"Four More Years Of The Bush Agenda?"

AP Photo/Charles Dharapak

Even with the $700 billion bailout, the financial crisis and fragile economy promise to loom large over the opening days of the next administration.

Obama acknowledges "the next president will have to scale back his agenda and some of his proposals." Yet neither camp is eager to say precisely what changes might have to be made — promises broken or delayed.

Obama's running mate, Sen. Joe Biden, was questioned about that in Thursday's vice presidential debate. He could list only a few: cutting wasteful spending and "we might have to slow down a commitment we made to double foreign assistance."

His GOP counterpart, Sarah Palin, was asked if there was any campaign promise she would have to take off the table because of the financial crisis. "There is not," she said.

Newly elected presidents have a good track record in winning approval of major tax bills and other legislation in their first year in office.

The next president probably will lay out an ambitious agenda, possibly soon after the election and amid great constraints: the financial crisis and a rising budget deficit projected by the Congressional Budget Office to reach a record $438 billion next year — and that's before figuring in the bailout's first-year cost.

Central to the nominees' tax proposals is that an array of Bush tax cuts are due to expire in 2010.

McCain would keep tax rates low for everybody, including higher-income people. For companies, he would slash them from the current 35 percent to 25 percent, arguing it is the best way to jolt the economy and create jobs.

Obama, who says his program would most help the squeezed middle class, would retain Bush tax cuts for families making less than $250,000 a year and individuals making less than $200,000. He would do away with them for people above those levels.

The Illinois senator also has proposed raising the top marginal income-tax rate, now 35 percent, to 39.6 percent, and raising the current 33 percent rate to 36 percent. The money raised from tax increases on the wealthy would be redirected by Obama to tax relief for lower-income people.

Under Obama's approach, the wealthiest 1 percent of taxpayers, those making roughly $600,000 or more, would see their taxes go up on average by $93,709 in 2009, according to the nonpartisan Tax Policy Center, because Obama would begin putting in place the changes before the scheduled expiration of the Bush cuts.

For McCain, those same wealthy taxpayers would see an average reduction of $48,860, reflecting in part additional cuts he is proposing.

By contrast, the bottom 20 percent of taxpayers, with taxable income of roughly $19,000 per year or less, would see their taxes cut by an average of $567 under Obama's program and $21 under McCain's plan, the tax center estimates.

For the 20 percent of taxpayers in the middle, making roughly between $37,600 and $66,400, the tax break would be $1,118 under the Obama plan and $325 under the McCain plan in 2009, according to the center's analysis.

Obama would raise the top rate on capital gains and dividend income, now 15 percent, to 20 percent for families making over $250,000. McCain would keep both at 15 percent.

Obama has proposed excluding people age 65 and older from federal income tax liability if they earn $50,000 or less, along with creating a new tax credit of up to $1,000 for lower- and middle-income families ($500 for individuals) to offset federal payroll taxes.

McCain wants a 15 percent federal estate tax rate and a $5 million exemption. Obama has suggested a 45 percent federal estate tax rate and a $3.5 million exemption amount.

Obama offers expanded renewable energy and conservation tax incentives and a repeal of tax incentives for oil and gas companies. He supports energy rebates for individuals to help offset the home-heating costs.

McCain has proposed an end to ethanol subsidies and discussed a federal gas tax holiday.

Douglas Holtz-Eakin, a top McCain economic adviser, said McCain is standing by his tax-cut proposals for now.

"Historically, we never have sustained successful deficit reduction without strong economic growth. So he's put that first," Holtz-Eakin said. Furthermore, "John McCain is running on a platform that does not include massive increases in spending," he said.

McCain also has indicated he is considering putting a complete cap and freeze on discretionary, nonmilitary and nonveterans' spending.

Of course, economic policy will be set not just by the new president but by the new Congress. Congress is in Democratic hands now, and Democrats are expected to increase their numbers in the November elections.

That could make it hard, if McCain is elected, for him to get his tax-cut proposals enacted.

"The reality of it is taxes will probably rise" no matter who is elected, said Mark Zandi, chief economist for Moody's Economy.com and an occasional McCain adviser. "It makes it a lot more difficult to cut taxes when you have big budget deficits."

Zandi thinks that the early days of the next presidency will be dominated by a lingering financial crisis and the need for "more government intervention, more legislation directly supporting housing and mortgage markets" beyond the $700 billion bailout.

Relief on Wall Street over the hard-won passage of a $700 billion bailout package for the financial system apparently hasn't yet trickled down to the pubs, storefronts, car lots and malls of Main Street.

Many Americans spent an uneasy weekend wondering whether the rescue would help in time — or at all — and trying to figure out where next to cut back as the economic screws tighten.

Would financing come through for the new washing machine? Could the old car hold out another year? Would a nice dinner out bust the budget?

"People are afraid," said Linda Morrow, who owns a shoe and handbag store in a Dallas mall. "People basically don't know what the future will bring. They're afraid to spend. They want to see what the bailout will do. They're waiting till after the election."

In more than two dozen interviews with The Associated Press across the country over the weekend, Americans described those concerns, from tighter personal credit to worries about small businesses to doubts about simply making ends meet.

     The Bush Administration has made it very hard for either Barack Obama or John McCain to implement their respective economic proposals because of the massive 700 billion dollar bailout of Wall Street. (I wonder did Obama and McCain think of that when they sheepishly voted for the Senate pork laden version of the original Henry Paulson version of the Wall Street bailout? I thought McCain hated earmarks?) Because of the current uncertainties Americans have about the US economy, consumers and investors are going to hold back on spending and investing. Banks are holding back on lending. Joblessness in America is increasing. Between Obama and McCain, whose economic policies are more likely to get the economy revived?

      Barack Obama's socialistic "wealth redistribution" tax policies will not encourage business investments by wealthy Americans, as I see it. If banks aren't lending and investors aren't investing then more jobs are lost for the working class Americans, who will then have to use their Obama tax rebates to pay for the necessities only, which will hurt many retail industries and businesses. As I see it, in the current US economic climate, no Americans should have their taxes raised. Spending will have to be cut back on an individual level as well as the governmental level. Ideally, withdrawing completely from Iraq and Afghanistan would free up billions of dollars for domestic and infrastructure spending, but we know that isn't going to happen in an Obama or McCain administration, as both candidates are totally committed to the imperialistic Bush Administration's so called War On Terror. Do you ever get the feeling that whether Obama or McCain gets elected, it will still be four more years of the Bush Administration's economic and foreign policy agenda?

tags: wall street bailout  bush  obama  mccain  business  capitalism  takebackamerica  politics  us  president  2008  

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