News & Current Affairs

August 20, 2008

McCain and Obama spar over taxes

McCain and Obama spar over taxes

John McCain and Barack Obama

The economy and oil have been key issues for both candidates

Barack Obama’s senior economic adviser Austan Goolsbee has accused John McCain of proposing huge tax cuts for rich people and large corporations.

Mr Obama’s tax cuts for “ordinary Americans” would be three times larger than Mr McCain’s, he promised.

Mr McCain’s economic adviser, Doug Holtz-Eakin, countered that Mr McCain’s tax cuts would help firms create jobs.

Speaking to the BBC World Service, both advisers clashed on how to end the US dependence on foreign oil.

In a debate between both advisers on the Business Daily program, Mr Goolsbee said: “Barack Obama’s tax cuts for ordinary Americans are three times larger than John McCain’s.””The way that John McCain’s package ends up being three to four trillion dollars more is that they give humungous tax cuts to high income people and large corporations.”

Small firms

In fact John McCain has no plans for cuts in personal income tax. But he does propose to cut the rate of corporation tax from 35% to 25% in an effort to revive the ailing US economy.

Mr Holtz-Eakin told the BBC: “In this economy in the past six months with over 400,000 jobs lost we’ve seen the small businesses – those with less than 50 employees – add 283,000 jobs.”

He underlined the importance of not damaging those small businesses: “keep them in a position where they don’t have onerous health care costs and mandates to provide expensive benefits to their employees.”

Barack Obama says he will spend $50bn immediately to jump start the economy and introduce tax credits for working families.

He is also proposing to invest $150bn in clean energy over the next decade, creating 5 million new jobs.

Energy policies

Mr Goolsbee said the US had to make a commitment to wean itself off its dependence on oil.

John McCain believes that we have a dangerous exposure to imported oil
Doug Holtz-Eakin, economic adviser to John McCain

“It is the mentality of the past eight years to listen to the oil companies that got us into this mess and we have to have a different energy policy to get out of it.”

Mr Holtz-Eakin denied that John McCain would follow the same energy policy as George W Bush.

“John McCain believes that we have a dangerous exposure to imported oil,” he said.

“It is his primary objective to put the United States in a position where it is no longer strategically exposed by this dependence.

“The first and foremost objective is to change the way Americans drive,” he added.

Foreclosures

Mr Goolsbee warned that more Americans would lose their homes unless there were tighter controls on the mortgage industry.

He said failure to address the fundamental challenges of oversight of the housing market – an issue that Senator Obama identified 18 months ago – could prompt “a second wave of the foreclosure crisis in the United States.”

Mr Holtz-Eakin said that John McCain would not be afraid to speak out in favor of free trade, even at a time when American jobs were being lost.

“Globalization is an opportunity.”

However he added: “Not everyone automatically gains from globalisation, and we do have an obligation to help those workers who do not instantly benefit to get an opportunity for the future.”

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