The Thought Refuse

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Breaking Down The First Presidential Debate: Lead Question #2 – Economic Policy

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Rather then discussing how Barack Obama and John McCain presented themselves to the American public in their first presidential debate, an examination of the content of the debate is far more productive, in terms of mapping policy issues then impulse, surface impressions.  With that in mind, I will explore each leading question and give an analysis of what was said by each candidate.

Economic Policy

The initial lead question to differentiate each candidate on their economic policy, specifically how each would lead the country out of the current crisis and back to economic health.  Both candidates focused on their long term economic policies, and oddly did not mention the short term measures for immediate stability.

McCain opened with stressing a reduction in earmark spending citing that Obama had asked for $932M in pork barrel spending during his service in the Senate.  He compared earmarking to “a gateway drug” that eventually leads to Congressional corruption.  Citing his record in fighting excessive spending and corruption, McCain pounded home his mission to reduce the size of government and stop “the largest increase in the size of government since the Great Society.”  He also spoke to his intent to reduce the business tax which he has previously stated would be shrunk from 35% to 25%, as well as his desire to give every American a $5,000 health care tax credit along with increasing the child dividend to $7,500 per dependent.

Obama concurred with McCain on the need for fiscal responsibility, but outlined his contention that more needed to be done including a tax cut for 95% of families while raising taxes on those with an income over $250,000.  Closing corporate loopholes, stopping tax breaks for businesses, and provided health care to Americans was also laid out by Obama as part of his economic plan.

Both were short on the details of their plans, and instead spent a majority of the time attacking proposed policies of their opponent.  Unfortunately, most of the attacks by each candidate fell woefully short in both accuracy and effectiveness although some managed to stick, particularly on the ones coming from Obama.

McCain, attempting to cite an example in pork barrel spending, mocked federally funded research into the study of bears in Montana at a cost of $3M.  In fact, the research was an exploratory look to see if Montana grizzly bears had reached a population level to remove them from the endangered species list which would then open new business opportunities in the logging and energy sectors.  It’s a repeated and hollow attack by McCain on a small research project that would spur job creation and state revenue far in excess of it’s price tag.  He’d be better served to find another example to prove his point.

The pork barrel issue was a reoccurring point for McCain who stated that earmark spending had increased by three fold in the last five years.  While it has increased over that time span, it actually dropped from $29B in 200 to $13B in 2008(Notice the increase from 2007 to 2008.  I’d attribute this to increased spending during an election year to court state voters).  His policy that corruption in Washington was out of control and needs to be stamped out falls flat on it face here.  It’s clear work is already being done to reduce political excesses by both candidates, and Obama correctly attacked McCain’s ancillary focus on pork barrel by putting into perspective the minuscule amount $18B is in relation to total government spending.  In addition, McCain’s contention that earmarking leads to corruption is fundamentally flawed.  It’s in versed logic.  Excessive spending does not corrupt, but rather corruption causes excessive spending.

Obama’s rebuttal to the $18B figure was to criticize McCains proposed $300M tax cut.  Obama portrayed the tax cut as giving “CEOs of Fortune 500 companies getting an average of $700,000 in reduced taxes, while leaving 100 million Americans out.”  I can’t help but point out that a $700,000 for 500 CEOs equals out to $350B – $50B more then McCain’s tax cut.  Stretching the numbers aside, Obama attacked a weak point in McCain’s tax cut policy.  When McCain rebutted Obama’s tax plan, he stated that Obama “voted in the United States Senate to increase taxes on people who make as low as $42,000 a year.”  This is technically untrue.  McCain is refers to a non-committal recommedation to allow the Bush tax cuts to expire in 2011 which in turn would raise tax levels for those with incomes almost across the board.

In terms of voter appeal and in light of the the countries economic woes, McCain’s tax cut plan fails horribly compared next to Obama’s.  The average American is already rattling their sabers at the income inequalities highlighted by the market crash.  Coupled with a bail out package that’s going to take tax payer money to rescue the jobs of those at the top of the income ladder, McCain’s tax cuts for those earning more then $600K only adds fuel to the fire.  Conversely, Obama proposed tax increase on the top 5% of earners could be perceived as a vengeful, spiteful attack back at the rich.  With Mccain’s tax plan practiculy ignoring the bottom 60% of the tax bracket, Obama’s tax plan is a sure win in the eyes of voters.

