Decision 2008: Candidate Matchups

Photo by Ramin Talaie/Corbis, Emmanuel Dunand/AFP/Getty Images

The 2008 presidential campaign is focusing on a number of major issues. Here is a guide to significant proposals of the major presidential candidates, Sen. John McCain and Sen. Barack Obama.

ECONOMIC RESCUE PLAN

McCain: “The moment requires that government act. And as president I intend to act, quickly and decisively.”

Proposals:

• Having the government buy up bad home loan mortgages and renegotiate them with homeowners at the new—lower—value.

• Lowering the tax rate on people who tap their 401(k)s and IRAs after reaching age 59½.

• Increasing allowable tax deduction from $3,000 to $15,000 for selling stocks at a loss.

• Cutting capital gains taxes from 15 percent to 7.5 percent for two years.

• Eliminating taxes on unemployment benefits of those who are looking for work and have annual income under $100,000.

Obama: “At this rate, the question isn’t just ‘Are you better off than you were four years ago?’ It’s ‘Are you better off than you were four weeks ago?’ We face an immediate economic emergency that requires urgent action.”

Proposals:

• Establishing a foreclosure prevention fund to help stabilize the housing market.

• Allowing penalty-free withdrawals of up to $10,000 from IRAs and 401(k)s in tax years 2008 and 2009.

• Providing a $3,000 business tax credit for every new full-time job created in the United States in 2009-10.

• Requiring that banks benefiting from the federally funded rescue plan provide a 90-day moratorium on foreclosures to give homeowners time to work out a payment plan.

• Empowering the Federal Reserve to provide short-term loans to state and local governments caught in a credit crunch.

DOMESTIC AND GLOBAL ECONOMY

McCain: “On tax policy, health care reform, trade, government spending and a long list of other issues, we offer very different choices to the American people.”

Proposals:

• Balancing the federal budget by 2013 by freezing nondefense, nonveterans discretionary spending for a year; cutting or vetoing all earmarks spending for one year; providing more resources for coordinated job-training programs.

• Promoting more free trade with better enforcement to ensure that the United States gets a fair shake.

Obama: “When it comes to the economy, John McCain and I have fundamentally different visions of where to take the country.”

Proposals:

• Renegotiating the North American Free Trade Agreement to include compliance with international standards on environmental protection and child labor.

• Extending career retraining and financial assistance features of trade-adjustment assistance to service industries, creating flexible education accounts to help workers retrain, and offering assistance to workers in economic sectors vulnerable to dislocation.

• Strengthening the right to organize unions, and increasing the minimum wage.

• Creating a National Infrastructure Reinvestment Bank to invest $60 billion over 10 years to rebuild roads, bridges and sewer and water systems, and to create new jobs.

SOCIAL SECURITY AND RETIREMENT SAVINGS

McCain: “Politicians refuse to talk straight about Social Security and Medicare: The current Social Security system is unsustainable. Period.”

Proposals:

• Letting a commission take the lead in developing options, then negotiating a long-term solution that preserves the Social Security obligation to retirees while restoring the program’s solvency. He promises not to cut benefits or raise taxes.

• Supplementing Social Security with personal savings accounts that can be invested in “safe and reliable index funds.”

Obama: “We will not privatize Social Security, we will not raise the retirement age, and we will save Social Security for future generations by asking the wealthiest Americans to pay their fair share.”

Proposals:

• Protecting Social Security benefits from cuts.

• Imposing a Social Security payroll tax on salaries above $250,000.

• Maintaining the current retirement age for benefit eligibility.

• Stopping any attempts to create private Social Security investment accounts.

• Eliminating income taxes for some 7 million seniors making less than $50,000.

• Creating automatic enrollment in company 401(k)s and in IRAs for employees without company 401(k)s.

MEDICARE

McCain: “By 2019, Medicare will be broke. We are currently spending more on Medicare than we are collecting in payroll taxes and cashing in the few IOUs left in the trust fund.“

Proposals:

• Reforming the payment system for Medicare by compensating providers for diagnosis, prevention and chronic care coordination rather than rewarding those who provide “more and more complex services.”

• Denying Medicare payments to providers for preventable medical errors as an incentive to increase quality care.

• Requiring wealthy retirees—couples earning $164,000 annually and singles $82,000—to pay more for prescription drug coverage.

Obama: “As president, I will reduce costs in the Medicare program by enacting reforms to lower the price of prescription drugs, ending the subsidies for private insurers in the Medicare Advantage program and focusing resources on prevention and effective chronic disease management.”

Proposals:

• Reducing waste, enacting fundamental health care reforms, and putting greater focus on chronic disease management and disease prevention.

• Eliminating $150 billion in subsidies over 10 years to private Medicare Advantage managed care health plans.

