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EDITORIAL: Obama, McCain economics

By | Friday, July 11, 2008

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This week, Barack Obama and John McCain touted their economic plans. If we take them at their word, Mr. Obama's plan could stifle initiative and perpetuate the current economic downturn. Mr. McCain's would unleash American dynamism, if he overcomes the lack of credibility his party has in restraining spending and limiting government.

Mr. Obama's "An Agenda for Middle-Class Success," differs from the "trickle-down" Republican economic philosophy that he believes only helps the wealthy. His initiative ostensibly has a "bottom-up"approach. In reality, Mr. Obama's condescending approach empowers the state to make decisions for free-thinking Americans. This is proof that he fails to understand that wealth is not created by more big government.

Despite his call for change, Mr. Obama's agenda consists of more government programs and lots of fuzzy math. Mr. Obama wants to "jumpstart economic growth and create jobs" by enacting a $50 billion stimulus package. He also wants to eliminate income taxes on retirement income. In other words, he favors more spending and a tax code that grants an entire class of people an exemption. This is socialistic — the redistribution of wealth according to the whims of legislators.

Mr. Obama promises that all families making less than $250,000 per annum will not pay higher taxes. He even pledges to give middle-class families a $1,000 tax cut. Yet, he has also stated that he will increase the capital gains tax from its current level of 15 percent to at least 20 percent (he has not settled on an exact figure, it may be higher). This will indeed mean a tax increase for all Americans who sell an investment.

Mr. Obama does not adequately explain how he will be able to prevent other tax increases, given the many new government programs he proposes. He will spend money on infrastructure repair, college tuitions, matching funds to encourage savings and universal health-care. He states that he will pay for these programs by cutting earmarks and with funds saved when the Iraq war ends. Yet he has no track record of resisting earmarks: He has already voted for billions of dollars in earmarks. It is also unclear when or how the Iraq war will end - and whether or not those funds that might be saved and may be needed for other military operations (such as in Afghanistan or in Iran, for example). Hence, we know that he will spend taxpayer money, but not exactly how he will pay for these expenses.

Mr. Obama's economic agenda belies his liberal view of the state as all-seeing and all-knowing. Rather than empowering Americans, he will end up burdening citizens with higher taxes, increasing regulation and creating more unaccountable bureaucracies to administer his numerous meddlesome initiatives.

Mr. McCain, on the other hand, is attempting to revive the people's faith in a more conservative economic philosophy. The Arizona senator does not want to impose any more burdens on small businesses, such as health mandates. He also promises to keep all of George Bush's 2001 cut taxes. He is proposing a gas-tax holiday, cutting the estate tax and reducing corporate tax rates. He has stated he will also double the child deduction. He wants to expand free trade agreements to generate jobs; he has repeatedly promoted free trade with Colombia. He also promises to veto bills with wasteful spending and to balance the budget by the end of his first term. In other words, he wants to restore fiscal responsibility and allow Americans to generate their own wealth: "All you've ever asked of government is that it stand on your side, not in your way."

Mr. McCain's economic plan consists of merging both the supply-side economics that were used with success by Ronald Reagan and the deficit-hawk philosophy that has been a staple of conservative thought. Yet, in reality, he may not be able to sustain both cutting revenue by cutting taxes and also balancing the budget. He has an even greater problem: Republicans have lost their credibility as custodians of low spending and limited government.