McCain, Obama, and the Economy
What effect would each candidate have on the economy? Or would they have any effect? Several items need to be taken into account to make an accurate judgment. What are their beliefs regarding things like taxes and the size of government? There are also other factors that play into the potential effects. The majority in Congress is currently democratic and that trend looks to continue at least for this election cycle. This means that a potential future President Obama would be more powerful than a President McCain. Given the majority, it would be easier for Obama to enact his policies and ideas than it would be for McCain. What does a vote for each candidate mean? Which direction will your vote take this country?
What does each candidate believe in regard to taxes? Both claim they will lower taxes for most people. But what kind of effects will each of their policies bring? McCain wants to keep the Bush tax cuts in place as well as add some new ones. He also wants to add a $5,000 tax credit for health insurance premiums. Obama is quick to argue that this is actually going to hurt most people due to McCain making insurance premiums count as taxable income. While this accusation is true, if you can do a little math, taxes will still be lower. A normal yearly premium is around $12,000. Assuming an upper-middle class tax rate of around 30% gives a $3600 increase in taxes, the $5000 tax credit in this case would lower taxes by $1400.
Obama says he will lower taxes on the lower 95% while raising on them the top 5% of Americans. This sounds pretty good to most people. I reside in that lower 95%, but I don’t want to raise taxes on the top just because itÃ¢â‚¬â„¢s not me. People need to understand that these people invest in America; they may invest in you. If you keep taxes lower on the wealthiest 5% of Americans it encourages them to invest in America. This creates jobs for the rest of us and helps grow the economy for everyone. This has the encouraging side effect of actually raising the amount of money the government takes in.
For example, look at what happens when you lower taxes on the middle class. In this scenario, Jim is making $42,000. The new President lowers his taxes around $500. Take into account that he isnÃ¢â‚¬â„¢t paying very much in taxes anyway at this point. That sounds great, so Jim is going to go buy a TV. Now look at a scenario where taxes get lowered across the board. In McCainÃ¢â‚¬â„¢s tax plan, businesses would be taxed 25% instead of the current 35% rate. Jim works for a small business with 20 employees that made $750,000 last year. The 10% reduction in taxes means that his company will have an extra $75,000 at the end of the year. Many small businesses spread their profits around. Given this example, each employee would get a $3,750 bonus. Jim can now buy a much nicer TV, or maybe 7. Going to a larger scale, Intel made around $6.5 billion last year. With a 10% reduction on their taxes, they would save around $650 million. This could create over 15,000 jobs paying JimÃ¢â‚¬â„¢s salary. That is the ultimate in job security; there are so many jobs created he knows he can find another if he loses his. This is how to make an economy grow.
Next is the size and scope of government influence on our free-market economy. Unfortunately, both candidates voted last week on the $700 billion dollar bailout. This is a scary step toward socialism. However, there is a fundamental difference between these two candidates. Look at the very important issue of health insurance. Most people agree that health insurance as it currently stands is flawed. Personally I donÃ¢â‚¬â„¢t think either candidate has a great plan to solve this. McCain, as stated earlier, is offering a slight tax break to get insurance with along with deregulating state laws on health insurance. This would allow people to shop across state lines for health insurance. ObamaÃ¢â‚¬â„¢s plan is to give health insurance to everybody. First, for people and businesses who can afford it he will institute fines for not having health care. Next, for those who canÃ¢â‚¬â„¢t afford it he wants to help them pay for it. This means an added strain on our overextended budget.
I donÃ¢â‚¬â„¢t think either plan is really that great; however, there is an essential difference. McCain advocates giving people more of their own money to spend on health insurance and the other advocates giving other peopleÃ¢â‚¬â„¢s money to spend on health insurance. One is a free market philosophy; the other is a government bureaucracy solution. There arenÃ¢â‚¬â„¢t very many things that the government runs smoothly and efficiently, and I donÃ¢â‚¬â„¢t believe they will start with health care.
I am not sure either candidate would do a great job with our economy. Obama wants to move us towards socialism. While I donÃ¢â‚¬â„¢t think that many of McCainÃ¢â‚¬â„¢s ideas are the best solutions, I think that they are closer to my basic belief that the government should do and take less instead of more. We agree that a free-market philosophy believing with less government intervention is a better way. He believes the government should give the people more of their own money to run their lives with. I think our economy in the short and long term is much better off going away from big-government socialism and towards free-market capitalism. The biggest financial crisis America has had was The Great Depression. The biggest change towards socialism our country ever saw was during this era. Most economists agree, the depression was extended significantly because of these policies. DonÃ¢â‚¬â„¢t make the same mistake again America. If you donÃ¢â‚¬â„¢t learn from history, you are doomed to repeat it.