Obama vs. McCain – Economy(II)

This is the second article on the candidates’ positions on the economy. The first dealt with their taxation policies.

(UPDATE October 6th, 2008 : a graphic from the Economist -

The link to the entire article can be found here.)

It is hard to get a sense of which Presidential candidate is good for the economy from the campaign agendas – so much of it is pure pandering for the political season. However, here is an excerpt from an article in the International Herald Tribune that might surprise you –

“Simply put, the United States economy has grown faster, on average, under Democratic presidents than under Republicans.”

That said, here are the two candidates’ positions and plans for the economy.

Barack Obama

Policy Positions( highlights)

  • Obama will enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills.
  • Will provide $50 billion to Jumpstart the Economy and Prevent 1 Million Americans from Losing Their Jobs: This relief would include a $25 billion State Growth Fund to prevent state and local cuts in health, education, housing, and heating assistance or counterproductive increases in property taxes, tolls or fees.
  • Obama will fight for a trade policy that opens up foreign markets to support good American jobs. He will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks.
  • Obama will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers.
  • Obama would update the existing system of Trade Adjustment Assistance by extending it to service industries, creating flexible education accounts to help workers retrain, and providing retraining assistance for workers.
  • Barack Obama introduced the Patriot Employer Act of 2007 with Senators Richard Durbin (D-IL) and Sherrod Brown (D-OH) to reward companies that create good jobs with good benefits for American workers.
  • Obama will create an Advanced Manufacturing Fund to identify and invest in the most compelling advanced manufacturing strategies.
  • Obama will invest $150 billion over 10 years to advance a clean energy economy and create 5 million new jobs.
  • Barack Obama will address the infrastructure challenge by creating a National Infrastructure Reinvestment Bank to expand and enhance, not supplant, existing federal transportation investments.
  • Barack Obama supports doubling federal funding for basic research and changing the posture of our federal government from being one of the most anti-science administrations in American history to one that embraces science and technology.
  • Barack Obama will eliminate all capital gains taxes on start-up and small businesses to encourage innovation and job creation.
  • Obama will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act.

Balancing the budget
In December 2007, Barack Obama admitted that it would not be a cinch to dig the country out of the fiscal hole that the last 8 years had dumped it in. Given the proposed spending plans in infrastructure, health care and economic stimuli, it is unclear how Obama intends to pay for them. (A general reading of Obama’s various policy pronouncements tends to give the idea that a balanced budget is lower down the list of priorities for the candidates than jumpstarting the economy.) An analysis by the non-partisan Tax Policy Center shows an impact of $3.4 trillion in debt relative to current law by 2018.

John McCain

Policy Positions (highlights)

  • Sending a strong message to world markets – under his plan, the United States will be telling oil producing countries and oil speculators that our dependence on foreign oil will come to an end – and the impact will be lower prices at the pump.
  • McCain’s policies will increase the value of the dollar and thus reduce the price of oil.
  • John McCain believes we should institute a summer gas tax holiday.
  • John McCain will roll back corn-based ethanol mandates, which are contributing to the rising cost of food.
  • McCain believes no taxpayer money should bail out real estate speculators or financial market participants who failed to perform due diligence in assessing credit risks.
  • McCain has proposed a new “HOME Plan” to provide robust, timely and targeted help to those hurt by the housing crisis.
  • To lower barriers to trade, the U.S. should engage in multilateral, regional and bilateral efforts to reduce barriers to trade, level the global playing field and build effective enforcement of global trading rules.
  • John McCain will overhaul unemployment insurance and make it a program for retraining, relocating and assisting workers who have lost a job.
  • John McCain will put our country on track to construct 45 new nuclear power plants by 2030 with the ultimate goal of eventually constructing 100 new plants.
  • John McCain will commit $2 billion annually to advancing clean coal technologies.
  • John McCain will commit our country to expanding domestic oil and natural gas exploration.
  • Mr. McCain pledges to veto every bill that comes to his desk with earmarked pork-barrel projects in it, and to order a one-year freeze on increases in most discretionary spending — a relatively small portion of the overall federal budget.

Balancing the budget

After promising to balance the budget in February 2008, McCain backed off the position in April and returned to it in July.  In an analysis done by the Washington Post citing research from the Congressional Budget Office and the Tax Policy Center, the math did not hold up well.  Turns out McCain’s tax plan would add $5.0 trillion in debt relative to current law by 2018.

4 thoughts on “Obama vs. McCain – Economy(II)

  1. katty

    No, the only difference between the two plans is not that one will not raise taxes while the other will do so on the top 5%. An important difference is that the bottom 40% that do not pay taxes will still get a tax “refund,” or more aptly defined, a welfare check. It is income redistribution for no other reason than to put $500-$1000 in the pockets of the lower class. Maybe the Obama administration believes that this will stimulate the economy? Hard to imagine.

  2. Vidya Pradhan Post author

    Taxation in the United States is an incredibly complicated and messy thing and I would not presume to understand all the ramifications of the candidates’ plans fully. However, if I understand the basics correctly, the difference between the two candidates is that one proposes no increase in taxes and the other proposes increasing the taxes on people earning more than $250000 a year.

    To you, and many others in higher tax brackets, it smacks on unfairness and in a time of prosperity and lower levels of income inequality, I would agree with you. But these are no ordinary times. The country is deep in debt, funding is at risk for things like education( believe me, I can see it happening right before my eyes in the schools my kids go to). Think of it as an emergency measure to rescue the US from the incredible profligacy of the last 8 years.

    On a side note, if you really believe that John McCain will honor his promise to not increase taxes, then either your candidate has no understanding of the dire situation the country is in, or you are going to be pretty disappointed next year. I seem to remember another politician saying a while ago -”Read my lips, no new taxes” and look how that turned out.

  3. Doug

    Facts are a stubborn thing. The bottom 50% of American income earners pay less than 5% of the income tax. If you do not believe me here is one link that will give the details http://www.american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes . The only way that Obama can cut taxes for 95% of Americans is to cut them a check to supplement to subsidize their income. Actually Obama has mentioned this in interviews.
    By lifting the caps on Social Security, he will fundamentally change it from retirement savings into a vehicle for income redistribution. What is strange is that this will cause revenue from income tax to drop. Remember we do not pay income tax on the money taken for Social Security.
    As Americans we have to ask ourselves why we have a tax system. If you believe it should not hinder economic growth and generate revenue then vote for McCain. If you believe it is suppose to force fairness then vote for Obama. Just remember it is easier to be generous with another person’s money.

  4. Ben

    Obama keeps crying about how bad the economy is,
    but if Americans are hurting so bad, how come they
    were able to send Obama 66 million dollars last month?
    … And, tonight Obama is asking Americans to give him
    $28,500.00 each for the Obama/Streisand fund
    raiser dinner. Two faced Obama has no credibility.
    No Wright, no Farrakhan, no Pfleger, no Rezko,
    no Ayers, no mean Michelle, and, NOBAMA !!!

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