Tuesday, November 11, 2008

Post-Election, What Does the Future Hold?

Janet Colliton, Esq., of West Chester, PA, wrote an article published on November 10, 2008, in The Daily Local News (West Chester, PA), entitled “The Presidential Election Is History – What Does the Future Hold?

She told me that crafting her predictions "took a fair amount of time and research." I find her "predictions" fascinating, and sufficiently detailed to be credible.

With her permission, I reprint her article here (edited slightly by me, and annotated with some Internet links).

At the conclusion of her article, I'll make two predictions of my own.

On November 4, the Presidential campaign season finally came to a halt with the election of Barack Obama as 44th U.S. President. While first on the new President Elect’s agenda are measures to restore the economy, other matters will likely soon follow.

Having hauled my figurative crystal ball from storage, I will venture some predictions on the policy winners and losers for the next four years.

Social Security and Medicare

The Social Security prediction is easy and one I share with others. See, for instance Mark Miller’s “Retiring on Obama’s Watch: What To Expect From 44.” Mark’s expression was “First things first: privatization of Social Security is dead as a doornail.”

Readers will remember the plan introduced by the Bush Administration in 2005 to allow younger workers to invest at least a portion of their Social Security contributions in private accounts. Since these investments would include equities (stocks), probably more of us today would recognize the risk involved in the plan.

On a subject that I covered extensively in previous columns, Medicare was also edging its way toward privatization with Medicare Advantage Private Fee For Service (PFFS) plans, which still exist but without the prior heavy federal government subsidization. PFFS plans can charge to offer worse coverage than can be received under plain Medicare without a premium. The aggressive marketing of PFFS plans will likely at least slow over the next four years.

Health Insurance

If the idea of taxing employer subsidized health insurance benefits was a serious notion, it is dead too.

During the campaign, Senator McCain introduced the idea of taxing employees on their employer health insurance benefits in exchange for a tax credit. The plan was to level the field for individuals who purchase their own health insurance since they also would receive a similar credit. The move was based on the premise that each of us can bargain individually with health insurance carriers for the best coverage. With overwhelming leverage resting with health insurers, this perception could be questioned.

Greed Is Out. Is Community In?

The stock and mortgage market downturns have highlighted greed in our society. To blame greed as a cause, however, would be oversimplifying.

What is fairly obvious is that the creativity of businesses in packaging and selling debt products that no one understands seriously contributed to today’s problems and, when coupled with ostentatious displays of wealth by high level executives, evoked anger.

If greed is out, does this mean that community in? It is too soon to say but it does seem there is a sense of common purpose to solve financial problems.

Personal Responsibility is here to stay

One rallying cry of the early 21st century has been the mantra of “personal responsibility.” I predict that personal responsibility is with us indefinitely which, if softened by common sense, is not a bad thing.

In broadest terms, personal responsibility means that we do not expect another person or society in general to provide for us where we have the ability actually or potentially to do so on our own.

Where the idea goes awry is when it is interpreted to mean every person for himself regardless of the circumstances. Despite our idealization of the rugged individual, I do not believe we ever were a country that believed personal responsibility eliminates concern for the elderly, youth, sick and disabled.

Legislation that may remain

Some of the legislation that dramatically altered the landscape over the past few years is likely to remain although there could be some consumer friendly revisions over time.

The federal Deficit Reduction Act that radically tightened requirements for the Medicaid program went into effect February 8, 2006. It has no immediate replacements on the horizon.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, widely understood as being sponsored by the credit card industry to prevent consumers from getting out from under credit card debt has no apparent challengers at this time.

Relief on the Way

Look soon for passage of these measures, among others, proposed by the new administration to help individuals through the financial downturn.
  • Unemployment benefits will be extended.
  • Required minimum distributions (RMD) from retirement accounts will temporarily not be required and withdrawals, if made up to the RMD amount will temporarily be exempt from federal tax.
  • IRA and 401(k) owners who have not retired will temporarily be permitted hardship withdrawals up to $10,000 or 15% of the account without penalty but subject to regular income tax.
* * *
Under an additional heading of "New Legislation," I now make my two predictions:

First, Congress -- finally, after continuous past introductions of bills on this subject into Congressional Sessions since 2002 -- will refine and adopt an "Elder Justice Act". It will be signed into law by the new President within the first two years of the new administration. For background on the matters that could be covered by such federal legislation and the wide-base of national proponents for it, see: PA EE&F Law Blog posting "Federal "Elder Justice" Acts Appear Elusive" (09/12/08).

Part of my belief for passage of a federal elder justice law derives from the family connection of the new, incoming Vice-President, to the current Attorney General of Delaware, who already is very committed to elder justice issues in that state.

In the October 2008 issue (
PDF version, or text version) of the newsletter of the National Center on Elder Abuse, this update appeared under the heading Delaware: Senior Protection Initiative:
State Attorney General Joseph R. “Beau” Biden, III recently announced new measures to enhance the prevention of senior victimization and to enhance the prosecution of crimes committed against older Delaware residents.

“Through the Senior Protection Initiative, the Delaware Department of Justice is redoubling its efforts to prosecute those who have committed senior abuse, encourage victims to come forward and bring together state agencies, law enforcement and advocates to tackle these issues,” said Biden.
* * *

In addition to the newly created multidisciplinary team, the initiative will include public outreach efforts and increased training in detecting abuse for local law enforcement.
[Link added.]
Second, I predict that Congress will adopt remedial Federal Estate, Gift, & Generation-Skipping Tax legislation by July, 2009, consistent with Senator Obama's campaign proposal, for implementation on January 1, 2010:

Sen. Obama wants to freeze the 2009 estate-tax structure, which taxes roughly 0.3% of estates -- those valued above $3.5 million per person -- at a top rate of 45%. According to Deloitte Tax, a $5 million estate would pay a tax of $675,000 under this plan. * * *
See: PA EE&F Law Blog posting "Presidential Candidates on the Issues" (11/03/08).

Hey, my guess is as good as anyone's, right?

I thank my friend and respected practitioner, Janet Colliton, Esq., for her contribution, again, to this Blog as a guest author. She practices through Colliton Law Associates, P.C. (790 East Market St, Suite 250, West Chester, PA 19382; Ofc: 610-436-6674; E-mail: colliton@collitonlaw.com) on matters limited to elder law, Medicare, Medicaid, life care, special needs, retirement planning, and estates & trust administration.