Economic Policies Of The Presidential Candidates Essay

The presidential election is coming just in the time when America is in desperate need to get out of many crises. Some of the apparent crises are the health reform crisis, the credit crisis and the political crisis generated by the war. Considering this background environmental condition, the coming election might be one of the most important events in the history of America and one that will decide the future of the country. In this paper however, I will focus on discussing the economic policies proposed by both presidential candidates. The discussion will focus on evaluating each of the candidates’ economic agenda and how they will affect the US economy in terms of growth (the supply side) and stability (the demand side). II. Thesis Statement Based on the news rails and publications regarding the economic agenda of the two candidates we can assess to a certain extent, the direction of each candidate. From my analysis, each of them has different approach on how to address the challenges faced by the nation. In the end of this paper I will provide a conclusion stating the different overall positions of both candidates and what benefits could come from each economic agenda. First however, I would make a thesis statement based on a quick glance over the available information in order to direct the course of this discussion. The thesis statement is: â€Å"Obama has an economic action plan that is aimed to affect the US economy in the form of improved living conditions for the middle class American workers in all aspects and thus generate economic stability, while McCain has an economic action plan that is aimed to affect US economy in the form of enhanced America’s competitiveness in businesses and thus create stronger macroeconomic growthâ€Å" III. Candidates on Economic Growth (the Supply Side) There are several perspectives of measuring the quality of a economic policy. In this paper, I am using two basic measurements of economic performance, which is economic growth and economic stability. Economic growth represents development of the supply side within the economy, which is represented by factors like productivity growth, capital accumulation and the supply of labor. Economic stability on the other hand, represents development of the demand side of the economy, which is represented by factors like inflation, demand for goods ands services, employment and price levels. Despite their nature of sometimes being a trade-off to each other, both are important economic indicators to ensure a prosper society. The lack of attention to any of those factors mentioned above will generate concerns and even protest from unsatisfied citizens of America. Thus, this paper is dedicated to evaluate the presidential candidates’ economic policies proposal within each and ever factors mentioned above. III. 1. John McCain on Economic Growth III. 1. 1 John McCain’s Agenda John McCain has confessed previously in one of his interviews that economy is not really his strong point. However, due to the presence of numerous professors as his economic advisors, it is not objective to judge the candidate from this statement alone. After a period of unclear statements regarding his economic agenda, John McCain has finally stepped-up confidently with a clear-cut economic agenda. His website reveals several sections consisting of actions under a title of ‘McCain Tax Cut Plan’. In the ‘Pro-growth Tax Policy’ section, McCain proposed the following actions: 1. Keep Tax Rates Low Under this action John McCain intends to fight the Democrats on their tax hike agenda and in the exact opposite of that plan, John McCain believes that there should be a reduction of taxes for the entrepreneurs of America. John McCain believes that small, medium and successful entrepreneurs are at the hearth of American innovation and therefore, should be protected by sound government policies. 2. Make It Harder to raise Taxes To support his commitment to maintain a low tax level, John McCain will strive to change the current legislation and suggested a new one, regulating that tax increases require at least 3/5 majority vote in Congress. 3. Cut Corporate Taxes Especially for corporations, John McCain suggested that a further tax reduction is important for US competitiveness. He believes that America was once a low-tax business environment, but later failed to keep pace as trade partners lower their rates. Thus, a tax deduction is appropriate to restore US competitiveness. 4. Rewards Savings, Investments and Risk-Taking John McCain believes that the reduction of tax will enable saving and further investment on innovation. Thus, it is imperative to maintain low taxes. 5. Allow First Year expensing of Equipment and Technology investment In order to boost investment in research and development, the government should allow corporations to expense their capital expenditures used for developing cutting edge technologies (‘John McCain’, 2008). III. 1. 2. Perceived Effects of the Agenda As elaborated, McCain’s economic agenda focused on his tax-cut plans. There are pros and cons regarding this action plan, especially regarding whether this tax cut plans will actually support economic growth. In theory, McCain’s agenda is in line with the general understanding on macro economic tendencies. Macroeconomic theories revealed that when taxes are low and entrepreneurship & innovation are supported by various legislations, there will be increased investment on business that will finally enhance the level of productivity of related businesses. This means that ‘in theory’, McCain has met the first criteria of economic growth, which is increased productivity. By lowering taxes on huge corporations, McCain will also allow these companies to enhance their capital accumulation process and generate business expansion faster than it would be otherwise. This means that ‘in theory’, McCain would have also met the ‘capital accumulation’ criteria. In terms of labor supply, McCain’s campaign website does not mention any effort of increasing the supply of labor for American industries. In his speeches and interviews on the other hand, the candidate has mentioned that his economic agenda will also include training programs for to increase the skills and capabilities of US labors and thus, enhanced their wages also. If these government training programs are truly a part of McCain’s action plan, than it the candidate had also ‘theoretically’ fulfilled the third factors, which is labor supply. Concerns however, are stated by economic observers. These observers stated that in the past 4 years, we have performed this strategy of providing entrepreneurs and corporations with supporting strategies, but the fact is, during the entire Bush’s administration, the amount of new jobs created is less than a year within the Clinton’s administration. Observers and writers also perceived that the corporate tax cut will enrich the already rich and done little for the middle class. This is quite in contrast to the current concerns throughout the United States toward increasing the quality of life for the middle class and the working class. Some perceived that this is only a clever strategy to get the support of powerful entrepreneurs in McCain’s campaign. Therefore, McCain’s idea of continuing this program (further protecting and supporting large corporations) does not impress most economic scholars and economic observers, but gain interest of the business sectors. Another concern is that McCain’s plan to increase labor supply is considered weak. This is due to the fact that American corporations are outsourcing their production activities overseas, due to the cheaper cost structure in foreign countries. Thus, supporting the large corporations with huge tax cuts will not guarantee that American labor will gain advantage over the growth generated by those tax cuts. Furthermore, with trainings that enhance American labor’s wage-rates, it will be less likely for American companies to use American labor in their production. These policies might have the potential of generating increased growth rates and innovation as promised, but even with the tax returns for workers families, the middle class will only gain a small portion, compare to the benefits gained by rich entrepreneurs.