Obama vs. McCain vs. America on the Economy

Right now the entire country seems to believe that Democrats will save the day on the economy and we're looking at a super majority for Democrats to gain complete control of the United States Government in this year's election results.

But, is this really true? Between the corporate lobbyists of the left and the corporate lobbyists on the right, will either party truly represent the national interest or working America's interests?

I have a premise that the only way to get the United States moving economically is to start producing, saving, exporting and raising up the middle class. I am not alone in this conclusion:

The US has to move toward a competitive, saving- and export-oriented economy. This requires investment in education that boosts incomes and improves competitiveness; in transportation and communication that efficiently move people, goods, and ideas; and in cleaner energy to power it all

and many note our ballooning deficit will be a major drag on these efforts. Yet both candidates keep harping on cutting taxes with a massive ballooning deficit funded by 47wallst.com/2008/10/with-us-budget.html">foreign capital.

A few notes on current economic plans from the candidates:

John McCain

John McCain Will Establish Permanent Tax Credit Equal To 10 Percent Of Wages Spent On R&D. This reform will simplify the tax code, reward activity in the U.S., and make us more competitive with other countries. A permanent credit will provide an incentive to innovate and remove uncertainty. At a time when our companies need to be more competitive, we need to provide a permanent incentive to innovate, and remove the uncertainty now hanging over businesses as they make R&D investment decisions.

McCain needs to tie this further to jobs going to US citizens due to the WTO, GATS mode 4 agenda, but fundamentally tying investment to jobs is a good connect.

On Trade, while Obama truly is not ideal, simply mentioning environmental, labor standards instead of renegotiating these agreements which are structurally biased against the United States, removing China and India from Emerging Market economic status (which gives Emerging Economies enormous, unfair bias on trade) and truly adopt a much more strategic trade policy. On the other hand, McCain is in economic fiction land on trade, promoting even further more bad deal trade which have already cost the United States 5.6 million jobs and caused our ballooning trade deficit.

While Obama has a series of plans that look promising to invest in America, there is one I find truly odious:

Eliminate all capital gains taxes on start-up and small businesses to encourage innovation and job creation. Obama and Biden will also support small business owners by providing a $500 “Making Work Pay” tax credit to almost every worker in America. Self-employed small business owners pay both the employee and the employer side of the payroll tax, and this measure will reduce the burdens of this double taxation.

Now this is a work of fiction. Most small businesses do not have any capital gains whatsoever. The problem is the self-employment tax which is double, but trying to imply zero capital gains would any effect, when these small businesses have nothing to do with stocks or capital gains is misleading.

Obama now wants a freeze on foreclosures, yet is blasting McCain on a HOLC. There is one valid criticism on McCain's plan in not demanding the original mortgage holders from which the HOLC would buy out, take a loss. It's also kind of dumb because obviously if a mortgage is about to go into foreclosure, the mortgage originator should be highly motivated to recover at least some of their losses, thus sell at a discount. Yet, McCain is onto a direction which is highly recommended by Economists and that is a good thing.

Let us not forget, Democrats generally want to pass massive guest worker Visas and flood the US domestic labor market with even more workers at a time the economy is contracting, so this alone with have a sharply negative affect on wages and the unemployment numbers.

Another very good point from Obama is to reform the bankruptcy laws to allow judges to renegotiate mortgages on primary residences, which is another major factor on foreclosure rates.

What does all of this lead me to conclude? One simply cannot pull the Democratic lever and expect all to be well. The current Democratic party is simply not the party of FDR. Americans need to become hyper vigilant, engaged in the details of trade, economic policy and demand our representatives start representing us, regardless of political party. As one can see just from the few policies presented, both sides have a few good points and corporate/special interests agendas being presented, Getting policy based on what works versus what special interests want is one tough slog.

We should not have to choose who sucks least in our representative Government, yet still in spite of the economic tsunami hitting our shores, this is the current situation.

We need to become much more active during primaries at the Congressional and state level, for when one party has a lock on government, getting those corporate elites out and true representation in becomes only that much harder.

Consider this post an open thread for discussion on economic policy positions as well as the last Presidential debate.

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Comments

Enforce Unfair trade agreements

Obama said in the debate it's important to have a President who will enforce unfair trade agreements.

Freudian slip?

McCain of course ignored the reality that labor leaders in Columbia are routinely assassinated. Both of them never utter a word on China, which is where the United States has the worst deficit.

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"competitiveness" in my mind

"competitiveness" in my mind seems to be code for low wages

who wants to spend years in college going deep in debt to have to compete with third world wages?

no amount of higher productivity and education can compete with workers earning pennies on the dollar

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truly

neither is addressing that at all, the reality of 50:1, 12:1, 100:1 wage ratios, although if the United States defaults on it's debt or deflates the dollar so much, we might not have to worry about that soon.

Labor economics and the realities thereof is just not statistically, historically discussed, both parties. A few brave souls of both parties on the fringe do talk about it but they are few and far between.

Also, the U.S. was sold on trade claiming it would raise all boats, well the truth of the situation is it's basically poked holes in the middle class of the United States as well as other nations. Need to cover the global results of trade because there is some belief out there that somehow it raised other nations boats and in most cases it's the opposite and why those peoples protest in masse.

