"Economic Choices 2008"-The Candidate's Economic Rescue Plans
Wednesday, October 15, 2008SUZANNE PRATT: The faltering economy is the top issue for the nation, as the presidential candidates prepare for their final debate tonight. Both men unveiled new economic proposals this week to address the financial crisis. As we continue our "Economic Choices '08" coverage, Stephanie Dhue looks at how the plans are similar and different.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Senator McCain's latest economic plan draws from the Republican playbook, focusing on stimulating investment. He is proposing a lower capital gains tax rate, bigger write-offs for tax losses, and a business tax cut from 35 to 25 percent.
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Reducing business tax rates has the potential to stop and reverse the rise of unemployment, and could create millions of new jobs.
DHUE: Senator Obama's plan highlights Democratic priorities, focusing on job creation. He's proposing tax credits for businesses that create jobs, tax cuts for middle-income and low-wage workers, and spending on infrastructure projects.
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I'm proposing a number of steps that we should take immediately to stabilize our financial system, provide relief to families and communities, and help struggling homeowners. It's a plan that begins with one word that's on everybody's mind, and it's easy to spell: J-O-B-S, jobs.
DHUE: There are places where McCain and Obama agree, including suspending the rule requiring people at age 70.5 to take withdrawals from 401(k) and individual retirement accounts. McCain also wants a lower tax rate for older Americans who withdraw retirement money. Obama would go further and waive the 10 percent tax penalty for workers who make early withdrawals from those accounts. Economists say both plans would discourage savings at a time when Americans should be doing just that. Tax analyst Clint Stretch says people should think twice before making early withdrawals.
CLINT STRETCH, MANAGING PRINCIPAL, DELOITTE TAX: You can only put so much money in each year. When you take money out, it's out and you can't have that in these tax-favored accounts anymore. These are accounts that, in essence, grow tax-free, and so they are like having a tax exemption on your bond portfolio or your stock portfolio, very favorable treatment.
DHUE: Rudy Penner is a former Congressional Budget Office director. He doesn't like either plan, saying they would both add to the deficit.
RUDY PENNER, FORMER DIRECTOR, CONGRESSIONAL BUDGET OFFICE: We are looking at gargantuan deficits in 2009 and 2010, probably well over $700 billion. I really think we have to be very careful about adding even more to the national debt with stimulus plans at this point.
DHUE: The candidates will have a chance to explain their latest economic ideas at tonight's debate. But analysts say those proposals are likely to change when the campaign promises of today meet the economic realities of tomorrow. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
