Bail outs do seem likely – and one of the things I think shouldn’t be done – but those would likely happen regardless of who wins – there’s too much political pressure being brought to bear. The only question would be WHO would be bailed out. If it’s the Democrats, it’ll be the homeowners who get bailed out. If it’s the Republicans, it’ll be the banks and the financial houses that sold MBS’s. Between those two, I’d rather bail out the homeowners.
Higher taxes all around seems very unlikely though. Obama has pledged to cut middle class taxes (though he has also promised to revoke George Bush’s tax cuts on the highest earners). Under Obama, I think those of us making 125K or more will probably see a slight tax increase, those making 200K+ will probably see a significant tax increase, and anyone here making less than 75K will probably get a tax cut. He has also said he is likely to increase the capital gains tax on a sliding scale up to 28% for the highest amount of gains.
Bear in mind though that the MOST likely thing that will happen is the restoration of the 38% tax bracket for those making 200K single/350K married, and the 33% bracket returning to the 35% level – as those he can have done without needing new legislation (by simply letting the Bush tax cuts for those brackets lapse). If the Democrats don’t have a filibuster proof majority (which seems likely) the GOP will likely filibuster any additional taxes.
Unfortunately, we do need to increase taxes somehow because we do have to dig ourselves out of the hole that we’ve been dug into – and given how badly the middle class has gotten squeezed during the Bush Presidency, it’s neither prudent nor likely that they will get hit with it.
