The economy: McCain vs. Obama

**min0 lee** · 06-26-2008, 07:24 AM

The economy: McCain vs. Obama

Taxes. Social Security. Housing. Gas prices. Get ready for lively debate between Democrat Barack Obama and Republican John McCain.

By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: June 7, 2008: 8:46 AM EDT
NEW YORK (CNNMoney.com) -- Barack Obama's emergence as the presumptive Democratic nominee on Tuesday sets the stage for a sharp partisan debate over the issue weighing most heavily on voters: the economy.
Over the past several months, as concern grew about the nation's struggling economy, few major differences surfaced between the proposals of Obama and Democratic rival Hillary Clinton.
But that's not the case between Obama and John McCain, the presumptive Republican nominee. The two senators part company on taxes, health care, entitlement benefits and other key economic issues that the next resident of 1600 Pennsylvania Ave. will need to tackle.
At the root of their differences: their views on tax policy and the roles of government and the markets in achieving economic and social goals.
Changing taxes
In the name of economic growth, McCain says he would keep the tax cuts of 2001 and 2003 in place and reduce the corporate tax rate.
He has also said that he'd eliminate the Alternative Minimum Tax and would introduce an alternative two-rate income tax code that would be simpler than the regular one. Taxpayers, he said, could choose which code to use.
Tax expert and Yale professor Michael Graetz doubts it will be simpler for taxpayers to have to figure out their tax liability twice to see which code they prefer to file under. "But if the option is sufficiently appealing, you can phase out the old system," he said.
Obama has pledged to keep the tax cuts in place for everyone except those making roughly $250,000 and up. He also has pledged to cut taxes further for the middle class.
"The tax code has been written on behalf of the well-connected," he said in April during a debate in Philadelphia. "Our trade laws have - the same thing has happened. And part of how we're going to be able to deliver on middle-class tax relief is to change how business is done in Washington."
"He seems more focused on redistribution of the tax burden," Graetz said.
Obama has also indicated he would raise the capital gains tax to somewhere between 20% and 28%. Graetz doesn't think he'd raise it much above 20%. "The truth is you can't go above 25% without losing a lot of money. People won't sell," he said.
Fixing Social Security
When it comes to shoring up Social Security's long-term shortfall, McCain has said he'd prefer to cut benefits than raise taxes, but he recognizes there will need to be bipartisan consensus.
McCain has expressed support for individual investment accounts as a way to augment Social Security benefits. But his campaign has indicated he no longer favors diverting payroll taxes from Social Security to fund those accounts.
Obama has said he opposes individual accounts and doesn't favor increasing the retirement age or cutting benefits. But he has called for increasing the amount of payroll tax that very high-income workers pay by subjecting more of their income to the payroll tax.
What he hasn't clarified yet is whether or not their Social Security benefits would also go up as a result of paying more into the system.
Curing health care
When it comes to reforming health care, McCain would rely more on individual efforts and market forces to drive down costs. Obama would rely more on government and establish health insurance mandates for companies and individuals to make coverage more affordable.
McCain's plan would not require anyone to have insurance, but he would change the tax incentives for getting it.
Currently, most people get their insurance through their employer. Companies pay 70% to 85% of the premiums, and workers don't have to pay income tax on that subsidy. Under McCain's plan, workers would pay income tax on that subsidy but would also receive a tax credit (a dollar-for-dollar reduction of their tax bills) worth $5,000 for family coverage and $2,500 for single coverage.
The rationale: Under the current system, people have no incentive to be cost-conscious about their health care, and a limited tax break will give all parties - workers, insurers and doctors - a reason to keep costs down. Converting the tax-free income subsidy to a tax credit also allows those who buy insurance on their own to get a tax break. Currently, they get none.
