There’s an old joke that the definition of a successful politician is a person who can stand on a fence and make voters believe it’s a platform.
That’s a tall order, however, for presidential candidates John McCain and Barack Obama – especially when it comes to their economic policies (and that goes double for the tech sector).
Americans are well aware that the economy isn’t exactly operating on all cylinders and will make the economic policies of each candidate a priority before they decide who earns their vote. The fact that McCain shook the political world and chose conservative Alaska governor Sarah Plain as his vice-presidential running mate only adds more fuel to the fire. An “X-factor” in that she is largely unknown to the American electorate, at least compared to her more liberal counterpart, Delaware Sen. Joe Biden, voters seem just as curious what the running mates have to say about the economy as they are the top-of-the-ticket candidates.
So, how do the candidates differ on the economy? And are there any areas in which Obama and McCain agree? For technology investors and consumers, those are the key questions.
Let’s have a look, issue by issue. I'll have part II on this issue tomorrow.
Silicon Valley
Obama is a proud greenie, and his support of renewable technologies would seem to stand him in good stead with technology big-wigs. And, yes, Steve Jobs, Bill Gates, and Jerry Yang, among other tech glitterati, have contributed to his campaign. But in the California Democratic primary, Obama lost Silicon Valley by a wide margin to Sen. Hillary Clinton. Sensing an opening, John McCain has courted the tech sector ardently. Despite answering one of those ubiquitous "Mac vs. PC" questions at an event this summer by answering "illiterate", McCain has also gone on record saying “I am convinced every time I come to Silicon Valley…that is where the future of America is all about." It's corporate taxes where the two really split - Obama wants to raise them and McCain says he'll cut them. Job-wise, Obama is a protectionist and will additionally tax tech companies who send job overseas. McCain says he won't do that.
Economic Philosophy
By and large, the economic outlook of both candidates reflects party lines. Obama wants a stronger government role in the economy while McCain wants to tap deeper into the private sector for economic growth. “John McCain believes in limited government and that goes double for the economy,” says Harley Kaplan, CFP at Beta Industries in Sherborn, MA. “When you look at Obama’s proposals, you begin to see a laundry list of proposals backed by the U.S. government. How both candidates want to pay for their economic proposals will impact Americans in key areas like taxes, energy prices, and jobs and trade.”
Other experts say that each candidate needs to be careful about overreaching with the economy. “In every case where you have an extension of government services you drive private capital out of existence,” says Dr. Herb London, president of the Hudson Institute, and author of the book, America's Secular Challenge. If you have bigger government you have a smaller private sector. What you have here is zero sum game. When it comes to the expansion of the economy through the use of investment dollars you are going to see less than that with expansion of government programs and regulations.”
On Taxes
The Illinois Democrat proposes raising taxes on Americans earning more than $250,000 annually. He would also raise the capital gains tax rate for investors in higher tax brackets. “The general principle of raising taxes on higher income Americans, like myself, and providing relief to those who haven’t benefited as much from this new global economy, I think, is a sound one,” Obama said in a recent interview with CNBC.
The GOP nominee says he will extend President Bush’s tax cuts that took effect in 2003. He will also lower corporate tax rates from 35% to 25%. On capital gains, McCain has indicated he will keep the current rates intact. He will double the children’s tax exemption and eliminate the Alternative Minimum Tax. McCain says he will pay for his tax cuts by cutting back on government waste. “We’re going to scrub every agency of government and we’re going to make them justify their existence. And if they can’t, they’re going to go out of existence,” he told CNBC in a recent interview.
Both Obama and McCain support tax credits for companies that invest in renewable energy.
For a more comprehensive look at how your taxes may be impacted by a McCain or Obama presidency, visit
http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html
Part II Tomorrow . . .
