Candidates' economic plans compared

Barack Obama and John McCain have both revealed new plans to help revive the US economy, which could be facing a recession following the financial crisis. How do they compare?

Obama economic plan

McCain economic plan

OBAMA ECONOMIC PLAN

Democratic US presidential candidate Barack Obama has unveiled an "economic rescue plan for the middle class".

At its heart is a $60bn expansion of spending to help individuals, companies and states hit by the slowdown.

These benefits include:

• Temporary tax credits for firms that create jobs in the US
• A 90-day moratorium on foreclosure for homeowners who are making "good faith" efforts to keep up their payments
• Temporary elimination of tax on unemployment benefits
• A new body to lend to state and city governments who are finding it hard to get access to credit markets
• Penalty-free withdrawals of up to $10,000 from people's retirement savings plans

These proposals are additional to the $115bn in tax cuts to households earning under $250,000 that Mr Obama has already proposed.

"Are you better off than you were four weeks ago?"
Barack Obama

Senator Obama's plan follows the approach adopted by Congress in its earlier economic stimulus package, which gave temporary and targeted, rather than broad-brush help.

The Democrats would like to call Congress back into an emergency lame-duck session immediately after the election in November to pass the new emergency stimulus package.

Mr Obama also has a number of longer-term spending plans, including investing $15bn a year in renewable energy and a big programme of rebuilding US infrastructure, such as bridges and roads.

He says that these plans will create seven million new jobs over 10 years.

MCCAIN ECONOMIC PLAN

Senator McCain's economic proposals centre on more help for homeowners who are facing foreclosure, and he has called for more tax cuts to help investors, retired people and workers.

The new tax breaks would cost about $52bn.

The new help to homeowners is much more expensive, costing around $300bn, although Senator McCain says it should be funded out of the $700bn bail-out package.

The key elements are:

• US government to buy up distressed mortgages and refinance them at lower values, letting borrowers enjoy more affordable rates.
• New lower Federal tax rate of 10% on the private pension income in 2009 and 2010
• Expanded tax deduction for investment losses in 2008 and 2009 and a 50% increase in the capital gains allowance
• Tax-free unemployment benefits for two years
• People with share-based retirement accounts allowed to postpone withdrawals until markets improve

"Our economy is in crisis ... your most important asset - your home - is losing value every day"
John McCain

Senator McCain's plan would follow the $300bn housing rescue plan passed by Congress over the summer - but unlike that plan, which requires the banks to write-down the value of distressed mortgages first, he proposes that the federal government would absorb the losses from the sub-prime lending fiasco.

Senator McCain has attacked the Obama plan for being too expensive and wasting taxpayers' money.

His plan is also less targeted at job creation and helping the unemployed and more at preserving the value of assets, both stocks and home values.

Senator McCain believes the key to the long-term recovery of the economy is to keep taxes low, so he wants to retain all the tax cuts made by President Bush, and increase tax breaks for companies to encourage investment.

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John McCain
Barack Obama
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