The budget submitted by President Obama has many positives and some negatives for the life insurance industry.
But, most of all, its enactment in general would provide some certainty for people involved in the life insurance business, whether they are underwriters, agents or their customers.
But, don’t hold your breath that the budget will be enacted by this Congress.
As bizarre as this may sound, a better bet would be on your favorite horse, the lottery or the roulette wheel at the nearest casino.
The reason is that the current gridlock in Congress is good business. Republicans have made it clear they will block everything proposed by this administration and Democrats in this Congress.
To put it another way, the “for sale” sign is up in Congress. Republicans, having been successful in blocking all Obama initiatives as “liberal” giveaways, a “federal takeover” of private business, or adding to the budget deficit, will do everything they can to force the administration to kick everything down the road.
Doing so, they are finding out, is the best way to increase campaign contributions by telling vested interests that they can get a better deal for themselves if Republicans win a stronger hand in the next Congress.
The result is that the only major legislation that is likely to pass Congress this year is watered-down financial services reform.
Banks are using their hefty war chests and bonus money to ensure that the reforms ultimately drafted will do little to change their way of doing business.
They would like to delay any action, but that is unrealistic.
The reason is that after spending trillions of dollars to bail out Wall Street, while Main Street suffers, calculating members of Congress are very much aware that failure to impose some measure of reform on Wall Street will backfire.
Sen. Chris Dodd, D-Conn., is jumpstarting work on a Senate reform package as a means of putting pressure on Republicans to create a bipartisan bill, but it will still be some months before legislation will be enacted. And, the devil will be in the details.
While insurers hope to escape relatively unscathed from the financial reform effort, they will be major victims of the Republican effort to stop everything else.
Tax policy is the linchpin of the life insurance business. All of its products are in some way related to tax planning, whether it is corporate or personal.
The most prominent example is the estate tax. It is now in limbo–with no end in sight–along with other administration initiatives, such as health care reform.