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Understanding the Proposed Economic Policies of Obama and McCain Sponsored by ASP Civil Controversy

Understanding the Proposed Economic Policies of Obama and McCain Sponsored by ASP Civil Controversy Vinit Jagdish Brandon Dupont WWU Economics Department October 6, 2008 September 2008 Unemployment Rate = 6.1%

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Understanding the Proposed Economic Policies of Obama and McCain Sponsored by ASP Civil Controversy

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  1. Understanding the Proposed Economic Policies of Obama and McCainSponsored by ASP Civil Controversy Vinit Jagdish Brandon Dupont WWU Economics Department October 6, 2008

  2. September 2008 Unemployment Rate = 6.1% Nonfarm payroll employment fell 159,000 in September (760,000 jobs lost so far in 2008) Unemployment Rate A Current Snapshot of the U.S. Economy U6 Unemployment Rate

  3. Gross Domestic Product

  4. Inflation Rate

  5. Credit Markets “Freezing Up”

  6. Obama on Energy • Cap-and-trade system  2050 carbon emissions 80% below 1990 levels • $150 billion over 10 years invested in ‘clean energy • Make permanent R&D tax credits for corporations and renewable energy production tax credits

  7. McCain on Energy • Drill, Baby, Drill (maybe?)!!

  8. Other McCain Energy Proposals • Cap-and-trade system  2050 carbon emissions 60% below 1990 levels • Repeal tariff on imported sugar ethanol (rollback corn based ethanol mandates) • $2 billion per year for developing clean coal technology • 45 new nuclear plants by 2030 • Plus cash prizes!

  9. Obama on Health Care • Require health insurance for children • “Pay or Play” for employers • Targeted refundable tax credits to low-income families without access • National Health Insurance Exchange with private insurance options and a new public plan • Reduces number of uninsured by 18 million in 2009 and 34 million by 2018. • Total estimated cost = $1.6 trillion (if implemented in 2009)

  10. McCain on Health Care • $2,500 refundable tax credit to individuals; $5,000 to households (indexed to inflation) • End tax exemption on employer sponsored plans • Pool and subsidize high risk individuals • Total estimated cost = $1.3 trillion (if implemented in 2009)

  11. Comparing Coverage Levels

  12. Obama on Taxes • Make Bush tax cuts (2001 & 2003) permanent for middle class but allow them to expire for upper class • Increase max tax rate on capital gains from 15% to 20% on those with AGI>$250,000 (married couples) or $200,000 (others) • Corporate taxes? • Estate tax: $3.5 million exemption and 45% rate • Eliminate income tax for poor seniors (<$50,000) • Expand EITC and child/dependent care tax credit

  13. McCain on Taxes • Extend 2001 & 2003 tax cuts except for estate tax (15%, $5 million exemption) • Permanently adjust AMT for inflation • Cut corporate tax rate from 35% to 25% • Deductions for R&D and investment • Create simpler alternative tax structure?

  14. Comparing the Plans: Average Percent Change in After-Tax Income

  15. A Rising National Debt

  16. Source: Tax Policy Center, 2008

  17. [Note: The OMB estimates earmarks to be 16.9 billion in 2008. Current federal expenditures for 2008 are not yet available, so the chart uses the 2007 value of 2880.5 billion from the BEA (the ratio is approximately one half percent, i.e. 0.59%). Since federal expenditures for 2008 will exceed those of 2007, this means that the area for earmarks shown in the diagram is overestimated, i.e. it is larger than the true value. The NY Times also notes that "earmarks ... make up less than 1% of the federal budget."].

  18. Comments / Questions

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