President Barack Obama, Mitt Romney policies a mixed bag for LI
Republican presidential candidate Mitt Romney's plan to make the George W. Bush-era tax cuts permanent could hold down income taxes for many Long Islanders -- but his proposed cap on mortgage interest deductions could hurt area homeowners, experts said.
President Barack Obama's program to rebuild roads, bridges and schools could mean more construction jobs for Nassau and Suffolk residents -- but his plan to allow the Bush tax cuts to expire for households earning more than $250,000 could mean bigger tax bills for many Long Island families, economists said.
Local residents and experts are watching Romney and Obama carefully, hoping for hints about how their economic policies would affect the region. Many of the candidates' proposals, from tax cuts and eliminating government regulation to infrastructure rebuilding, could have a major impact here, they said.
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"I think Romney will hear us better because of his business background," said Marchesella, 59, of West Islip. "He has turned around businesses; he knows small businesses are the economic engine of this country."
Ironworker Joe McDermott, currently on a project at the Whitestone Bridge, is worried about the uncertain job market. He believes Obama, a Democrat, would be more likely to look out for workers like him.
"I feel like Obama is more like a working man," said McDermott, 46, of Brightwaters. "I feel if we don't support him it'll be a low class, a high class and no middle."
Pearl Kamer, chief economist for the Long Island Association, the area's largest business group, said no matter who is elected, "there is no quick fix for this economy, either nationally or on Long Island."
"It took three decades for us to develop the types of problems we've developed, and it's going to take some time to craft the policies that will alleviate some of these problems," Kamer said.
The local economy still is in transition from a reliance on defense plants and commuter jobs to high-technology companies and entrepreneurs, experts said.
LIA president Kevin Law said the collapse of the local defense industry shows "it does matter who we elect president."
But neither Romney nor Obama offers everything that Nassau and Suffolk need.
"With both candidates, it's going to be a mixed bag," Law said. "There are going to be some things in there that will be advantageous to Long Island and there will be some things that aren't."
Romney wants to make permanent the Bush-era tax cuts. He also would eliminate levies on long-term capital gains and dividends for households earning less than $200,000.
Edward T. Gullason, a Dowling College economics professor, said Long Island would benefit from these proposals, along with Romney's plan to end the federal estate tax and the Alternative Minimum Tax, designed to ensure that individuals who benefit from certain tax deductions or credits pay at least a minimum amount of tax.
The changes, Gullason said, "would translate into more disposable income here, which is the seed of greater consumer spending."
Obama would limit the Bush-era tax cuts to households earning $250,000 or less. That way, the middle class would get a break while increased revenues from higher-income households would go toward reducing the federal deficit.
But a half-dozen Long Island economists said the region's relatively high incomes mean it would be hit disproportionately by Obama's plan. Gullason, a staff member for the White House Council of Economic Advisers under President Ronald Reagan, said Obama's recipe would "hurt Long Island disproportionately because of our high incomes."
The Romney housing proposal that has generated the most controversy would limit income tax deductions for mortgage interest in order to cut the deficit.
Marianne Garvin, head of the Community Development Corp. of Long Island, a nonprofit housing advocacy group, said the impact on Long Island would depend on the severity of the deductions cap.
Romney has floated the idea of capping all deductions at $17,000, but has not provided details.
Carl L. Figliola, a Long Island University public policy and public administration professor, warned that "You remove the mortgage exemption and you hurt home ownership."
Obama said he hopes to find ways to allow more borrowers to refinance their mortgages. Obama has noted that today's low interest rates could help the housing market, but not enough homeowners are able to qualify for loans.
Still, Garvin said neither Obama nor Romney is addressing broader housing issues, including foreclosures and homes that are "underwater" and worth less than their mortgages.
"It needs to be a focus. The problem isn't over," Garvin said. "You can't just throw up your hands and say, 'Let the market prevail.' "
Romney has said he hopes less government regulation, improved job training programs, tax cuts and a focus on energy independence will create more jobs.
He wants to curtail the power of labor unions, saying they can increase costs and slow employment growth.
He also has promised to help companies that invest in research and development.
The latter is critical to Long Island's future, according to Law, the business leader. "We need to be encouraging the commercialization of more research in our region to help startups be successful and become large employers," he said.
Obama wants to cut payroll taxes for employers, especially small businesses. He has proposed a 50 percent reduction on the first $5 million of payroll. He also would spend $50 billion on bridges, roads and other transportation projects.
Richard O'Kane, head of Local 361 of the Ironworkers union, said such investments would help the construction industry. He said unemployment among his members on Long Island, and in Queens and Brooklyn, is as much as 12 percent.
* Eliminate tax breaks for companies that send jobs overseas; create incentives for the work to return to the United States
* Allow the George W. Bush-era cut in personal income tax rates to expire on Jan. 1 for households with more than $250,000 in income; continue them for everybody else
* Spend $20 billion to renovate schools, putting to work unemployed construction workers
* Spend $50 billion on bridges, roads, airports and other infrastructure
* Cut payroll taxes for employers, particularly small businesses (50-percent reduction on first $5 million of payroll)
* Institute a payroll-tax holiday for employers that hire and boost wages over the previous year
* Continue tax write-off for companies that buy equipment
* Promote manufacturing and alternative sources of energy
* Make permanent, for all, the Bush-era reduction in personal income tax rates -- without increasing the federal deficit
* Maintain the lower tax rates on capital gains, dividends and interest that were instituted by Bush; eliminate the tax for households with income below $200,000
* Cap tax deductions for mortgage interest, local taxes and medical expenses
* Eliminate the federal estate tax and Alternative Minimum Tax
* Reduce the corporate tax rate from 35 percent to 25 percent
* Expand tax credits for research and development
* Repeal tax on foreign profits of U.S. companies
* Promote free trade but challenge China's unfair practices
* Replace the Dodd-Frank financial-services rules; review existing regulations and place cap on future ones
* Expand domestic energy production, including on federal lands
* Raise visa caps for highly-skilled foreign workers
August: 7.8 percent
Price of regular gasoline
Oct. 12: $4.12 per gallon
July-September: 70.2 points
*Readings below 76 points indicate that the number of people who are pessimistic about their economic future exceeds those who are optimistic.
**Percentage of homeowners who are 90 days or more late with mortgage payments
-- Compiled by James T. Madore