For all the efforts of Sens. John McCain and Barack Obama to portray themselves as willing to break with their parties to get things done, the economic debate that opened their general election campaign this week previews a classic clash. It is a battle between Republican supply-side economics and a Democratic tradition that uses government levers to try to reduce inequality and spur the economy.
McCain, who once opposed the Bush tax cuts in part because they favored the wealthy, has now made extending those cuts a central plank in his economic plan, which is based largely on the Republican credo that tax reductions stimulate the economy. And he is pushing another strain of fiscal conservatism that has not been much in evidence of late: a call for smaller government and a vow to cut pork-barrel spending.
He often adds a dash of populism, speaking yesterday against excessive corporate pay packages, and has pushed for a gasoline-tax reprieve. And while McCain has portrayed his tax cuts as benefiting the middle class, most of the benefits would go to the wealthy and to corporations, including his calls for the elimination of the alternative minimum tax.
Obama often speaks of the traditional liberal goal of trying to redistribute the tax burden to reduce economic inequality, and at least in his public pronouncements has not emphasized the market-friendly, deficit-reduction aspects of the economic approach credited to President Bill Clinton and Treasury Secretary Robert E. Rubin in the 1990s. Obama's plan would raise taxes on those who earn more than $250,000 by allowing President Bush's tax cuts on top earners to expire, and he has signaled that he would consider increasing the current cap on income subject to the Social Security payroll tax.
Obama has also proposed, for instance, more spending on providing access to health care, which critics say would widen the deficit when coupled with tax cuts.
While McCain asserted in a speech in Washington yesterday that under Obama's tax plan, Americans of every background would see their taxes rise, Obama's plan calls for cutting taxes on those earning less than $75,000 a year and for eliminating the federal income taxes on the elderly who make less than $50,000 a year.
Overall, the two candidates' approaches - which come from one candidate who has been described as a maverick, and another who is often called "post-partisan" - each hew pretty closely to his party's traditional economic playbook. And that is increasingly forming the basis of their attacks on each another as each links his opponent to unpopular presidencies.
