What a Bush win means to your wallet

You're likelier to pay fewer taxes, but more at the gas pump. You could have more control over your retirement fortunes, but there's less pressure now to lower drug prices

Author: MSN Money Staff

Published: November 3, 2004

Wall Street has wasted no time in cheering the re-election of business-friendly George W. Bush. What does another four years of a Bush presidency mean for more down-to-earth pocketbook issues?

Taxes

The president has repeatedly called on Congress to make his 2001 and 2003 tax cuts permanent, and now that the Republican majority in both houses appears to have solidified, he's likely to get his way.

Bush has said failure to make the cuts permanent would amount to a tax hike and hurt job growth by threatening the economic recovery.

The 2003 tax bill boosted the $600 child credit to $1,000. The law also gave new breaks to married couples and cut rates for higher-income taxpayers and investors. When the law was passed, the Tax Policy Center estimated that the typical taxpayer would save $671 per year.

Congressional analysts say making the tax cuts permanent would cost about $1.3 trillion over the next 10 years.

Bush has also talked about tackling tax reform in a second term, particularly reforming the alternative minimum tax.

Health care

During the campaign, Bush and Kerry touted sharply different approaches toward helping the 44 million Americans who now live without health insurance. Bush's proposed approach relies on fiscal and market reforms aimed at making coverage more affordable.

The Bush plan would provide health insurance to an additional 2.4 million Americans over the next decade, at a cost of $90 billion, through the following:

A refundable tax credit to cover up to 90% of the annual premium on an individual health policy. Taxpayers who are provided health coverage by their employers or who belong to a public plan would not be eligible.

A tax deduction equal to the premium paid for a high-deductible health plan, defined as a deductible of at least $1,000 for individuals and $2,000 for families.

Creation of Association Health Plans (AHPs) under which small businesses and individuals could lower their underwriting costs by banding together across state lines to form insurance-buying pools.

Drug prices are not likely to drop significantly under a second Bush term. In the campaign, Kerry took a stance in favor of importing cheaper foreign drugs. Wall Street is expecting a small rally among pharmaceutical stocks with the news of Bush's likely re-election.

Social Security

The president has vowed to pursue partial privatization of Social Security in a second term, by allowing younger workers divert a portion of their Social Security payroll taxes to private accounts.

Because those payroll taxes now fund the benefits of current retirees, it remains to be seen how the president plans to make up a shortfall estimated as high as much as $2 trillion, or how he will meet future threats to the solvency of the system. Bush has said he will preserve benefits for current retirees and near-retirees.

Jobs

The president has said he will spend $500 million on education and training to improve skills of American workers under an initiative the White House calls "Jobs for the 21st Century" aimed at schools and local community colleges.

Student loans/grants

Bush has proposed raising the maximum Pell Grant award by $1,000 to $5,050 for low-income students and increasing first-year Stafford loans from $2,625 to $3,000.

Energy

Consumers have been hit recently by spiraling energy costs, as the price of oil has hit record highs. Whereas Kerry emphasized conservation in his campaign, Bush is likely to renew his push for greater domestic production, including drilling in environmentally sensitive areas such as the Arctic National Wildlife Refuge.

Analysts have said that increasing domestic production without curtailing demand is unlikely to have much effect on the consumer price of gasoline or heating oil.