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here's one thing

That I already wrote about but it's now confirmed, McCain Called Hillary on the economy...and if you notice Obama just took one of Hillary's policies too.

Maybe this will cause a complete implosion of the Republican party, which to me can only be a good thing since they have had either completely corrupt policies, written for and by corporate lobbyists (Democrats too) or that insane supply side, trickle upon economic theories that all the way back to Reagan are proven to not work.

Everybody thinks of Nixon as the evil doer but in truth, he had less "philosophy" and did try a host of polices that the obnoxious Republican party of today...they stick to their inane positions regardless of the results.

There are a few sane ones who probably will survive...now if only the same thing could happen on the Democratic side...

Though out the History of the US corruption has been a major problem. I wish once and for all we could clean up that town.

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Trickle down didn't start with Reagan

I used to think it started with the 1896 recovery from the 1873 panic, but now I realize something.

The history of charging interest for loans is the history of trickle down economics.

Interest is a tax on progress just as much as if the federal government slapped a 100% income tax with a $1,000,000 standard deduction. The only difference is in who profits from it.

We all profit from taxes in the form of infrastructure. I'm no longer trusting of the idea that we all profit from a lack of usury laws.

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Maximum jobs, not maximum profits.

Ouch! Rubins busted on derivatives

WaPo finally calls out the doers which led up to this financial disaster.

I think everyone on this site, although we wish it weren't so, know the Rubins through Jason Furman is running the Obama campaign and just to be fair and balanced, McCain had Phil Graham as one of his economic advisers.

Who thinks these guys need to be tarred, feathered and run out of town instead of dictating policy in yet another administration?

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I do

But I go further than that. You see, policy is just one side of the coin- fraudulent business practices such as short selling (selling what you do not own) and fractional reserve banking (loaning what you haven't been given to loan) seem to me to be equally large problems.

And hiding behind all of that is the grand elephant of putting profits before human life, or as the Vatican puts it and has been warning about since the early 1800s, the Culture of Death, which affects a lot more than just abortion (which is only an easy target because an abortion will cost $400 to the insurer or patient, vs a live birth which can cost $4000).

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Maximum jobs, not maximum profits.

This deserves a diary of its own.

I would get a tremendous kick if you wrote this up. Cover what Rubin and the gang have been up to and what derivatives are.

And dropped it over at Red State or one of the right wing blogs.

You ought to check out this piece about the role played by computer executed trading of derivatives in the crisis. And this shocked me.

Amid all the fallout from the financial turmoil, one group has yet to feel the accusing finger of blame: the analysts who built the computer software that drove the derivatives markets that, in turn, drove the financial collapse. Since the Big Bang of the 1980s, large amounts of stocks and shares - and derivatives of them - have been traded automatically by computers rather than by humans. These so-called "algotrades" accounted for as much as 40% of all trades on the London Stock Exchange in 2006; on some American equity markets the figure can be as high as 80%.

80% of trade volume is being executed without human oversight?

This is yet another example of the conflation of wealth with productive power a la List.

The origin is wealth is not these false financial instruments, but productive power, i.e. the power to take an item and add value to it through labor.

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volunteer middle?

I think it's important for people to realize that the culprits are on both sides, in both campaigns, both parties.

Want to write it up? Cut and paste of my comment is aok and cut and paste are your friend.

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Too much for me

this weekend. I've just spent two days on the road, and I've got a ton of paperwork waiting to be attended to.

The gang over at European Tribune picked up on this same article.

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Sirota on Obama/McCain

Other American Dreams.

What kills me about Sirota is all during the primary, while Hillary after dumping Mark Penn was pumping out policy after policy that was really superior on manufacturing, trade, unions, labor...Sirota was busy blasting her, often with some seriously incorrect statements.

Now, here we are in the general and he realizes that it's DLC 3.0 with Rubins once again running the economic show vs. McCain who just recently stole a couple of policies out of Clinton's stack and of course other positions are classic corporate/labor arbitrage ones...

Why did he not write this in the primary, when one had a chance to move the Democratic platform and candidates to a more Progressive/Populist agenda?

It's a good read, especially on how the propaganda, rhetoric tries to poo poo blue collar.

We need Jill the Engineer to be on T.V. instead of Joe the Plumber. Odds are Joe the Plumber is making more money than Jill the Engineer so presenting Professionals as the way to economic prosperity is a huge lie that is not confronted in this above article.

Although I agree, for 30 years now media and politicians really has looked down their nose at manufacturing, blue collar workers, badly.

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Sole Proprietor

means your business taxes and personal are one and the same. But one would have gross income and then write off business operating expenses, payroll and so on.

The same is true for a pass through LLC. If one owner, those have a self-employment tax which is double than W-2 taxes.

Found a good comparison table.

Self-employment tax is required on Sole Proprietor, LLC and is 15.3%....so that's on your net business income and you would have additional income tax on your personal income, but you get to subtract half of the self-employment tax from what is owed on personal income.

Hit > 105k a year and it's time to incorporate or do something different because the tax bill goes way up.