McCain would also let individuals buy insurance plans across state lines to further boost competition in pricing.
For the uninsured, he would create a state-level Guaranteed Access Plan that could receive federal funds and provide subsidies to low-income Americans.
Obama would make coverage mandatory for children, and he would create a National Health Insurance Exchange of public and private plans for the uninsured, for those who aren't eligible for other public programs and for small businesses. All plans would have to meet standards in terms of benefits, quality and efficiency.
Obama would keep the tax-free subsidy for those covered at work. But he would also create a federal subsidy - based on income - for people who don't qualify for government plans such as Medicaid.
Obama would require all employers to offer a plan or contribute money to employee's health costs. Companies that do neither would be required to contribute a percentage of payroll to the health exchange.
(Here's a more in-depth look at how their health care plans differ and what critics of both candidates' proposals say.)
Helping homeowners
It's not clear what role the next president will have in shaping the government's response to the foreclosure crisis, because it's unclear what the housing situation will be and what Congress will have accomplished by Jan. 20, 2009.
Each candidate, however, has expressed views on what lawmakers and lenders should do.
Although initially opposed to additional government aid in the mortgage mess, McCain has joined Obama in supporting the idea of the Federal Housing Administration backing loans that lenders have written down to affordable levels for borrowers.
But the plans they support differ somewhat.
Obama backs a proposal from House Financial Services Chairman Barney Frank, D-Mass., and Senate Banking Chairman Christopher Dodd, D-Conn., that would require borrowers to share equity with the FHA when they sell or refinance their home.(Here's how the plan would work.)
McCain has proposed the"HOME Plan,"which blends elements of the Frank/Dodd plan with proposals from the Bush administration and the Office of Thrift Supervision. Under McCain's proposal, if a borrower sells his with a gain, the lender and the federal government each would receive a portion of the equity.
Beyond more help from the FHA, Obama has called for a $10 billion foreclosure prevention fund to help victims of mortgage fraud sell their homes or modify their loans so they can avoid foreclosure and bankruptcy.
McCain has called for the creation of a Department of Justice task force to investigate mortgage crimes involving lending and securitizing home loans.
Getting a grip on energy
As gas prices climbed toward $4 a gallon this spring, McCain supported a summertime gas tax holiday, which he proposed paying for by using money from the Highway Trust fund.
Obama opposed such a tax break, contending it would not amount to significant savings for drivers nor help lower gas prices.
To combat the rising price of oil, McCain has also called on the government to temporarily suspend buying oil for the country's Strategic Petroleum Reserve.
Both candidates are calling for less reliance on oil as a fuel staple and reductions in greenhouse gas emissions. Obama and McCain support some form of a cap-and-trade system, whereby companies would pay for the right to emit carbon dioxide in a market-based auction.
Obama has also proposed investing $150 billion over 10 years to promote alternative energy and conservation.
(Here's a closer look at McCain's and Obama's energy proposals.)
Keeping spending in check
When it comes to addressing the federal budget deficit, McCain's preferred solution is cutting government spending. He has called for a one-year freeze on discretionary spending to assess which programs should stay and which should go. He has also said he would demand that Congress eliminate earmarks.
Obama too has said he wants to restore fiscal discipline by cutting earmarks to levels no greater than they were in 2001 and reinstating so-called pay-go rules. Under pay-go, lawmakers may not pass any spending measures or tax cuts with paying for them by making cuts to other programs or raise an equal amount of money.
Despite the candidates' promises, experts are skeptical that either candidates' economic proposals when taken as a whole could be fiscally sound.

