A Voter's Guide to the Economy
By Kristina Dell, Alexandra Silver
Consumer confidence is at an all-time low, and many Americans are struggling to avert foreclosure as they fork over $4 a gallon for gasoline. That's why the U.S. economy has grabbed center stage this campaign season. The ultimate test: How would the candidates put more money in your pocket while dealing with a record estimated budget deficit of $482 billion? Here's where the candidates stand on four key issues: [This article contains a table. Please see hardcopy of magazine.] DEMOCRAT REPUBLICAN Barack Obama John McCain 'The core of our economic success is ... each American does better when all Americans do better.' 'Small businesses are the job engine of America, and I will make it easier for them to grow.' Obama sees a more active role for government in job creation. In the short term, he supports a second stimulus package in addition to the $168 billion one already passed. McCain portrays himself as a traditional fiscal conservative, emphasizing tax cuts and a balanced budget. He has not weighed in on a second stimulus plan. TAXES The 2001 and 2003 Bush tax cuts are set to expire in 2010. What are the candidates' new tax proposals? He would end Bush's tax cuts for families making more than $250,000 and raise the capital-gains tax rate to 25% from 15%. He wants yearly tax credits of $500 for individuals and $1,000 for families. He would make Bush's tax cuts permanent, abolish the alternative minimum tax and reduce the corporate tax rate to 25% from 35%. He may be open to the possibility of a higher Social Security payroll tax. SPENDING The next President will inherit a record budget deficit, estimated at $482 billion. What are the candidates' positions on the federal budget? He favors "pay-as-you-go" accounting so new spending or tax cuts are offset by program cuts or increased revenue, but he hasn't said how he would pay for all his tax proposals or universal-health-care plan. He would end earmarks and stop "waste, fraud and abuse" to recoup hundreds of millions. But it's unclear how. The former budget stickler has proposed costly tax cuts, but his spending cuts don't add up. REGULATION Unregulated Wall Street products like CDOs contributed to the financial crisis. How would the candidates change regulation in the financial industry? He calls for "a 21st century regulatory framework" based on six principles to improve government oversight, including extending the Fed's purview and tightening regulation of mortgage companies. He talks about "removing regulatory ... impediments to raising capital" yet also calls for reforms to "assure transparency, prevent abuse and protect the public interest." Highlights mortgage-industry reforms. MORTGAGE HELP President Bush signed a sweeping housing bill into law on July 30. Both candidates missed the vote, but do they feel at home with it? He has voiced support for the bill, which provides $300 billion in guarantees for mortgage renegotiations and stands behind the obligations of Fannie Mae and Freddie Mac, among other provisions. He has emphasized helping those who were bilked into bad mortgages rather than the overleveraged. He also supported the bill but ultimately wants Fannie and Freddie to go fully private--or away.