2008 Election Issues: Economy


 

Feb. 4, 2008 -- Last fall, as the subprime housing crisis intensified, the economy replaced the war in Iraq as the top concern for Americans. It's quite possible that the economy will remain the top issue until until the general election in November. That's because the bad debts generated by the subprime debacle have caused a credit crunch that, along with record high energy prices, appears to be dragging the U.S. economy into recession. There are even fears of a global downturn.

These concerns have caused wild gyrations in the financial markets, dramatic interest rate cuts by the Federal Reserve and efforts to stimulate the economy by the White House and Congress. Meanwhile, unemployment is up, inflation is creeping higher and housing values are down. This has unsettled Americans and caused a decline in consumer confidence.

The situation has compelled the presidential candidates of both parties to hone their economic positions and provide their own ideas about how to avoid a recession.

Here is a summary of the candidates' economic views:

The Candidates on the Economy
Democrats Republicans
Sen. Hillary Clinton. Photo: Getty Images

Sen. Hillary Clinton (NY)

Tax Policy: Clinton would roll back President Bush's tax-rate cut for upper-income Americans. She proposes tax credits of up to $1,000 to match retirement savings by middle-income couples. She would make the research credit permanent for businesses.

Fiscal Discipline: Clinton says she would require the government to pay for new spending with new revenues or cuts in other areas.

Trade Policy: To strengthen enforcement of trade agreements, Clinton would double the size of the U.S. trade representative's enforcement unit.

Economic Stimulus: Clinton has proposed a $70 billion stimulus package. It includes a 90-day moratorium on subprime mortgage foreclosures and a $30 billion emergency-housing crisis fund to help head off foreclosures. The plan also includes billions for emergency energy assistance for families and for extending unemployment benefits.
Housing Help: Clinton would establish a $1 billion fund to help at-risk borrowers avoid foreclosure. She would make $100 million available for government counseling for distressed homeowners.

Sen. John McCain. Photo: Getty Images

Sen. John McCain (AZ)

Tax Policy: McCain would try to make President Bush's tax cuts permanent for individuals and businesses. Those tax cuts are scheduled to expire in 2010.

McCain would also make permanent the research tax credit for businesses.

McCain says he wants to completely eliminate the alternative minimum tax. Originally designed to make sure millionaires pay taxes, the AMT is now affecting millions of middle-income taxpayers.

McCain supports a ban on Internet taxes and says any tax increase should require a three-fifths majority in Congress.

He also supports supplementing Social Security with personal accounts -- but not as a substitute for addressing Social Security benefit promises that he believes cannot be kept.

Fiscal Discipline: McCain says the practice of excessive borrowing and deficit spending by the federal government must stop.

Economic Stimulus: McCain would cut the corporate tax rate from 35 percent to 25 percent and allow first-year expensing of equipment and technology investments by businesses. In addition, McCain would provide a permanent tax credit equal to 10 percent of the amount businesses spend on wages and on research and development.

Sen. Barack Obama. Photo: Getty Images

Sen. Barack Obama (IL)

Tax Policy: Obama would reverse President Bush's tax cuts for upper-income taxpayers and provide 150 million low- and middle-income workers a tax credit of up to $500. He proposes eliminating income taxes for seniors earning less than $50,000 a year and tripling the earned-income tax credit -- to $555 -- for full-time minimum wage workers. Obama also proposes a mortgage tax credit for homeowners who don't itemize deductions, and he would make the research credit permanent.

Fiscal Discipline: Obama says he would restore fiscal discipline by requiring new government spending to be paid for by revenue increases or cuts in other programs.

Trade Policy: Obama says he would institute stronger enforcement of current trade agreements; set benchmarks for environment and labor provisions in new agreements and work to fix NAFTA.

Economic Stimulus: Obama would offer an immediate $250 tax cut for workers, plus another $250 tax cut if the economy continues to weaken. He would provide the same amounts for seniors. He would also help homeowners and states hit hardest by the housing crisis and would extend unemployment insurance.

Housing Help: Obama would create a $10 billion fund to help homeowners avoid foreclosure.

Sources: Candidate Web sites, speeches and releases