The Insurance Doctor

Tag: Economy

  • Biden’s Gift to New York!

    Biden’s Gift to New York!

    Last weekend, President Biden’s $1.2T infrastructure bill passed, in a bipartisan Senate and House of Representatives. This bill will have a disproportionately positive benefit for New York and Rockaway in particular!

    There is an old saying, “the squeaky wheel gets the oil,” and this is what is going to happen with New York since we have more infrastructure needs than every other state except California.  If initial estimates hold true, roughly $170B (over 14% of the total) would be earmarked for New York State infrastructure projects.

    The New York Funds Breakdown is as follows:

    1. $12.5B:  For Roads, Highways, Bridge Repair, Electric Vehicle Infrastructure.
    2. $1B: For our 3 Airports:  JFK, $300M, Laguardia, $150M and Long Island MacArthur, $21M.
    3. $58B: For Trains:  $22B for Amtrak Improvements (includes the Gateway Tunnel to NJ Project, $24B for Northeast Corridor Modernization and $12B for Intercity Passenger Rail, including a “High-Speed” Rail! In addition, completion of the 2nd Ave Q-train to 125th st. and installed handicapped-accessible elevators at all stations.
    4. $90B: For Water Infrastructure:  $14.7B for the EPA (Environmental Protection Agency) Drinking Water Revolving Fund (provides grants and loans for projects). $14.7B for the EPA’s Clean Water Revolving Fund (for water quality improvement) and $55.4B in Supplemental Emergency Appropriations. 
    5. $9.8B: For Clean Buses and Mass Transit.  

    While this bill is a “game-changer,” I have mixed feelings about it.  To use an insurance term, it is great to see that both parties can come to somewhat of a consensus by “unbundling” the bill and breaking it off the proposed $2+T “Social Spending” bill.  

    My top 5 benefits to the United States from this bill:

    1. It will create hundreds of thousands of jobs and get people off couches!
    2. This will be a boon to the “Steel Industry!”
    3. Additional Modern Roads Will Increase Trucking Efficiencies and Cut Back on Carbon Emissions!
    4. Increase Domestic job creation!
    5. Drinking Water Quality Will Improve, Which Will Improve American’s Health.  There is a Water Company Called “Heart Water” That Could Solve Our Water Problem if Given the Chance to Scale (keep a lookout for a future column on this).

    As we all know, Rockaway has been devastated by Super Storm Sandy. We have shown our resiliency building Rockaway back better over the past 9 years.  This splurge of money can be used to:

    1. Fix Rockaway’s roads, especially Beach Channel Drive.
    2. Develop Additional Transportation Methods from Rockaway to Manhattan.
    3. Continue Improvements for future storm resiliency.
    4. Create new jobs in Rockaway.
    5. Prices of electric vehicles will come down as auto makers introduce their new EV models.  I predict the 2023-2024 models will be the optimal time to buy electric!  Buying electric and adding charging stations will improve Rockaway’s air quality and reduce carbon emissions.

    The general public might not find It easy to grasp how much $1 Trillion dollars is, as we could have done this while spending less money.  According to www.USDebtClock.org, the current US Deficit sits at $28.8 Trillion or $86,637 per person.  The proposed $3.5T package (not yet passed) would be equivalent to over 12% of our current deficit.

    To give an example how we got ourselves into this deficit situation, look at the Federal deficit progression below:

    President: Debt at Start of Office                       Debt When Leaving Office

    George Washington (1789-1797)                       $82 Million:  211 years later

    William J. Clinton (1993-2001) $4.4T                 $5.8 Trillion

    George W. Bush (2001-2009) $5.8T                  $11.9T

    Barack Obama (2009-2017) $11.9T                   $20.2T

    Donald J. Trump (2017-2021 $20.2T                 $27T

    In summary, this is the largest investment in domestic infrastructure since the 1950s!  It is prudent to spend money on long-term projects with trickle-down effects that will improve this country and our quality of life.

  • “BIDENOMICS!”

    It now appears Joe Biden will be taking over the reins of power in January. I feel this is a good time to address some changes he might make based on his platform.  The question is, what does “BIDENOMICS” mean to your wallet or purse?

    Over the years, I have found that politicians’ actions are often incongruent to their words.  Here are some of his proposed changes:

    1. People Making Under $400,000 Will Be Unaffected: His proposal is to leave those earners alone and add a “Social Security Increase Tax” of 6.2% on ALL income earned over $400,000.  Social Security is in jeopardy as baby boomers (10,000 people turn 65 every day) born from 1946-1964, are withdrawing Social Security benefits faster than working Americans are contributing; hence, the affluent would be bridging the Social Security gap. 
    2. Income Earners Over $1,000,000 Would Incur Higher Capital Gains Taxes: Americans with over $1 million in total income would see income brought in from dividends, as well as capital gains taxed like their wages.  In this scenario, if you had a stock or business sale, your capital gains tax doubles from 20% to roughly 40%.  This would change many business and investment decisions.  It would not be a bad idea to consider making those sales now as usually these changes are “Grandfathered.”
    3. Corporate Tax Rates Would Be Increased:  His proposal would increase corporate tax rates from 21% to 28%, a 33% increase.  This is a big change that would have corporations reevaluate moving or setting up subsidiaries overseas. 

