We’re still a ways from knowing who will be the next President of the United States, but, having just won the Iowa caucus, Sen. Ted Cruz (R-Texas) is among the top contenders. As such, you may want to know a little more about him and, specifically, how some of his policy proposals would affect your finances.
Whether Cruz or any other potential president will accomplish the goals outlined in their campaigns is a huge unknown; regardless, they’re helpful to review as the election gets underway. We’re putting together these summaries for all the frontrunners, and we’ve already published pieces on how a Donald Trump or Sen. Bernie Sanders presidency could affect your money. Here are some changes you might experience if Cruz wins on election day.
1. Health Care Reform
Cruz wants to repeal “every word of Obamacare,” according to his website. That would eliminate things like requirements that all Americans have health insurance (or face a penalty) and insurers cover people with pre-existing conditions (among many other things the law specifies). Depending on your personal insurance situation, that could help you save money or it could cost you more. It all really depends on how Cruz plans on enacting reforms to “make health care personal, portable, and affordable.” In short, a President Cruz would want to change the way we pay for health care.
2. A Smaller Government
Cruz proposes eliminating the Internal Revenue Service, the Department of Education, the Department of Energy, the Department of Commerce and the Department of Housing and Urban Development (HUD). He calls it his Five for Freedom plan.
If you rely on any of those departments for anything — say, you want to buy a home with an Federal Housing Administration loan, a program administered by HUD — a Cruz presidency could significantly disrupt your plans. That’s not to say he’ll get rid of everything these departments do (his website said his administration would determine if any programs need to remain intact), but it seems impossible that these departments could disappear without sending shockwaves through certain populations.
These departments do a lot of things that directly affect Americans’ finances. The Department of Education is a good example: What would happen to student loans and programs the department runs, like student loan forgiveness? Given how many people use federal student loans to pay for college and how much student loan debt Americans have ($1.3 trillion of mostly federal loans), that’s no small question. (You can see how your student loan debt may be affecting your credit by viewing your free credit report summary each month on Credit.com.)
3. A ‘More Stable Dollar’
Cruz has highlighted dollar instability as an economic woe for the U.S., saying that a highly valued dollar tends to lower prices and be good for the consumer, but that’s not good for manufacturers and exporters. A low dollar can result in the opposite, costing consumers but helping to grow the economy. He is proposing stabilizing the dollar by auditing the Federal Reserve.
“A rules-based monetary system would restore stability to the dollar and to the international currency system,” his website reads. “This will help us get beyond these cycles of boom, bust, and malaise, and return us to rising productivity, strong economic growth, and higher incomes for all.”
It’s hard to say how this proposal would affect your finances directly since stabilizing the dollar at high or low value will inherently be good for some and bad for others (and Cruz didn’t specify what he meant by “stable.”)
“The problem is there’s upsides and downsides to having a strong and weak dollar, and they both serve a purpose,” said Samuel Rines, an economist and portfolio manager with Chilton Capital in Houston. On top of that, the act of stabilizing currency is really complicated.
“Regardless of whether we wanted a stable currency, we would have to make a determination of how we would do that,” Rines said. It’s not just up to the United States. The economies of other countries affect the value of the dollar. “It would be really difficult to enact,” he said.
4. Lower Taxes
Cruz proposes a Simple Flat Tax. Instead of the seven existing tax brackets, everyone will pay a 10% income tax, but for a family of four, the first $36,000 will be tax-free. For tax year 2015, the lowest bracket starts at a 10% tax. Cruz says that tax change will increase wages by 12.2%. Note: With the proposed dissolution of the IRS, it’s unclear if you’ll have to file taxes to make sure you’re paying your required 10%. At any rate (pun intended), the way you pay taxes is likely to significantly change under a Cruz administration.
5. Job Creation
Cruz also claims that the Simple Flat Tax will create more than 4.8 million jobs. He’s also pitching approval of the Keystone Pipeline and similar projects that will expand oil, natural gas and ethanol operations, which he says will fuel job creation. So, if you’re among the 5.5% of unemployed Americans, that’s something to consider.
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