First Published: June 4, 2008: 7:33 AM EDT

**min0 lee** · 06-26-2008, 07:29 AM

Originally Posted by min0 lee

Changing taxes:

Fixing Social Security:

Curing health care:

Helping homeowners:

Getting a grip on energy:

**clemson357** · 06-26-2008, 07:35 AM

The answer simply depends on whether you are conservative or liberal. Obama is your typical liberal, big taxing, big spending, big government, lots of control and intervention. McCain appears to be much more small government than Bush, more along the lines of your typical conservative, small government, less taxes, more free market.

**Big Smoothy** · 06-26-2008, 08:12 AM

I'll take a stab at this. First and foremost, I'm not a (D) nor an (R). We all have our biases and it's already clouded posters' perception.

Changing taxes:

What's the difference? Perhaps Obama will provide some middle class tax relief, or....he may be another GWB and just spend more. GWB is one of the, if not theee biggest spender in US history.

Fixing Social Security:

Both candidates cannot fix Social Security. Congress also needs to be involved. Social Security cannot be fixed. It's a train crash. Medicare will be worse.

Curing health care:

Hard to say. There is no "cure," however. Only a small bandaid on a bullet wound.

Helping homeowners:

Nobody should help people who borrowed money they cannot pay back.

Getting a grip on energy:

Hopefully the private sector is doing lots of R & D on new and different forms of energy. Humans are usually able to adapt - when they need to.

As for the my answers above, remember: the President is powerful, but many aids do the heavy lifting, and the economy is so complicated and globalized there are many other factors that influence an economy. A lot of the influence is on....the individual. 70% of the US economy is propelled by consumer spending. Manufacturing is overseas. More and more technology jobs are outsourced.

The President is also largely a symbolic figurehead. The Executive wields the most power in the Federal government, no doubt, but the President can only do so much.

Any "change" will be symbolic. It will not be of substance.

**kbm8795** · 06-26-2008, 08:25 AM

Republican concept of "free" market = corporate welfare.

**tucker01** · 06-26-2008, 08:25 AM

You are fucked either way

**BulkMeUp** · 06-26-2008, 08:28 AM

**bio-chem** · 06-26-2008, 08:39 AM

Originally Posted by kbm8795

Republican concept of "free" market = corporate welfare.

democrat concept of "free" market = welfare

**kbm8795** · 06-26-2008, 08:46 AM

Originally Posted by bio-chem

democrat concept of "free" market = welfare

Yes....the "general welfare."

**bio-chem** · 06-26-2008, 08:51 AM

Originally Posted by kbm8795

Yes....the "general welfare."

i don't consider that a good thing

**clemson357** · 06-26-2008, 09:03 AM

Originally Posted by kbm8795

Yes....the "general welfare."

Its true. The liberal economic idealogy is largely centered on directly redistributing wealth. Notably, so does the communist and socialist ideologies.

**min0 lee** · 06-26-2008, 09:14 AM

Originally Posted by Big Smoothy

I'll take a stab at this. First and foremost, I'm not a (D) nor an (R). We all have our biases and it's already clouded posters' perception.

.

Thank you Big Smooth.

I should have left out the names of the candidates in order to get an honest opinion even though a person who follows politics can pick out who said what.

**min0 lee** · 06-26-2008, 09:19 AM

Changing taxes
In the name of economic growth, McCain says he would keep the tax cuts of 2001 and 2003 in place and reduce the corporate tax rate.
He has also said that he'd eliminate the Alternative Minimum Tax and would introduce an alternative two-rate income tax code

I just found out about the The Alternative Minimum Tax from the article above.

The Alternative Minimum Tax (Tax Guide: Personal Finance) at SmartMoney.com

REMEMBER BACK when you were young and poor and nothing made you madder than tales of rich people who paid nothing in income taxes? Well, you weren't alone, and that anger led to the creation of something called the alternative minimum tax, which was designed to keep the rich from living tax-free.
Fast-forward a few years. You're a bit older, somewhat better off and paying far more in taxes than you ever thought possible. So what's the last thing you expect to see when you fill out your tax return? That you owe the alternative minimum tax. You can take some solace in the fact that thousands of taxpayers just like you have been snagged by this nasty bit of tax law in recent years. While only 19,000 people owed the AMT in 1970, millions are paying it now. What happened? Inflation, mostly. While the "regular" tax brackets, exemptions and standard deductions are adjusted annually for inflation, the AMT brackets and exemptions are not, so many people whose income has grown with the economy enter the dreaded AMT zone each year. Especially vulnerable are people with income over $75,000 and some large deductions, but not the exotic ones that were originally targeted by the AMT's creators. Most vulnerable are taxpayers with several children, interest deductions from second mortgages, capital gains, high state and local taxes, and incentive stock options.

**bio-chem** · 06-26-2008, 09:38 AM

Originally Posted by min0 lee

I just found out about the The Alternative Minimum Tax from the article above.

