Economic policy options dominate US electioneering amid fears of recession

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AWASHINGTON, Oct 26 (AFP) - In the final sprint to the White House, Democrat Barack Obama hopes to win over middle-class America with his economic plan, while John McCain charts a traditional Republican course of lowering taxes, even for the wealthy.
Earlier in the year, with several months to go before the US election November 4, neither candidate had unveiled many details of their socio- economic plans to prospective voters.
But as steadily souring US economic trends -- property foreclosures have skyrocketed and unemployment rose to 6.1 per cent in September, heightening fears of recession -- snowballed into a full-bore global crisis, the rivals are now locked in a vicious battle over who whose economic plan would do better for the US public.
Economists see McCain and Obama distinguishing themselves on three fronts: taxes, healthcare and retirement programs. Their planks on energy do differ slightly, particularly on the issue of nuclear power, but they share the broader goal of weaning the United States off of foreign oil.
"McCain wants the same tax policy as Bush: tax cuts for the high-end wealthy," Dean Baker of the Center for Economic and Policy Research told the news agency, referring to tax cuts enacted by current President George W. Bush after taking over from his predecessor, the Democrat Bill Clinton.
"Obama wants to bring them back to Clinton-era levels and use the money for more moderate incomes and for other purposes such as alternative energy programs," Baker told the agency.
Under Obama's plan, reversals of the tax cuts would apply only to those making more than 250,000 dollars a year. Obama says 95 per cent of Americans would see their taxes lowered or unchanged.
McCain, who has blasted his opponent as a "socialist" seeking to "spread the wealth," wants to extend the Bush-era tax cuts -- even those to wealthier Americans.
He has proposed a reduction in the corporate tax rate from 35 per cent to 25 per cent as well as reductions on taxes on capital gains and individual retirement accounts.
"Raising taxes in a tough economy isn't patriotic," McCain has said. "It's just plain dumb."
But Obama has characterised McCain's corporate tax proposal as a shameless gift to companies that send American jobs overseas.
McCain has promised recently to balance the budget by the end of his first term in 2013.
But he may have to soft-pedal his plans as the United States announced its 700-billion-dollar rescue package to counter the financial crisis, which is certain to put the squeeze on the US budget deficit that topped 10 trillion dollars for the first time in late September.
Experts say the taxes on high income recommended by Obama could serve as a stimulus for new investment in education and infrastructure, alternative energy programs, as well as for the broadening of healthcare coverage, which some 46 million Americans currently lack.
Max Wolff, an economist who teaches at the New School of New York, said that over the past 30 years, "the US has had the most unequal distribution of wealth," a scenario that is "so unequal that it is undermining democracy and political stability."
Twenty per cent of Americans earn half of the country's total income, he said.
McCain proposes replacing a tax break on employer-sponsored health plans with a tax credit enabling working Americans to shop around for coverage.
Another key difference: McCain wants to privatise the retirement pension system and do away with employer contributions, which amount to 6.2 per cent of an employee's salary.
McCain's "argument (about pensions) is to get better returns," Baker said.
"For two-thirds of retirees, the public pension system is most of their income, with an average of 1,000 dollars a month."
In addition, if McCain hammers home the free-market credo of limited government intervention in the economy, he is far from convincing orthodox conservatives.
For Dan Mitchell of the Cato Institute, a conservative thinktank, the presidential race is between Obama, a "leftwinger collectivist pretending to be a moderate," and McCain, "a moderate pretending to be a conservative."
As the crisis deepened in mid-September, the two camps put forward rival plans for helping the millions of US homeowners under threat of foreclosure.
Earlier this month McCain unveiled a "McCain Resurgence Plan" to purchase mortgages directly from homeowners and mortgage servicers, and replace them with fixed-rate mortgages, enabling families to stay in their homes.
For his part, Obama proposed a 90-day moratorium on home foreclosures.