They are not being clear here I agree, but it's really complex and one can incorporate, do a LLC, S-corp, all sorts of things for tax purposes...

but in terms of Obama trying to claim a zero capital gains is going to help "small business", that's only for C corps, then qualifying for a small business AND they have to issue stock...

now I don't know the statistics but Mom & Pop electrical contractors as far as I know are not busy issuing stock for their C corp.

VCs, private equity, start ups would possible qualify as small business stock but hello....let's have Dot Con 3.0 if there are zero capital gains on such stuff...

Mom & Pop or Joe the Plumber even if they have a good accountant are simply not running around selling shares in their C-corp and holding them for 5 years.

Odds are they are a Sole Proprietor, a LLC or something along these lines.

Im not an expert on taxes but private stock issues are a huge deal for startups, VCs, private equity, hedge funds.

Not Joe the Plumber.

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More and more is coming out

More and more is coming out about Joe the plumber

he is not licensed plumber, and his boss says the business is not for sale. He is also a regular caller on the local RW radio

My grampa was a union plumber/pipefitter in Toledo - this is a reliably democratic constiuency.

Looking moire and more like a shill as the reports come out.

Joe is a living "straw man" creating a hypothical (and therefore unprovavable) argument to then knock down to prove the agenda

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Joe the Plumber

I'm sorry but going after Joe the Plumber is just absurd. There are 1 million guys just like him out there, all with their foreclosures, tax liens, not licensed or whatever...

the main issue he was going after, which is coming from the Populist right....are taxes on small business...so instead
of really explaining that issue, which is assuredly different from personal income taxes...

they are out to character assassinate this one guy...
when there are over 1 million guys just like him.

It would be much better to see an objective comparison contrast on effective tax rates on Sole Proprietor, LLC, S-corp, C-corp where employees < 10 and gross receipts < 500k versus just trying to character assassinate some guy out there...who is just like us (but right leaning), who just happened to get on TV...asking some real questions.

Character assassination is selective. If Joe the Plumber was an illegal immigrant, getting a home loan, working in an underground economy with a stolen identity or fake one, working as a plumber with no license, or an electrician with no license....registered to vote....
Lord knows anyone who pointed out that would be called a racist.....

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more on taxes

Boy, talk about no information, including the supposed non-partisan tax analysis sites ....I could not find a comparison contrast on sole proprietorship, S-corp, LLC., C-corp to save my soul.

It does appear that Obama will effectively raise the self-employment tax and that is a real problem.

While one might have self-employment taxes on net income of a business, there are further deductions one gets as an individual, but the employment tax is figured on the net income of that business. So, raise that and we have a real problem in terms of increasing taxes on small business, esp. those who use cash based accounting.

This is a 1st pass but it does appear to potentially raise taxes over 50% margins on these types of businesses and that's due to increased taxes on social security and medicaid, which small business pays 100% FICA on. (when you're a W-2, you split that with your employer).

This is a TBD, I'm not a tax expert, hoping to find some answer out there and frankly the non-partisan groups are not doing their job on small business tax entities and how it all works. Yuck.

Anybody else find analysis feel free to post but it must be about the effective self-employment tax rates, not individual income taxes that we're looking for.

If he passes this stuff I will do a C-corp, start a "Side business" with some sort of capital gains or try to turn something into capital gains if it has a zero tax rate, sell stock to myself, try to find some sort of pass-through..so I imagine tax havens will be the new booming business.

Bottom line, business taxes are not at all the same as individual taxes and they are very complex, all sorts of deductions, one can play games with retirement fundings...but not accurate to give percentages of the numbers or raw numbers...would be more accurate in terms of analysis by number of employees and actual wages of those employees and just how much is part of GDP as well.

but comparing this by raw percentages or trying to apply personal income tax rates to this is not valid.

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I think there is a

I think there is a distinction to be made that exposing frauds and shills for what they are is different than character asassination. The first is using information and facts to set the record straight , the other is using innuendo, associations, misinformation and the like to diminish credibility.

With that said, going after Joe is largely a futile excercise with potential backlash consequences.

My point is that once again, the democrats missed yet another golden opportunity to discredit the right's meme that somehow lower taxes for the wealthy and prosperity are linked (which the last 8 years have proven wrong) and that there was much more shared prosperity and opportunity when taxes were more progressive, as well as hammer home that the wealthy benefit greatly from the privileges and infrastructure the taxpayer provides and therefore have a moral obligation to contribute back to society. Obama once again missed an opportunity big enough to fdrive a truck thru and flubbed instead with a poor choice of words to an obvious shill.

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taxes

I've seen a few analysis and they are saying in terms of the middle class they are coming up about even in effective tax rates. Don't quote me because there is a lot of spin.

and yes I've for a Progressive tax system so it's not like I'm trying to defend the idiotic supply side steal from the poor give to the rich.

Even amount expert groups I trust I'm seeing a lot of misinformation, probably because details keep changing or other policies aren't added in.

Here Urban institute and if they say neither one is good or would stimulate the economy, I have a tendency to believe that. Now we have this massive deficit just recently added too.

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