The entire earmark point McCain decided to make a hallmark of his economic policy during the debate only gets more shakey when you look at earmark spending by state.  Alaska, the homestate of McCain’s VP pick Sarah Pailin, has lead in ear mark and pork barrel spending per capita since 2000 when the CAGW began tracking data.  Pailin has been roundly criticized for her hypocritical stance on the infamous “Bridge to Nowhere”.  There’s a clear contradiction here towards excessive spending on the Republican ticket.  When McCain gives visibility to ear marks he rightly deserves the scrutiny.  McCain certainly has rightfully earned his reputation as a champion against pork spending, so he deserves credit where credit is due.  Obama’s $932M far outstrips the few loan ear marks McCain has put forth in his much longer tenure in the Senate.  So, despite having misnomer in Pailin on his ticket, McCain has the advantage on teliminating pork.

The debate over economic policy turned to tax cuts for businesses in concluding the second lead question.  This was McCain’s only area where he had any real monocrom of success.  McCain noted that the US had one of the highest business taxes in the world at 35%(and curiously cited the hot bed of overseas US job migration of Ireland at 11%), and indicated his desire to reduce the business tax.  While not particularly articulate, McCain has previously proposed cutting the business tax to 25%.  In order to pay for those tax cuts, McCain returned back to the elimination of pork barrel spending citing the tax revenue lost due to the cut would be offset by less ear marks.  Additionally, although not specifically mentioned, McCain wants a tax credit for reseach and development, as well as a tax break on equipment and technological investments.  As a long term economic policy, it’s a traditional winner.  When business tax breaks are applied ethically(read small to medium sized businesses), they spur investment and job creation.  Additionally, there is no greater engine to driving the economy then innovation.  McCain’s desire to encourage research and technology will open up new business sectors.  There’s no better example then the design and evolution of the Internet at how technology can change our economy.

Obama attempted to chide McCain on his business tax cut accusing him of giving oil companies $4B in tax breaks.  This is true, but all companies would be getting some amount in tax breaks.  The oil companies will be getting $4B based on what they are currently taxed just as every other business in America would under McCain’s plan.  While being factually true, it’s not an additional tax break for oil companies as Obama portrayed it.  The attack was an oversimplified one that missed it’s mark.

Health care was a topic of debate that I felt, restricted to teh debate, McCain met Obama head on.  McCain propsed a $5k tax credit for all American families.  Obama never once mentioned any details concerning his health care plan aside from the need to provide it.  That might be because according to Obama’s campaign site, it states that his health care plan would “save a typical American family up to $2,500.”  Both want to make health care affordable except through different means – McCain through tax credits and Obama through regulation.

Purely on the numbers, McCain’s health plan keeps pace and surpassed Obama’s.  However, Obama’s provides better access and greater coverage then McCain’s.  Obama did attempt to point on the accessibility difference saying that under McCain’s plan ” if you end up losing your health care from your employer, you’ve got to go out on the open market and try to buy it.”  Attacking McCain’s taxing the employer for provided health care benefits fell a bit short as it’s a way to remain fiscally responsible paying for his tax credit by passing the cost of to employers rather then taxpayers.  However, it runs somewhat contrary to the intent of McCain’s business tax cuts to provide businesses with greater capitol investment fund.

This leads the attack leveraged by McCain that Obama has $800B in proposed new government spending. While true(although I’m not certain where the figure arose from), it runs contrary to Obama’s previous statement where he acknowledged due to the bail out package, new spending will have to be postponed.  In light of the bail out package, both candidates economic plans have to have an astrerik beside them and suddenly become circumstantial.  The sizable bail out package makes any new spending or tax cuts a fiscal risk until the budget is back on stable ground.

Overall, McCain’s decision to make ear mark spending and Washington greed his central theme of his economic policy and his predominately baseless counterattacks on Obama came off as bad policy and bad debating.  Instead of concentrating on a fiscal blip in the federal budget, McCain would have been better served to address issues American voters were concerned about rather then trying to play the all encompassing greed card.  That’s better left to an advertisement.

Obama, on the other hand, left out many details, but provided enough sensible arguements and rebuffs to McCain’s policies to present a cohesive and tangible economic plan.  His points where concise and direct in contrast to McCain’s economic tangents.  Once again, Obama outperformed and laid out a more workable economic plan then McCain.  Advantage Obama for lead question #2.

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Written by huxbux

September 29, 2008 at 1:38 pm

2 Responses

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  1. I just stopped by your blog and thought I would say hello. I like your site design. Looking forward to reading more down the road.

    Mike Harmon

    September 29, 2008 at 2:38 pm

  2. Thank for the visiting my blog, taking time to read some of my posts, and leaving a comment.

    huxbux

    September 29, 2008 at 2:55 pm


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