Obama vs. McCain on Economics

Here's an impartial rundown on the differences on economic policy between Barack Obama and John McCain: Obama and McCain have big economic differences. (The article was written before Congress passed a bill to bail out struggling financial firms, the ones holding "toxic" mortgage-backed securities, to the tune of up to $700 billion.)

A summary:

• Income tax rates on wealthier Americans (individuals making over $200,000 and families with incomes over $250,000): McCain will keep them low, and even reduce them for the very wealthy; Obama will increase them by eliminating the Bush tax cuts for people in those brackets and even imposing higher rates.
  
• Income tax rates for everyone else: McCain would cut them some; Obama would cut them even more.
• Income tax rates for corporations: McCain would slash them; Obama would not.
• Biggest tax goal: McCain's is to use tax relief to jump-start the economy and "give the country a boost"; Obama's is to "target his help to the squeezed middle class" and to narrow income inequality.
• Extending the Bush tax cuts after 2010, when they are expected to expire: "McCain would extend all of them except the total elimination of the estate tax, while Obama would extend only the cuts for individual taxpayers making less than $200,000 annually or couples making less than $250,000."
• Keeping the Alternative Minimum Tax on the wealthy from hitting millions of middle-income taxpayers in future years: both McCain and Obama would patch the AMT year-by-year to do that.
• Eliminating the current tax on estates: McCain would; Obama wouldn't.
• Overall effect on tax revenues: "McCain's plan would cut taxes by $596 billion over the next decade; Obama's would increase taxes by $627 billion during the same period [mostly by] raising tax rates on the wealthy and boosting the taxes they pay on dividends and capital-gains earnings."
• Spending cuts: "While both campaigns argue they are not getting enough credit for their plans to cut spending, history shows that campaigns always pledge to pay for their tax cuts but seldom achieve that goal because spending cuts prove much more difficult to get through Congress."
• Overall effect on the federal debt (assuming the proposed spending cuts take place): "The government's debt would go up sharply — by $3.5 trillion under the Obama plan and by $5 trillion over the next decade under McCain's plan."
• Fixing Social Security: No plans by McCain are cited; "Obama has proposed levying a 2 percent to 4 percent tax on payroll earnings above $250,000 a decade from now to deal with Social Security."
• Fixing Medicare: "Neither campaign has put forward any proposals that experts say would make a meaningful dent in fixing Medicare, the far bigger entitlement problem because of soaring health care costs."

Main concerns of independent experts:

• "Higher deficits that are expected because of [McCain's] tax cuts [especially on the wealthy] could drive up interest rates, raising the cost of money for businesses and result in less investment, not more."
• "[Obama's] new and expanded tax credits ... will further complicate an already complex tax system and won't make a very big dent in the problems of income inequality."
• "Experts say that [Obama's future increase in payroll taxes on earnings above $250,000] would fix only a small part of the problem with the pension program."
• "Some experts see tax increases, not cuts, in the country's future regardless of who wins the presidency."