Wednesday, September 24, 2008

Candidates respond to the bailout

Though certainly not the only problem facing our nation today, the federal bailout plan for the financial crisis is certainly making headlines. Both major party candidates have issued statements on the proposal, and there are some striking similarities. As MSNBC reports:

Both called for greater oversight; for ensuring that taxpayers benefit if repackaged loans are sold at a profit or the bailed-out companies recover; and for limiting the pay of executives at firms covered by the bailout.[1]

Beyond that, though, there are some differences. In particular, the two have different tax cut plans.

"Obama said his proposed middle-class tax cuts remain 'absolutely necessary.'...McCain says he still plans to extend Bush's tax cuts for high-income Americans..."[1]

Other parts to their proposals follow similar lines. Senator Obama called for "boosts to subsidies for health care, education, retirement savings, renewable energy and other priorities," [1] the first three of which would directly benefit individuals, while the fourth would help bring the cost of energy down in the long term. Senator McCain "favors increased federal spending for nuclear power and control of greenhouse gases" [1]. While more investment in nuclear power might help bring down the cost of energy in the long term, measures to control greenhouse gases will likely raise it in the short term. In addition, such federal spending would only indirectly benefit consumers while directly benefiting power companies.

As such, it seems from the MSNBC article that Senator Obama's plan is more focussed on assisting the individual citizens while Senator McCain is calling for assistance to the wealthy and to corporations. Senator McCain's top financial advisor Doug Holtz-Eakins said McCain is working on "policies to create jobs in America and get the economy going,"[1] a strategy that, combined with the above, smacks of trickle-down economics.

From an article on Fox News, we learn that Senator McCain seems to have given more ammunition to his detractors, since "McCain, who only a week ago said the economy was fundamentally sound, now says the U.S. financial system is facing a major crisis."[2] However, he also "called for a bipartisan oversight board for the proposed bailout, to be headed by Warren Buffet or another broadly respected business leader."[2]

Senator Obama "vowed to slash federal spending on private contractors by 10 percent in an effort to cut costs to help the failing economy, singling out Haliburtion."[2] As such, it seems that he intends to fund his initiatives outlined above by ensuring "Washington starts taking responsibility for every dime that it spends."[2] Senator Obama also calls for bipartisan oversight of the bailout.[3]

In summary, Senator McCain and Senator Obama agree that the current bailout plan needs more oversight. Senator Obama has endorsed middle class tax cuts, more spending on programs that directly aid citizens, and reducing government costs by increasing accountability. Senator McCain favors extending the President Bush tax cuts to the wealthy, more government spending on nuclear power and greenhouse gas control, and a committee including business leaders to oversee the distribution of federal funds to other business leaders.

It's just not reasonable to portray these two plans in an equal light - one of them is likely to actually assist individuals while the other is likely to assist corporations and businesses.

[1] Obama, McCain wary about financial bailout
[2] Obama, McCain Question Wall Street Bailout
[3] Show Your Support for a Responsible Economic Recovery Plan

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