Candidates try to top one another with economic plans

McClatchy NewspapersJanuary 21, 2008 

WASHINGTON — Help for seniors who still pay into Social Security. Tax rebates for almost everyone. Big tax breaks for business.

Presidential candidates are engaging in a virtual bidding war these days over who can stimulate the weakening economy most effectively. But analysts wonder whether voters will see this sudden burst of generosity as serious antidotes for the ailing economy or blatant political pandering.

The answer could make a big difference, particularly in Florida's Republican primary Jan. 29, where "the perception is that we are suffering," said Kevin Wagner, an assistant professor of political science at Florida Atlantic University.

Former Massachusetts Gov. Mitt Romney leads the charge with a package that would cost an estimated $250 billion. He calls for Congress to pass it within one month. It includes permanently ending Social Security payroll taxes on employees older than 65, which is bound to be popular in Florida

The savings, Romney says, would "provide an immediate tax cut to working seniors." There was no estimate of how many seniors would be affected, but the program would cost an estimated $20 billion.

He'd also lower the bottom income-tax bracket from 10 percent to 7.5 percent and provide a retroactive tax credit so that the rate applied to workers who earned less than $97,500 last year. The change would be worth $400 to eligible taxpayers.

Romney's chief Florida nemesis, Arizona Sen. John McCain — under fire from conservatives for voting against President Bush's 2001 and 2003 tax cuts — is fighting back with a proposal to cut the 35 percent corporate tax rate to 25 percent. Romney would lower the rate to 25 percent this year and 20 percent next year; McCain doesn't specify a time frame.

Other candidates are making similar promises, but none is as ambitious as Romney's.

Among Democrats, New York Sen. Hillary Clinton's proposal, which would cost at least $70 billion, includes help for families struggling with energy prices and those hit hard by the housing crisis.

Illinois Sen. Barack Obama would spend $75 billion on aid, including an immediate $250 tax rebate and a $250 "bonus" to seniors in their Social Security checks. Former North Carolina Sen. John Edwards would spend at least $25 billion to boost jobless benefits and training, and energy investments.

There's little discussion about how to make up the revenue losses. Romney's plan would cost even more than the $145 billion package that President Bush announced last week. Romney spokesman Kevin Madden said the candidate's ideas were "designed to inject a new level of growth in the economy," and provide more revenue and less spending on social programs.

Romney's rivals are making the same point as they push less ambitious, and somewhat vaguer, proposals.

McCain last week offered what he called "bold solutions to stimulate the American economy," focusing on long-term relief.

His plan, largely paid for by unspecified spending cuts, would maintain the expiring Bush tax reductions but would avoid quick help for individuals. Instead, McCain would provide breaks for deducting equipment and technology investments and would establish a permanent tax credit equal to 10 percent of wages spent on research and development.

Former New York Mayor Rudy Giuliani supports a broad series of tax cuts, including reducing the corporate tax by 10 percentage points and the capital gains tax from 15 percent to 10 percent, and indexing it to inflation.

Former Arkansas Gov. Mike Huckabee talks about a "Fair Deal" stimulus package that includes eliminating all federal income and payroll taxes and replacing them with a consumption tax, increasing defense spending, investing more in energy independence and working with the Federal Reserve "for a pro-growth, low-inflation economy."

Whether any of this will sway voters is a huge question.

"Florida voters are 'What have you done for me lately?' voters. They don't have a lot of long, deep loyalties," said Lance deHaven-Smith, a professor of public administration and policy at Florida State University.

In such a climate, Romney's bid for the over-65 vote, as well as his huge package, may be a gem. "The economics of it are questionable," Wagner said, "but the perception that something is being done is important."

McClatchy Newspapers 2008

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