An overarching theme in Obama’s inauguration speech last Monday was the idea that we are all created equal. Everyone should benefit from economic prosperity and not just a few—or as they have come to be known “the 1%”. Obama also mentioned that the times change, and with change the government and the country as a whole have to bend and shape to maintain equality for everyone:
“For we have always understood that when times change, so must we, that fidelity to our founding principles requires new responses to new challenges, that preserving our individual freedoms ultimately requires collective action.”
Obama’s second term will surely reflect this idea of change. The country and the economy are not in the same conditions as he found them four years ago when he first was elected president. Some of the challenges that will face Obama in the coming four years in terms of finances will have serious implications for middle class American families.
Certainly some of the most important issues that face Obama during the next four years when it comes to finances include: student
loan debt, war costs, funding Obamacare, and immigration. These are also things that you as a personal finance guru should pay attention to as well because most likely these issues will affect your finances.
One important change for the younger finance gurus in the audience was passed in 2010, though it only takes effect in the coming presidential term: student loan reform! Among the highlights of this reform, the government has stopped letting private lenders profit off student loans that the government guarantees–a benefit to all taxpayers, in fact. For students themselves, loan repayment is based on a lower fraction of your income: 10% instead of the current 15%. This means lower payments right after graduation! And for those with even greater need, the legislation increases the amount of Pell grants that a person can receive, and these never need to be paid back at all! And there are even better rewards, too. If you enter certain public service jobs–like teaching or nursing–you may be eligible to have your slate wiped clean after ten years of good payments! In exchange for you doing something good for your country, your country will also do something good for you.
The main provisions don’t kick in until 2014, but some are already up and running! For instance, young people can save money by staying on their parents’ insurance until age 26. After this year’s over, you’ll HAVE to get insurance, or you will be fined by the government–possibly $1,000 or more! But on the other hand, the government will help you out: if you make too much money to qualify for Medicaid, you might still get a government subsidy to help you slots online pay your insurance premiums–even if you make up to 4 times the poverty limit!
While Obama and the Congress are unlikely to make any headway on the national debt (and a good thing–cutting the deficit means higher taxes or less spending, and both would be harmful to our economy), there is one big way that we can reduce every American’s government debt burden–and it looks like it just might happen! The key to doing this is simple: we just let more people into the country! For one thing, we could charge people to enter: plenty of people worldwide would be willing to pay $5,000 or more to become residents and citizens. And, more American taxpayers means a smaller debt burden per person, and if we focus on younger and higher-skilled immigrants, the effects could be huge! Younger immigrants wouldn’t add to social security or medicare costs for a while, but they could help make up current and future spending gaps. Another way that immigration could help our economy is by curing the housing market. After the housing market crashed, we were left with tons of empty homes, and some cities (Detroit!) are full of abandoned houses. Who better to fill these houses–and prop up the housing markets in depressed cities–then a batch of immigrants? Since current Americans are unable or uninterested in doing so, recruiting some immigrants would solve a few problems at once.
The cost of the wars in Afghanistan and Iraq continue to cost taxpayers thousands of dollars every second. Of that, most is the cost in Afghanistan. As America’s part in the war winds down over the next year or so, the cost to the budget of our wars should fall commensurately. As importantly as the money, this means more of our nation’s young people will be able to invest in careers to help people here: they can become teachers, health care professionals, and enter other jobs of the future. Nevertheless, civil war is likely to continue in Afghanistan, in Syria, and now in Mali and other places. This brings us back to the previous point: one thing that we can do to help both our nation and people of all nations is to have more immigration! In addition to lowering the debt and helping solve the housing crisis once and for all, it would let people escape war-torn countries for their chance at a better life in the good ole USA.
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