The Housing Chronicles Blog: McCain vs. Obama: whose economic plan is better?

Thursday, August 14, 2008

McCain vs. Obama: whose economic plan is better?

I can't wait for the presidential debates to begin in earnest, because I'm eager to hear specifics from both candidates on numerous issues, including the economy.

At this point I can't promise to punch the hanging chad for either candidate come November, and why is that? Perhaps because neither of their economic plans add up, something which BusinessWeek has outlined in detail: much faith should voters put in the Arizona Republican's proposals? Or for that matter in Senator Barack Obama's bold plans to spend hundreds of billions on national health care, infrastructure, education, and energy? Put another way, how likely is it that the plans now being spelled out on the campaign trail will actually come to pass? In two words, not very.

Politics, the weak economy, and the reality of the ballooning federal budget will all limit the next President's room for maneuver. McCain's low-tax strategy could well be chewed up in a Congress that is likely to be even more Democratic than it is today. Obama's lofty plans could be undone by the hefty costs of his health-care plan and other programs. Even some Democrats may not stomach the huge expense and vast complexity of Obama's proposals.

In every election there is a big gap between what the candidates promise and what they can actually deliver...

The 2009 economy will offer tough conditions for a President set on bold new policies. The next Administration will face anemic growth, sluggish employment, a housing downturn expected to continue at least through much of next year, and continued tight credit markets as the shakeout works its way through the financial sector.

And in part because of last spring's $168 billion stimulus, the federal deficit will rise to nearly $500 billion next year, almost three times fiscal 2007 levels. There's a growing sense in Washington, particularly among Democrats, that another round of stimulus or further moves to bail out the housing or financial markets could be needed. Such spending could add tens if not hundreds of billions to the deficit. In the face of that tab, the question will be whether McCain or Obama can find the money to fund many of their tax cuts and spending proposals...

Come January, the next President will have to take a much clearer stand as to where his priorities truly lie. The problem for voters is that it is impossible now to tell which of many competing goals Obama or McCain will back when the time comes to move from campaigning to governing. In either case, Americans will likely get much less than what's being offered in the heat of the campaign.

In other words, it's time to start voting armed with knowledge about the reality of a candidate's positions instead of the gut check that's led to ruinous results in the past.

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