There’s little room for nuance when it comes to comparing the political differences between Barack Obama and John McCain, particularly when it comes to the economy.
The good news is that the differences between the two offers voters a clear choice on who they want in a president. The bad news is that one political ideology, either liberal or conservative, is going to be licking its wounds on November 5th.
So, how do the candidates differ on the big economic issues of the day? And are there any areas in which Obama and McCain agree? Let’s have a look at some of the issues.
Health Care: Obama and McCain have vastly different prescriptions for the U.S.’s health care challenges, again originating from their political platforms. Obama says he will keep the current health insurance system in place but expand government’s role in managing it. Obama also wants universal health coverage for millions of Americans without insurance, and would mandate coverage for children. McCain will turn to tax credits to aid health care consumers move from employer-based insurance coverage to open market system so consumers can opt from myriad policies.
Taxes: Obama proposes raising taxes on Americans earning more than $250,000 annually. He would also raise the capital gains tax rate for investors in higher tax brackets. Obama advocates eliminating taxes on seniors making less than $50,000 annually; and will push a $1,000 tax rebate for families that earn $75,000 or less. McCain says he will extend President Bush’s tax cuts that took effect in 2003. He will also lower corporate tax rates from 35% to 25%. On capital gains, McCain has indicated he will keep the current rates intact. He will double the children’s tax exemption and eliminate the Alternative Minimum Tax. Both Obama and McCain support tax credits for companies that invest in renewable energy.
Housing Crisis: Obama says he will hold fraudulent credit and mortgage lenders accountable by making them give loan applicants honest and easy-to-understand information on loans. He’s also proposing a tax credit for middle-class homeowners and says he will open a $25 billion fund to help people refinance their homes and save them from foreclosure. Obama will also ease bankruptcy court rules to help people keep their homes and reduce pressures on onerous payments. The centerpiece of McCain’s housing proposal is the “Home Plan”, aimed at helping people who qualify for a standard mortgage get out of an adjustable-rate mortgage and into a fixed mortgage to save their homes. Like Obama, McCain also has the lending industry in his sites. He’ll instruct the U.S. Justice Department to go after fraudulent lenders. Both McCain and Obama have indicated they will tighten the screws on Wall Street, particularly after the Federal Reserve-engineered bailout of Bear Stearns earlier this year, although no such help was given to Lehman Brothers this month.
Energy: Long a proponent of what he refers to as “Big Oil”, Obama initially came out against domestic oil drilling, famously declaring “we can’t drill ourselves out of this mess.” Obama has proposed a windfall profits tax on income earned when oil exceeds the price of $80 per barrel. Obama also wants to tighten trading regulations on oil speculators on Wall Street. Obama is also against a gas-tax holiday, despite supporting one in 2000 as an Illinois state senator. He does support wind and solar power, as well as advocating big tax breaks for developers of alternative fuels McCain now falls squarely into the “drill here, drill now” camp – although he has previously gone on record as opposing drilling in Alaska’s oil-rich ANWR province. This is one area where GOP vice-presidential nominee Gov. Sarah Palin – a big supporter of ANW drilling – could change the election’s oil drilling dynamic. McCain has also come out against giving oil companies tax breaks. A big supporter of nuclear power, McCain also supports wind and solar energy initiatives, promising tax breaks to renewable energy companies.
Trade: In a word, Obama is anti-globalization. As President, he’s promised to provide tax relief to U.S. companies that keep jobs at home. Conversely, he’d hike taxes on companies that send jobs overseas. He’ll also revisit NAFTA, which Obama has said penalizes U.S workers. The McCain camp points out that 95% of the world’s customers fall outside the U.S. Hence, he’s an advocate for globalization. But the U.S. needs to be smarter on its position on trade, McCain warns. “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,” says his campaign material.
Industry Winners and Losers
Under Obama, alternative energy companies would likely boom, as his call for tax credit for green research would spur industry growth. Any auto companies that switch to hybrid and alternative fuel vehicles would benefit from similar tax grants and credits from an Obama administration. But any industry that wants to shop jobs overseas—the tech sector is at the front of that list—could face higher taxes under Obama, who has threatened to penalize firms that ship U.S. jobs abroad.
Under McCain, energy and oil companies would do well, as he has caused for increased domestic drilling. Nuclear companies would do well under McCain for the same reason— he's a huge proponent. Health care and biopharm sectors would continue to prosper, as McCain would likely not push for universal health care (thus taking the power to manage patients and fees away from the private medical sector). He's not the kind of politician to set up too many regulatory road blocks, so biopharm companies would likely get their products approved faster.
Under both McCain and Obama, the financial services sector faces significantly increased federal oversight. Hedge funds, derivatives, even commodities trading all will be under microscope in either a McCain or Obama White House.
Conclusion
Clearly, on issue after issue Barack Obama and John McCain offer compelling differences. In addition, both underscore the visions of the political parties they represent. In a tough political environment, it may well be these differences that could determine who takes the oath of office come next January.
Obama vs. McCain: Economic Policies At a Glance
| Obama | McCain |
|---|---|
| Tax increases for those earning more than $250,000 per year | End employee tax-exemption for the cost to cover employees |
| Tax cuts for those earning less than $150,000 per year | Corporate tax cuts from 35% to 25% |
| Increase in unemployment benefits | Overhaul unemployment insurance policy |
| $50 billion economic stimulus package | Institute a summer gas (petrol) tax holiday |
| Relief for homeowners facing foreclosure | Increased offshore oil drilling |
| Higher Social Security payments from the wealthy | Medicare cuts |
| Against privatization of social security | No defense cuts |
| Against raising the retirement age | Workplace flexibility policies for families |
| Higher taxes on some investment income | Retain the Bush tax cuts |
| Savings from reduction of troops in Iraq | Spend $100 billion and $150 billion per year in war (continue indefinitely) |
| Against predatory credit card practices | Tax breaks for oil companies |
Source: Economywatch.com
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