The Libertarienne

Anti-business? Revelations from review of Obama & Biden’s personal finances

Kiplinger ran an article this month titled “An Inside Look at the Personal Finances of the Obamas and the Bidens“  that reveals a deeply personal distrust of the stock market and calls the financial acumen of both the President and the Veep into question.   Tellingly, the investment strategies (or lack thereof) provide insight into the fundamental beliefs that shape the decisions Obama and Biden make.

Lack of trust in the market? Or lack of understanding?

Many people – myself included – describe the Obama administration as being “anti-business.”  I stand by that statement – the emphasis on regulation and belief in government as a creator of jobs – suggest to me that the President is deeply skeptical of private enterprise.   His investments underscore that.  Obama, according to the article, is worth almost $5 million.  However, 92% of his money is in cash.  Only $325,000 is invested in the stock market.  That investment sits entirely within a 500-stock index fund.

Biden’s financial approach is similarly weird. He and wife Jill have a mishmash of nine checking and savings accounts, with balances between $1,000 and $15,000.  They also own two CDs, worth between $100,000 and $200,000.  Like Obama, they have a very small exposure to the stock market.

These strategies say one of two things about Obama and Biden.  They either don’t understand the stock market, or they don’t trust it.   And by extension,  you can also say they both lack trust in and understanding of the American business marketplace that underpins the stock market.

A lax attitude toward personal debt … and the nation’s?

Both Obama and Biden also carry debt, and neither are doing a particularly good job of managing it.   Obama hasn’t refinanced his house since 2005.   With rates at an all-time low, and with his balance estimated at $750,000, he could end up saving himself more than $100,000 if he refinanced.

Biden carries considerably more debt, borrowing against home equity lines of credit and insurance policies in addition to carrying a traditional mortgage.   Some of his loans carry interest rates that are stunningly high (9.9%) given the historic lows.   He has enough cash on hand to retire some of the higher rate loans, or he could consolidate them.  Either way,  Biden appears to be completely disorganized – and he’s doing some really stupid things with respect to his personal finances.

The fact that both men take a lax attitude toward managing debt in their personal lives is reflected in the fact that they seem to be completely at ease with the burgeoning government debt.   I can’t help but believe that someone with sensibilities geared more toward penny-pinching wouldn’t take a more active approach in managing the US debt.

Simple lack of financial acumen? Or something else?

While I’m no fan of their politics, I’m not willing to say that Obama and Biden are idiots.  They are both smart and accomplished people.   I’m confident they both understand concepts like compound interest.   And while they’re both busy, busy men, they’re surrounded by people.   To me, the “too busy” and “I don’t get it” excuses for poor financial planning simply don’t apply to either.

So what is going on here?  Why do a couple of the most powerful men in America have such ineffective, unsophisticated approaches to their own personal finance?    It’s going to get a bit ugly, but here are a few of my theories:

• Narcissism: Once out of office, rich speaking gigs, book deal and lobbying gigs await.   Obama and Biden (and their wives) may be banking on their future ability to cash in, and thus aren’t concerned about paying attention to their day-to-day affairs.
• Belief in big government:   The retirement benefits received by former Presidents include a pension, Secret Service protection, and reimbursements for staff, travel, mail, and office expenses. The Presidential pension is not a fixed amount, rather it matches the current salary of Cabinet members (or Executive Level I personnel), which was $191,300/year as of March, 2008 and is now higher.  Biden and his wife Jill are currently on track to receive pension benefits of about $90,000 annually when they retire.   So, effectively, defined benefit  plans – which have fallen far by the wayside in the real world of private enterprise – form the basis for the futures of both the President’s and the VP’s families.   This “I don’t have to take care of me because the government will,” belief is strongly reflected in the Democratic leadership’s dim view of personal responsibility and the fact that big government is the solution they offer to most problems.

Simply put, it’s not Mitt Romney who is out of touch.  He gives copiously to charity (as in millions of dollars) and sees to it that his investments are managed aggressively and skillfully, despite the fact that he (like all pols) needs to be certain to avoid conflicts of interest.

Who will do a better job of running the economy and the country’s affairs?  My vote is for the guy who respects business and knows how to handle his own money.  That would be Mitt Romney.