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Get Four
|  | OCTOBER 25, 2004
By Amey Stone Bush or Kerry? A Pocketbook Rating Here's a primer on which candidate would likely be better for voters concerned about jobs, energy costs, real estate, taxes... Still undecided about who to vote for on Nov. 2? One way to decide is to simply vote your pocketbook. While it may be hard to judge which Presidential candidate would be more likely to improve the country's general health and well-being, it's sometimes easier to determine which would have the most impact on the dollars-and-cents issues you personally care about most. Overall, Bush comes out strongest on pocketbook issues that affect the wealthy. He emphasizes lower taxes and less regulation of business, which may translate into higher stock market returns for industries operating with fewer costly restrictions. Yet Bush's tax cuts and aggressive military policy have contributed to soaring budget deficits that have contributed to a weaker dollar. In contrast, a central feature of Kerry's campaign is a promise to help a pinched middle class that's coping with a weak labor market and minuscule wage growth, at a time when the price of health care, tuition, energy, and food have soared. Kerry is expected to promote more regulation. Keeping tight reins on profit-maximizing companies may lead them to raise prices, but may provide consumers with better, safer goods in the long run. Following is a list of key issues and which candidate seems most likely to do the best to protect your pocketbook on each one: Jobs: Kerry President Bush has already had a four-year shot at getting America hiring again, and he has come up short. His policies have resulted in economic growth and a boost to corporate profits -- yet only pitiful job creation. Fear of another terrorist attack, which Bush keeps in the forefront of the national psyche, and testy international relations aren't helping businesses' willingness to expand and invest. That means fewer jobs. Also limiting job creation: dramatic increases in the cost of health insurance and benefits. Kerry's proposed health-care reforms could mitigate that burden, which could help stimulate more hiring. Given Bush's track record, a new jobs policy is worth a try. Energy costs: Bush Energy prices have soared under Bush. Going forward, however, it seems clear that the President would do more to bring prices down, in part by promoting policies to increase oil and gas supplies. He wants to hike domestic production of oil in places such as the Arctic National Wildlife Refuge and of natural gas in the Gulf of Mexico. His energy bill is widely regarded as a boon to producers. Morningstar's Oct. 21 forecast for crude-oil prices, from a current level of $55, is that they would fall to $44 in 2005, $34 in 2006, and $33 in 2007, due mainly to hikes in production. In contrast, Kerry is likely to push for stronger environmental protections, which would mean tougher emissions standards for both auto makers and coal companies. This would spark higher costs for coal-fired utilities. It would also hike costs for the auto industry, which would pass them on to the driving public. Kerry would also, however, be more likely to promote alternative-energy development and use. Renewable energy sources cost more in the near term but ultimately could reduce demand for fossil fuels, save money, and better protect the environment over the long haul. But if it's less expensive and more plentiful gas and home heating oil you're after now, vote Bush. Real estate: Kerry The Democrat would likely ease pressure on government-sponsored mortgage giants Fannie Mae FNMand Freddie Mac FRE, which have come under fire by the Bush Administration for weak financial controls. Those lenders help make mortgages more available. Kerry also stands to maintain real estate values by promoting environmental protections. There's nothing like a nearby ecological disaster or environmental problem to destroy property values. O.K., maybe the odds on that are relatively slim. But here's something a bit more pressing to consider: The big risk to housing prices is dramatically higher long-term interest rates. Such higher rates could happen if the bond market gets too worried about the strength of the U.S. economy and demands higher returns for holding long-term bonds (mortgage rates are typically tied to the 10-year Treasury). Large federal deficits are already contributing to a weaker U.S. dollar and limiting the appeal of U.S. Treasuries to foreign buyers. Getting the budget deficit down is key to keeping interest rates low and homes affordable. Both Bush and Kerry promise to cut the deficit in half over the next four years, but given Bush's track record, we think Kerry has a stronger commitment to that goal.
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