t pay taxes,” based on this credit. “That’s not a tax cut,” McCain fumes, “that’s welfare.”

What McCain does not mention is that the credit is not applicable unless one or both providers in a low-income family are working. This is not a welfare payment to the structurally unemployed. It is an incentive to the working poor to remain working, rather than giving up and sinking into welfare and structural unemployment.

I do not doubt McCain is a decent and intelligent man but he really is following the same old failed Republican policies in criticizing his opponent’s plan as well as in his own plan.

Perhaps McCain is the more experienced hand on the tiller. Maybe he has even steered clear of some dangerous reefs and shoals in the past. However, when boarding a ship, we should be concerned not only about the captain’s past voyages but also about where he plans to take us on our own voyage with him.

I have studied the charts drawn by both Obama and McCain and I am convinced the old master mariner has plotted a course to run the Ship of State aground, all the while stubbornly insisting he is heading out to open sea.

McCain says he is steering toward a brightness that he believes is the light at the end of the tunnel. He has forgotten he is driving a ship and not a train – there is no tunnel. That brightness ahead is the white cliffs of Dover and he is going to ram into them head-on.

Sure, you try to be fair to all in any tax plan but you also must target relief at those who are hurting the most.

Here’s another local story. The Terrace Hotel, a venerable downtown Cincinnati landmark since 1948, announced yesterday that it is closing its doors, effective today. Hotel management offered no reason for the sudden closure but said it was unrelated to the economy, a claim met with general skepticism. Two middle-aged women, who ride on the same bus I do, work at that hotel as part of its housekeeping services. They were not on the bus this morning.

I am far more worried about those two women and my twenty-eight former co-workers and those seven thousand former American Express middle managers than I am about the owners and management of Exxon in the months ahead. What is more, I do not think I am acting like a socialist or engaging in class warfare or championing big government for feeling this way.

As Obama asked in a speech last night, “Since when did selfishness become a virtue in this nation?”

I am as big a fan of self-interest as the next advocate of capitalism. However, it was always my opinion that it needs to be enlightened self-interest. We seem to have lost sight of that in the past eight years and I have already discussed the “light” McCain is steering toward for the next four years.

Barack Obama addresses my concerns with his policies. John McCain does not.

End of story.