Transcripts

"Economic Choices-2008"-Business & Politics

SUSIE GHARIB: Democratic Party leaders moved today to put the long primary battle behind them, urging super delegates to rally around Senator Barack Obama. The long primary season now looks like it will turn into a long general election campaign, as both the Obama and McCain camps consider a series of pre- convention town hall meetings. As we continue our "Economic Choices '08" coverage, Darren Gersh looks at the themes markets will be watching in this two-man race.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: As the candidates prepare to jumpstart the general election campaign three months early, analyst Tom Gallagher says investors should understand the direction of change in this race is already set. The real question is the magnitude of that change.

TOM GALLAGHER, POLITICAL ECONOMIST, ISI GROUP: You think about even a McCain presidency with a Democratic Congress, which is a near certainty, is going to produce a more activist government on the range of issues that markets care about the most: taxes, health care, climate change.

GERSH: Gallagher points out McCain and Obama largely agree on climate change. McCain has already taken a tougher stand on regulation of health insurance companies, though Obama is on record pushing for more aggressive health care coverage. And no matter who wins, taxes are expected to go up under the larger Democratic congressional majority most analysts are predicting. The question, though, is how much taxes go up and analyst Charles Gabriel says the current 15 percent tax rate on capital gains and dividends is at greater risk if Obama wins in November.

CHARLES GABRIEL, MANAGING DIRECTOR, CAPITAL ALPHA PARTNERS: If you think that we are going to see higher dividend, corporate dividend and capital gains taxes, then those companies that really are very rich with dividends, like utilities, are going to be much more at risk and the value of their stocks is going to be discounted.

GERSH: Both McCain and Obama have made it clear they intend to run as agents of change in Washington. But one of the most immediate changes the next president gets to make, the leadership of the Federal Reserve, is not likely to get much attention in the election.

GALLAGHER: The winner in November will pick four of the seven Fed governors and will have the opportunity to decide who the next chairman and vice chairman will be, probably all in the next year.

GERSH: While much of the country has been preoccupied with the elections, financial markets have been obsessed with the housing meltdown and resulting credit crunch. But if some analysts are right and those concerns are easing, Wall Street will have plenty of time to develop new jitters over the next president's agenda. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.