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10-05-2008, 03:23 PM
McCain or Obama: Who's best for the economy?
Obama is no friend of economic growth
Point: J.D. Foster
Neither John McCain nor Barack Obama envisioned campaigning while the financial markets were in meltdown and the economy teetered on the brink of recession. Yet both set partisanship aside to support a difficult plan that could make a real difference. This bipartisanship mirrored laudable efforts by congressional Republicans and Democrats over the past weekend to hammer out a workable compromise. The House of Representatives came a few votes short on Monday, but there is still a chance Congress will pass the plan.
With luck, the next president will take office with the economy ready to rebound. He will then be able to focus on policies to accelerate the recovery and strengthen our economy. Here's where the two candidates differ significantly.
Consider energy prices. They've soared, spotlighting the risks associated with our dependence on foreign oil. We can't break our addiction to it only by drilling for more oil in the United States -- but we can't break that addiction without drilling for more oil either. McCain believes we should take all due care for the environment, even as we tap our abundant resources. Obama has steadily backtracked from stark opposition. He now accepts that some additional drilling may be needed under some circumstances in some locations.
Like President Clinton, McCain believes in free trade. We have the most productive workforce in the world and can compete effectively in many different industries. Where we have an advantage, we should trade; what others produce better, we should import. Obama's more unilateralist view assumes, rather insultingly, that American workers need protection from foreign competition.
McCain believes we shouldn't raise taxes. Indeed, we should reduce them where it would benefit our growing economy the most. Obama's views, by contrast, have been evolving. At one time, he proposed a dramatic increase in payroll taxes. Then he scaled back his payroll tax hike. Then it was scaled back and delayed until sometime in the next decade.
Obama has proposed modest tax cuts for the middle class and a significant increase in the top income tax rates to satisfy his demands for greater wealth redistribution. The proposed cuts are welcome, but they're a type that provides no benefit for the economy. More recently, Obama has said that his tax hikes may need to be postponed if the economy remains weak. This is progress, though, because it means Obama is acknowledging that higher marginal tax rates harm the economy. Admitting as much would complete his migration to McCain's position.
On healthcare, the differences between the candidates could have implications for the future of our economy. Obama has dressed up Hillary Clinton's national healthcare in a new bonnet and a bow, but it remains a system where ultimately the government would decide what care you get. McCain's plan will give you more control, not less, over your healthcare decisions and provides significant tax relief so you can afford to exercise that control.
The economy is very weak today, and it will recover sooner if Congress and the administration take the necessary actions. The candidates' plans are particularly relevant for the recovery and what follows. Excessive government control and redistribution inherently conflict with economic growth. Obama's plans put more emphasis on greater government control; McCain's puts emphasis on economic growth. Therein lies the choice.
J.D. Foster, PhD, is the Norman B. Ture senior fellow in the economics of fiscal policy
Obama is no friend of economic growth
Point: J.D. Foster
Neither John McCain nor Barack Obama envisioned campaigning while the financial markets were in meltdown and the economy teetered on the brink of recession. Yet both set partisanship aside to support a difficult plan that could make a real difference. This bipartisanship mirrored laudable efforts by congressional Republicans and Democrats over the past weekend to hammer out a workable compromise. The House of Representatives came a few votes short on Monday, but there is still a chance Congress will pass the plan.
With luck, the next president will take office with the economy ready to rebound. He will then be able to focus on policies to accelerate the recovery and strengthen our economy. Here's where the two candidates differ significantly.
Consider energy prices. They've soared, spotlighting the risks associated with our dependence on foreign oil. We can't break our addiction to it only by drilling for more oil in the United States -- but we can't break that addiction without drilling for more oil either. McCain believes we should take all due care for the environment, even as we tap our abundant resources. Obama has steadily backtracked from stark opposition. He now accepts that some additional drilling may be needed under some circumstances in some locations.
Like President Clinton, McCain believes in free trade. We have the most productive workforce in the world and can compete effectively in many different industries. Where we have an advantage, we should trade; what others produce better, we should import. Obama's more unilateralist view assumes, rather insultingly, that American workers need protection from foreign competition.
McCain believes we shouldn't raise taxes. Indeed, we should reduce them where it would benefit our growing economy the most. Obama's views, by contrast, have been evolving. At one time, he proposed a dramatic increase in payroll taxes. Then he scaled back his payroll tax hike. Then it was scaled back and delayed until sometime in the next decade.
Obama has proposed modest tax cuts for the middle class and a significant increase in the top income tax rates to satisfy his demands for greater wealth redistribution. The proposed cuts are welcome, but they're a type that provides no benefit for the economy. More recently, Obama has said that his tax hikes may need to be postponed if the economy remains weak. This is progress, though, because it means Obama is acknowledging that higher marginal tax rates harm the economy. Admitting as much would complete his migration to McCain's position.
On healthcare, the differences between the candidates could have implications for the future of our economy. Obama has dressed up Hillary Clinton's national healthcare in a new bonnet and a bow, but it remains a system where ultimately the government would decide what care you get. McCain's plan will give you more control, not less, over your healthcare decisions and provides significant tax relief so you can afford to exercise that control.
The economy is very weak today, and it will recover sooner if Congress and the administration take the necessary actions. The candidates' plans are particularly relevant for the recovery and what follows. Excessive government control and redistribution inherently conflict with economic growth. Obama's plans put more emphasis on greater government control; McCain's puts emphasis on economic growth. Therein lies the choice.
J.D. Foster, PhD, is the Norman B. Ture senior fellow in the economics of fiscal policy