McCain vs. Obama: 2 views on economy

In recent days the nation's deepening financial crisis has pushed the Democratic and Republican presidential candidates toward a consensus that aggressive government intervention is needed to stabilize the economy.

But a look at Barack Obama's and John McCain's records, and statements from both, reveals strikingly different perspectives on economic and fiscal policy.

Nicholas Souleles, a professor of finance at the University of Pennsylvania, said that it was not surprising that the candidates have been making similar points of late.

"Right now we have a crisis," he said. "They both recognize we have to solve this crisis. There are differences in the longer run."

As recently as last week, McCain said that "the fundamentals of our economy are strong," and proposed a government commission to recommend policy.

The comments reflected McCain's difficulty in reconciling a history of opposition to government regulation with the apparent need for decisive action from Washington. (See Signe's cartoon, Page 15.)

"I think until recently, McCain was more bullish, or more confident about the state of the economy," said Benjamin Liebman, an economics professor at St. Joseph's University.

"He has been forced to do an about-face."

Meanwhile, Obama said that the crisis was "nothing less than the final verdict on an economic philosophy that has completely failed," and noted his earlier calls for increased regulation.

Here's a look at where the candidates stand on the proposed bailout and on other economic issues, based on their policy papers, voting records and public statements.

Bailout

McCain is pushing for the creation of a bipartisan oversight board to review the Bush administration's plan for a $700-billion bailout of the troubled banking system.

"We will not solve a problem caused by poor oversight with a plan that has no oversight," he said in Scranton yesterday.

Obama says that there should be more strings attached to the deal, including limitations on compensation for chief executive officers and more regulation of financial institutions.

"We cannot only have a plan for Wall Street," he said in a speech Friday in Florida. "We must also help Main Street, as well."

Economic philosophy

Historically, McCain has been a supporter of free markets and deregulation. Former U.S. Sen. Phil Gramm, who authored a massive 1999 deregulation bill, was until recently an adviser to McCain.

Obama has said that financial regulations need to be modernized. He put out a plan earlier this year calling for more supervision of the financial system.

"McCain has in general more confidence that markets will get it right, and Obama is more interested and thinks that there is a greater role for government to fix things where they need fixing," said Liebman.

Stimulus

Obama wants to provide $50 billion to "jump-start" the economy, which would provide aid to state and local governments, as well as fund jobs in road and bridge maintenance. He also wants to invest millions in green jobs, make a tax credit permanent for research and development, and invest in infrastructure - all of which would create jobs.

McCain plans to cut corporate taxes. He also would make a permanent research-and-development tax credit and wants to set up a "Lexington Project" with the goal of building 45 new nuclear power plants, an endeavor that would create jobs.

Mortgage crisis

Obama proposes a mortgage credit for people who do not itemize their taxes. He is also calling for closer supervision of the mortgage industry and greater penalties for fraud or predatory lending.

McCain has proposed a "HOME Plan" for people with subprime mortgages. Under the plan, people with subprime loans could apply for a mortgage that reflects market value.

Pork-barrel spending

McCain has been particularly focused on congressional pork, promising to do away with unnecessary earmarks - spending provisions that Congress members insert into legislation.

Obama has pledged to cut back earmarks and reveal them to the public. As a senator, Obama has requested earmarks. In the 2008 fiscal year, Obama requested $321.8 million in earmarks and got $98.6 million in the final appropriations bills, according to the non-partisan group Taxpayers for Common Sense.

McCain does not request earmarks for Arizona, but running mate Alaska Gov. Sarah Palin asked for $200 million in the 2009 fiscal year.

Earmarks make up less than 1 percent of the $3 trillion federal budget.

Taxes

McCain would make the Bush tax cuts permanent, reduce the corporate income-tax rate, increase the exemption for dependents by two-thirds and cut back on the estate, or inheritance, tax.

Obama would roll back the tax cuts for people making more than $250,000. People who make less could receive a number of tax credits, including a $4,000 tax credit for each child in college, or a mortgage credit if they don't itemize returns. And seniors making less than $50,000 would pay no income tax.

According to an analysis by the nonpartisan Tax Policy Center, people making less than $250,000 would see a bigger increase in their take-home pay under Obama than McCain. *

The Associated Press contributed to this report.