In the wake of the recent economic crisis in this country, each presidential hopeful has tried to convince voters that he will be the stronger leader, the more apt handler of a problem that nobody, not even a group of gurus on Wall Street, has an answer to. As a result, the American people are seeing excessive amounts of political rhetoric from both candidates. Not that your typical campaign doesn't have its rhetoric, but the past few weeks have hosted some of the most hollow promises in the history of U.S. politics. I do have to admit though, this rhetoric is, in a way, responsible. If the candidates were to "straight talk" about policies right now, we would all be hearing about budget cuts across the domestic spectrum, potentially causing even more cynicism about our government than already exists. I will provide a few examples of both Sen. McCain's and Sen. Obama's proposed policy initiatives and compare them with their respective tax proposals, putting them into financial perspective given the recent credit and financial crunch. Remember, all of the plans I will mention are the PROSPECTIVE ideas of each candidate and are viewed through the perspective of our failing economy...
Sen. McCain on taxes:
- Sen. McCain's economic campaign has been entrenched in lower taxes, lower taxes, and some additional tax cuts. Well, at least for the business world anyway. McCain proposes a decrease in the corporate tax rate from 35 percent to 25 percent. His ceiling tax rate on 'small businesses' will be 25 percent, while he will maintain a 15 percent tax rate on dividends and capital gains. Essentially, McCain proposes maintaining and lowering current tax levels in an effort to motivate businesses across the country to become more innovative while remaining domestic in their operations.
Why McCain won't be able to keep his promises:
Based on its tax policies, a McCain administration will see a decrease in tax revenue. One of the only new sources of tax revenue will come from the inclusion of employer-provided health insurance policies in taxable income (which I think is a terrible idea, for the record). To combat this lack of increased tax revenue, McCain plans to eliminate all earmark spending bills. He is also considering implementing a domestic spending freeze. Earmark bills account for a very small portion of the federal budget and would marginally impact the excessive spending problems. Also, I will be interested to see how much more difficult it will be for Congress to pass any legislation with the banning of earmark spending bills. The claim for a domestic spending freeze means that all of the reform that McCain so adamantly advocates will look a lot more like arbitrary program cuts rather than any kind of significant reform (unless by reform he means privatization). Even with a domestic spending freeze, the money involved in a McCain administration foreign policy will likely include funds for 'nation-building' efforts around the world (see the new U.S. Military Doctrine). These are only a few examples of the ways in which McCain's policy profile is unattainable based on his prospective tax policies. In the last Presidential Debate, Sen. McCain claimed that he can balance the federal budget in his time as president (whether that means 4 or 8 years was not specified). If that is not a hollow promise filled with political rhetoric then I don't know what is.
Sen. Obama on taxes
- Sen. Obama's tax plan calls for a tax credit for 95 percent of 'workers and their families.' His entire tax platform begins with tax relief for the middle class. Obama also promises the elimination of capital gains taxes for 'small businesses.' Much controversy has been initiated over Obama's $250,000+ tax increase. The much-debated plan involves tax increases on these families in corporations in several areas: ordinary income (36% and 39.6%), capital gains (20%), dividends (20%), and estate taxes (45% on estates ober $7 million). In his plan, Obama claims that the net tax revenue will constitute an overall CUT. The debate still continues as to the validity of these claims, but for now, I will assume both candidates' proposals are truly their intents.
Why Obama won't be able to keep his promises:
Sen. Obama's tax policies, while centered around a different sector of the population, still call for a net reduction in tax revenues. Obama is more committed to domestic spending as opposed to foreign spending. He wants to increase funding in the education system, investing in charter schools, performance-based teacher salaries, and affordable options for prospective college-bound students. His healthcare plan will also require significant funding, as he wants to provide an 'affordable' public health system structured after the benefits that federal employees receive. Obama also stresses the importance of increasing funding for alternative energy research and clean coal technology. While Obama has claimed that, given the current economic state of our country, he will scale down his domestic spending proposals, he has yet to provide any SIGNIFICANT, specific cuts that he will be making. Also, under an Obama administration, the defense budget will not decrease as much as I believe it needs to. The question is, how much will Obama have to 'scale down' his spending proposals? He certainly won't be able to implement his policies of 'change' as quickly as he would like the voting public to believe.
All of the information provided about the tax plans were taken directly from the official candidate websites. I really tried hard to make this entry as non-partisan as possible...
Also, here is a link to a Washington Post article on the nation-building aspects of the new U.S. Military Doctrine:http://www.washingtonpost.com/wp-dyn/content/article/2008/10/04/AR2008100402033.html