The Alternative Minimum Tax (Tax Guide: Personal Finance) at SmartMoney.com

sounds good. looks like i need to do more research on McCains views on taxes and what he would do

**kbm8795** · 06-26-2008, 10:04 AM

Originally Posted by clemson357

Its true. The liberal economic idealogy is largely centered on directly redistributing wealth. Notably, so does the communist and socialist ideologies.

Such ideological nonsense. Of course, if you regard the "redistribution of wealth" as the direct transfer of it from the poor and middle classes to the rich, then you've aptly described the conservative philosophy.

**Splash Log** · 06-26-2008, 10:14 AM

Goob hasn't started the whining in this thread yet?

**Big Smoothy** · 06-26-2008, 10:19 AM

Originally Posted by clemson357

The answer simply depends on whether you are conservative or liberal. Obama is your typical liberal, big taxing, big spending, big government, lots of control and intervention. McCain appears to be much more small government than Bush, more along the lines of your typical conservative, small government, less taxes, more free market.

The terms "conservative" and "liberal" are outdated, IMO. I think they became outdated back in 1988 when George H. Bush was elected.

This brought the era of Neo-Liberalism.

George H. Bush
Bill Clinton
George W. Bush

are basically Neo-Liberals, with different fringes of the political spectrum, that both parties need in their big tents.

Their policies are between the "Xs"

----------x--0--x--------

**bio-chem** · 06-26-2008, 10:57 AM

Originally Posted by Big Smoothy

The terms "conservative" and "liberal" are outdated, IMO. I think they became outdated back in 1988 when George H. Bush was elected.

This brought the era of Neo-Liberalism.

George H. Bush
Bill Clinton
George W. Bush

are basically Neo-Liberals, with different fringes of the political spectrum, that both parties need in their big tents.

Their policies are between the "Xs"

----------x--0--x--------

we have heard all of this rhetoric before. as the rest of the US uses it liberal is democrat and conservative is republican

**clemson357** · 06-26-2008, 11:04 AM

I understand what he is saying though. If a self-proclaimed Conservative increases government power, increases taxes, etc., is he really a conservative?

**bio-chem** · 06-26-2008, 11:18 AM

Originally Posted by clemson357

I understand what he is saying though. If a self-proclaimed Conservative increases government power, increases taxes, etc., is he really a conservative?

do we have to hear about it in every thread that uses the words liberal or conservative?

**bigss75** · 06-26-2008, 12:13 PM

While I think both of them aren't the best for economic policy I think McCain's choices for VP have much greater potential Bobby Jindal and Mitt Romney.

The huge issue I have with Obama is him pushing alternative fuel research and not recognizing the immediate need for relief now. Also were are we going to get money to fund all this new research when the economy is on the decline?

Newt has a good little plan that will never happen but it would lower oil prices

YouTube Video

**brogers** · 06-26-2008, 01:21 PM

Here's a little quote from a man named Norman Thomas.

The American people will never knowingly adopt socialism, but under the name of liberalism, they will adopt every fragment of the socialist program until one day America will be a socialist nation without ever knowing how it happened

Who was Norman Thomas? Head of the Socialist Party of America in the 1930's and 40's. Also helped to found the ACLU (so surprising they are left-wing, huh?).

"Liberals" are dangerous. Don't take my word for it. Take it straight from one of America's most famous socialists himself. Look how true his prediction has come. Examine the expansions of government during the administrations of FDR and LBJ. American is becoming ever more socialist under the guise of "Liberalism" no wait "Progressiveness" is the new term in vogue today. Obama's economic policies are nothing more than socialist style redistribution of wealth.

Let's examine why the capital gains tax should be raised from Obama's mouth himself.

"Fairness"

**brogers** · 06-26-2008, 01:24 PM

Let me say what I think is fair: Everyone pays the same flat rate on each dollar earned, and there are no more withholdings, so people can actually "feel" how much the government is taking from them. If everyone was paying a flat rate, and had to write a check to the government at the end of the year, I can guarantee people are going to start wanting taxes to come down. Right now a lot of people aren't even feeling the pain of the government taking their money since they don't even get to have that cash in their hand.