    In essence, his proposals would be taxing the rich and protecting the middle class.  Based on our current national and state budget deficits, I do see the middle class paying more taxes eventually; however, not in the beginning.

    President-Elect Biden has vastly different viewpoints on many issues than President Trump, especially on energy, climate change, health care and infrastructure.  The “Green New Deal” was a centerpiece in Biden’s campaign.

    Some areas where President-Elect Biden said he would concentrate on include:

    • Traditional Infrastructure
    • Digital Infrastructure
    • Electric Cars
    • Cannabis
    • Telemedicine
    • Green and Clean Energy

    There has been much unhappiness and angst over the fact that Congress has not yet passed an additional stimulus package since the one that ended on July 31.   Many believe that there is a possibility that another stimulus package may be passed either just before, or shortly after the inauguration on January 20, 2021.

    Keep in mind that it appears there will remain a split in control in the Senate and House of Representatives, so the next stimulus package might not be as large as people hope.  These “checks and balances” are, in my opinion, why the stock market has reacted so favorably thus far.

    I see the next stimulus including:

    • Extended Unemployment Benefits
    • Emergency Renters Assistance
    • A 2nd Stimulus Check
    • Some Type of a State-Level Aid Package
    • Additional Triple P (Paycheck Protection Program) Funding

    If you are interested in being added to our monthly e-newsletter list, email “Add Me” to Rob@InsuranceDoctor.us. 

    Be Positive, Test Negative!

    By:

    Robert C. Intelisano CLU, CSA, LUTCF

    The Insurance Doctor

  • The “Nobody CARES Act”

    The “Nobody CARES Act”

                Reflecting back on my childhood, the week after Labor Day was usually a time when I was feeling a range of emotions from excitement (to see many of my school friends whom I missed over the summer) to some apprehension about the new school year.  This year, the vibe for both students and parents is different because of COVID-19.

                When “The CARES Act” was enacted in late March everybody knew the $600/week unemployment bonus was expiring on July 31, 2020.  If politics were like golf, originally (in July) the Senate was playing for the “COVID” 19th hole, whereas the House of Representatives was playing for the next round.  The Senate said they would be willing to address the unemployment issue by itself, while the House of Representatives was holding out for a “new comprehensive package.” 

    RESULTS: Both parties went on vacation for the first 2 weeks of August.  President Trump then signed an executive order to cut these benefits in half ($300/week) with the states (most of whom are broke) expected to kick in an additional $100.  For New York State, Governor Cuomo’s office calculated that bill would add an additional $4.2 Billion to the $30 Billion we are already in the hole.  It is unlikely that most people will receive the extra $100 any time soon.  As of this writing, it is not clear if anyone has received the said $300/week which should be retroactive to August 1st.

                When the President made comments about the United States Post Office, the House of Representatives reconvened (and flip-flopped) that weekend to address just that Post Office issue, leaving The NOBODY “CARES ACT” dormant through the month of August.  Does this mean that “their votes” are more important than the people and families they represent?  It is time the leaders who represent us put our needs before their own!

                In addition, the $1,200 stipend and The Triple P (Payroll Protection Program) money from the NOBODY “CARES ACT” has mostly dried up (it ended in August) as business owners have been paralyzed due to conflicting rules and uncertainty as to when and how they can reopen.  To complicate matters, the Federal Government is facing a shutdown on September 30th and the USA’s cumulative debt is on schedule to eclipse the size of our economy next year.  We would be joining Japan, Italy, and Greece with debts larger than their economy.  It’s expected that U.S. debt will be equal to 98% of the nation’s Gross Domestic Product (GDP) by year-end. 

                The restaurant industry in New York City has felt the brunt of these political decisions.  Queens restaurants, in particular, have been hamstrung by this as Rockaway residents can drive 20 minutes and be on Long Island to enjoy alcohol and indoor dining.  New York City and New York State have had the lowest COVID-19 positivity rates (by the percentage of tests) in the country for some time now.  Alcohol (which I call truth-serum) has been a big factor in COVID-19 spiking, especially in colleges.  Why not allow city restaurants to reopen first with no alcohol?  Malls and Casinos are now opening (at 50% and 25% capacity, respectively).  The current explanation for not allowing city restaurants to open for indoor dining is because the SLA (State Liquor Authority) and the New York State “Task Force” does not have enough employees to inspect the restaurants.  Inspections could be easier (and take less time) if this short-term compromise is proposed.  Instead, lawsuits will bring longer delays before the cold weather is upon us.

                All these economic decisions have ripple effects and are interrelated.  Take the “school dilemma” for example.  What is now happening is that child-care needs are affecting jobs.  Families either cannot find or afford home care for stay-at-home students.  This is causing secondary wage earners (the majority are women) to give up their jobs even though they are in their prime income-earning years (ages 25-54).  For some households, that $300+ per week check could make the difference and save those jobs. 

                It is not all “gloom and doom!”  Although conducting business will be difficult this fall in many professions, there are planning strategies available to us in order to overcome these roadblocks.  Stay tuned to this column for more creative ideas on how to do so and KEEP THE FAITH! Feel free to reach out to me at Rob@InsuranceDoctor.us to continue these discussions, for a personal review, or if there are topics you want to learn about, do not hesitate to contact me!

    Rob Intelisano
    The Insurance Doctor