In Part I of our look at the proposed economic policies of John McCain and Barack Obama, we found that each candidate brings his parties economic idealism to the table, whether that's a good or a bad thing.
McCain will be a no-taxes, free-trading, domestic drilling supply sider right out of the Ronald Reagan handbook. Obama will be a tax-raising, government spending, protectionist in the Lyndon Johnson mold.
For the tech industry, it's a mixed bag. They'll appreciate McCain's free trade bonafides, because they'll be able to ship cheaper jobs overseas and sell more products there, too. His lower tax policies should also allow consumers to buy more of the products that tech companies sell here in the U.S. But Silicon Valley will endorse Obama's call for billions in green technology research grants for the industry, along with his call for computers in every school room.
Let's continue with our comparison and see how each stacks up in other key economic areas:
On Housing & Credit
Obama wants to 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.
Long a proponent of what he refers to as “Big Oil”, Obama initially came out against domestic oil drilling, famously declaring that “we can’t drill ourselves out of this mess.” He 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.
The GOP nominee 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 Gov. 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.
Both candidates are flexing their muscles on energy, but in different ways. “McCain’s energy plan emphasizes leveraging existing energy sources, such as ‘drill here, drill now,’ and the construction of new nuclear power plants,” says Deborah L. Wince-Smith, President of the Council on Competitiveness. “Obama is more cautious when it comes to traditional energy sources, but aggressive as it relates to alternative energy. No matter what, affordable energy must be a priority for the next administration.”
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.
Summing It Up
Clearly, the economic policies of both Barack Obama and John McCain offer compelling differences, particularly to the technology sector, where issues like trade, taxes and energy prices are a huge deal. In addition, both underscore the visions of the political parties they represent. In an economic environment where voters are fairly sour, it’s a battle of ideas that could well determine who takes the oath of office come next January.