• Revising the “antiquated” Medicare reimbursement system for doctors to provide “fair and reasonable” physician payments to ensure access to high-quality care.

• Closing the “doughnut hole” in the Medicare Part D prescription drug program, which limits benefits for seniors.

• Allowing the federal government to negotiate directly with drugmakers to get lower prices for the Medicare prescription drug program.

• Allowing importation of pharmaceutical drugs from Canada and other industrialized nations.

• Sending beneficiaries a full list of the drugs and fees they paid the previous year to help determine which plans can better cut out-of-pocket costs.

HEALTH CARE

McCain: “I offer a genuinely conservative vision for health care reform, enhancing the freedom of individuals to receive necessary and desired care. We do not believe in coercion and the use of state power to mandate care, coverage or costs.”

Proposals:

• Replacing personal tax exclusion for employer-provided health insurance with a $2,500 tax credit ($5,000 for families) to help people buy their own insurance.

• Expanding health savings accounts for families to use tax-free dollars to pay for health care.

• Allowing individuals to buy any plan available, regardless of state of residence.

• Lowering drug costs by allowing reimportation of less-expensive drugs from Canada and other developed nations.

• Using information technology to reduce health care system administrative costs for billing.

Obama: “You know, my mother died of ovarian cancer when she was 53 years old. And I remember in the last month of her life, she wasn’t thinking about how to get well; she wasn’t thinking about coming to terms with her own mortality. She was thinking about whether or not insurance was going to cover the medical bills and whether our family would be bankrupt as a consequence. That is morally wrong. It’s objectionable. That’s why I put forward comprehensive legislation for universal health care so that all people could get coverage.”

Proposals:

• Making affordable and quality coverage available to everyone who wants it through a combination of private insurance and expanded public plans covering essential medical services that include preventive, maternity and mental health care.

• Requiring employers to provide health insurance to workers or pay a percentage of their payroll to finance new public programs, with company plans reimbursed for a portion of the cost of catastrophic illness or injury.

• Holding costs down by allowing people to choose from a pool of competing private plans and one public plan similar to Medicare.

• Requiring that all children have health insurance, with costs subsidized by repealing President Bush’s tax cuts for households earning more than $250,000.

• Allowing children up to age 25 to get coverage under their family health insurance.

• Lowering costs through greater use of information technology.

• Allowing the reimportation of safe, lower-cost prescription medicines from Canada and other developed countries.

TAXES AND ENERGY

McCain: “We’ve got to reform the tax code. Nobody understands it. Nobody trusts it. Nobody believes in it. And we have to fix it. And we can’t raise taxes as our Democrat friends want. So I don’t know exactly who’s paying the most of the burden, but I would say that the American people need a tax code they can understand and that they know is fair.”

Proposals:

• Making President Bush’s 2001 and 2003 tax cuts permanent, including taxes on earned income, capital gains and dividends.

• Cutting corporate tax rates from 35 percent to 25 percent to spur investment and keep jobs in the United States.

• Phasing out the alternative minimum tax.

• Doubling the personal exemption for dependents in seven, $500-a-year increases from $3,500 to $7,000.

• Setting the estate tax at 15 percent and excluding estates under $5 million.

• Creating a summer “holiday” in the 18.4 percent federal gas tax.

• Creating a new and simpler tax code that would include just two tax rates and a generous standard deduction.

• Allowing corporations to immediately deduct the cost of equipment and capital improvements.

• Creating a permanent business tax credit equal to 10 percent of wages spent on research and development.

• Using presidential veto power to cut congressional earmarks, pork-barrel spending and government waste.

Obama: “I think it’s time to restore fairness and responsibility to our tax code. We need to reward work—not just wealth. We need to stop giving tax breaks to companies that ship jobs overseas, and put a tax cut in the pockets of middle-class Americans.”

Proposals:

• Eliminating income taxes for people over 65 who earn $50,000 or less.

• Repealing President Bush’s tax cuts for those who earn more than $250,000.

• Raising the capital gains tax rate above the current 15 percent level.

• Raising payroll taxes on those with annual salaries of more than $250,000, the wealthiest 3 percent of Americans.

• Providing a $1,000 income tax credit for families ($500 for individuals) with income of up to $75,000; a universal mortgage credit of up to $500 for people who don’t itemize their taxes; and an annual $4,000 tax credit to cover two-thirds of the tuition at an average public college.

• Setting the estate tax rate at 45 percent with an exemption for the first $3.5 million.

• Imposing a windfall profits tax on oil companies.

• Establishing a foreclosure prevention fund to help stabilize the housing market.

• Investing in research and development for alternative energy.

• Closing special interest corporate loopholes and deductions.

• Extending and indexing the current alternative minimum tax.

Judith Hasson is a Washington-based journalist. James S. Toedtman is the editor of the AARP Bulletin.