**kbm8795** · 06-26-2008, 02:17 PM

Originally Posted by brogers

Here's a little quote from a man named Norman Thomas.

Who was Norman Thomas? Head of the Socialist Party of America in the 1930's and 40's. Also helped to found the ACLU (so surprising they are left-wing, huh?).

"Liberals" are dangerous. Don't take my word for it. Take it straight from one of America's most famous socialists himself. Look how true his prediction has come. Examine the expansions of government during the administrations of FDR and LBJ. American is becoming ever more socialist under the guise of "Liberalism" no wait "Progressiveness" is the new term in vogue today. Obama's economic policies are nothing more than socialist style redistribution of wealth.

Let's examine why the capital gains tax should be raised from Obama's mouth himself.

"Fairness"

Man, you are so full of ideological brainwashing that it's almost astounding. What, exactly, makes the American Civil Liberties Union "left-wing?" And, by that measure, are you attempting to view civil liberties and justice for all as "socialist" in nature, rather than the apparent elitist class philosophy pushed by conservatives in which power is vested in and reserved for themselves?

Since most of Americans have been witness to the last eight years of having their own standard of living raped while conservatives redistributed wealth from their pockets to the bank accounts of corporate executives, banking CEOs and scam loan operations (who are, naturally, always entitled to taxpayer bailouts when they can't manage their own finances), why won't conservatives just admit that they have always favored making the wealthy richer without expecting any return to the country?
Isn't it part of conservative doctrine that the reason Americans keep losing jobs overseas is because the lower working people make too much money and don't deserve those wages? And that if they would just acquiesce to what is a "fair market wage" - meaning, in competition to workers in Bangladesh, then working Americans would understand that they are only worth a skimpy minimum wage because paying any more would cause the profit-greedy companies to immediately ship jobs overseas - like real patriots?

**Crono1000** · 06-26-2008, 02:30 PM

you should have left an option for shooting self in head. Cuz as soon as I read a few of the responses that's what I wanted to do

**DOMS** · 06-26-2008, 02:49 PM

Originally Posted by kbm8795

Man, you are so full of ideological brainwashing that it's almost astounding.

Wow...

Pot meet kettle.

**Crono1000** · 06-26-2008, 03:38 PM

Originally Posted by DOMS

Wow...

Pot meet kettle.

this sums up this whole thread, which in turn sums up the whole debate. It's like a bunch of kids argueing who's dad could beat up who's dad.

**bio-chem** · 06-26-2008, 04:01 PM

Originally Posted by kbm8795

Man, you are so full of ideological brainwashing that it's almost astounding. What, exactly, makes the American Civil Liberties Union "left-wing?" And, by that measure, are you attempting to view civil liberties and justice for all as "socialist" in nature, rather than the apparent elitist class philosophy pushed by conservatives in which power is vested in and reserved for themselves?

Since most of Americans have been witness to the last eight years of having their own standard of living raped while conservatives redistributed wealth from their pockets to the bank accounts of corporate executives, banking CEOs and scam loan operations (who are, naturally, always entitled to taxpayer bailouts when they can't manage their own finances), why won't conservatives just admit that they have always favored making the wealthy richer without expecting any return to the country?
Isn't it part of conservative doctrine that the reason Americans keep losing jobs overseas is because the lower working people make too much money and don't deserve those wages? And that if they would just acquiesce to what is a "fair market wage" - meaning, in competition to workers in Bangladesh, then working Americans would understand that they are only worth a skimpy minimum wage because paying any more would cause the profit-greedy companies to immediately ship jobs overseas - like real patriots?

so lets bring it back to being on point. Between McCain and Obama why do you think obama will be better for the economy? when capitol gains taxes go up, tax revenue goes down. when taxes go down tax revenue went up.

**goob** · 06-26-2008, 04:03 PM

Originally Posted by Splash Log

Goob hasn't started the whining in this thread yet?

Present and accounted for.

**danzik17** · 06-26-2008, 04:15 PM

How about we elect a candidate with some fucking common sense and credibility which neither McCain or Obama seem to have an ounce of?

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