Taxes dominate final week of US poll campaign
Friday, 31 October 2008, 19:30 IST
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Washington: With a financial system on the verge of meltdown and an economy facing a prolonged recession, the final weeks of the US election campaign have mostly focussed on something much narrower: taxes. Some of it is attributable to the sheer complexity of the financial turmoil that has ballooned out of control since September. Mortgage-backed securities, short-selling and market-to-market accounting don't make for snappy soundbites in a 24-hour news cycle. "Part of the reason why taxes matter is that people identify with them," said Roberton Williams, a research associate with the Tax Policy Centre, a non-partisan think-tank. "I mean, what's a credit default swap?" Republican nominee John McCain and Democratic rival Barack Obama have largely stood behind the efforts of President George W. Bush's administration to stabilise the financial industry. Both senators voted for a $700-billion rescue package, which allows the government to take stakes in banks. By contrast, some of their sharpest philosophical differences are on tax policy. The debate has come to be embodied in a single, catchy phrase - "spread the wealth" - that McCain supporters deride as socialism and Obama defends as a means of helping what he says is a struggling middle class. "I think when you spread the wealth around, it's good for everybody," Obama told Joe Wurzelbacher, an Ohio plumber who emerged as a celebrity of sorts since the exchange in early October. McCain zeroed in on the comment, and "Joe the plumber" has become a regular feature of McCain's stump speeches. Wurzelbacher has since endorsed McCain and appeared Wednesday at a rally with vice presidential candidate Sarah Palin. McCain has slammed Obama's economic philosophy as "wealth redistribution" that smacks of the job-killing socialist policies promoted in Europe. "At least in Europe, the socialist leaders who so admire my opponent are upfront about their objectives," McCain said in a recent radio address. US politicians, especially Republicans, have long ridiculed European economic policies, which place more emphasis on social welfare programmes than in the US. At the centre-right party's convention in September, Republican presidential also-ran Mitt Romney, now a McCain supporter, warned that Europe's path "leads to moribund growth and double-digit unemployment". Raising the spectre of "socialism" has peaked the interest of all sides and dominated discussion since, though it's something of a false debate. Both candidates support a progressive income tax and neither has promoted a dramatic expansion of social welfare programmes. "We're a long way from European socialism," said Robertson. "I won't be losing sleep over it." Rhetoric aside, there are key policy differences at the heart of the dispute. For people earning more than $250,000 per year, Obama would repeal a series of broad tax cuts first passed in the early years of the Bush administration. The centre-left candidate promises tax relief for the remaining 95 percent of US workers. High-income earners would return to the 39-percent tax rate they paid under former president Bill Clinton, up from from 36 percent currently. McCain was among a select few Republican senators who voted against Bush's tax cuts in both 2001 and 2003. McCain now says he would make them permanent and promises additional tax cuts for the middle class, calling it dangerous to raise taxes on anyone in a time of economic crisis. Neither plan would much reduce the ballooning federal deficit. Obama's tax and spending proposals would add about $3.5 trillion and McCain's $5 trillion by 2018 to the national debt, according to the Tax Policy Centre. Most economists agree that some extra deficit spending is a necessary evil, as the US works its way out of what could be a protracted recession. "Getting the economy moving again and pursuing national priorities will be expensive. But it is a cost that we as a nation can certainly afford," wrote John Irons of the Economic Policy Institute. In the same vein, Williams agreed that Obama's tax hike on the wealthy could harm the economy in the short-term, though it will be necessary in the long run to help combat the deficit. He noted that middle-class wages have stagnated over the last 30 years, while wages for the highest-income bracket have doubled. Obama points to that discrepancy - and the looming recession - to argue that the economy must be built from the "bottom up".
Source: IANS
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