Election 2008: Obama on the Economic Issues
Obama on Taxes
• Income Taxes: Senator Barack Obama (D-Ill.) would hold most income tax rates steady, making permanent the Bush tax cuts for the vast majority of individual taxpayers. With those cuts scheduled to expire in 2011, he would allow rates for households making more than $250,000 (or individuals making more than roughly $200,000) to return to earlier levels. Earners who now pay today's maximum 35% rate would see their top marginal rate go back to the 36.9% in effect in the Clinton years, for example.
• Estate Taxes: Obama proposes setting inheritance taxes permanently at 45% on estates over $3.5 million.
• Capital-Gains Taxes: Obama would again limit any increases in capital-gains rates, as well as taxes on dividends, to households making more than $250,000 or individuals bringing in more than $200,000. For those folks, he proposes increasing the maximum rate to somewhere between 20% and 25%.
• New Tax Cuts: Obama has proposed a handful of new tax credits and other adjustments aimed at helping struggling families, students, and others. He would institute a refundable tax credit of 6.2% of earnings, up to a maximum of $8,100, for example, along with a refundable mortgage credit equal to 10% of loan payments for homeowners who don't itemize their deductions. Students would be eligible for a $4,000 annual credit to help defray college costs, while Obama would eliminate income taxes for seniors making less than $50,000.
• Economic Stimulus: Obama has proposed giving businesses a $3,000 tax credit this year and next for every net new job they create to help jump-start the stalled economy. He would also temporarily eliminate taxes on unemployment benefits and calls for legislation that would allow struggling individuals to take up to $10,000 from their IRA or 401(k) retirement accounts this year and next without paying the normal tax penalty for early withdrawals.
• Business Taxes: Obama has proposed eliminating all capital-gains taxes on investments in small business. He would also make permanent the R&D tax credit and credits for renewable energy production. But elsewhere, he would eke more revenue out of the corporate sector: He would like eliminate loopholes that he says favor oil and gas companies, for one. And he favors shifting the tax code to favor companies that create jobs in the U.S. and increase taxes on those that move jobs overseas.
Obama on Jobs
• Job Creation: Obama wants to steer $50 billion into an economic stimulus. He proposes that $25 billion go into a "Jobs and Growth Fund" to prevent cuts in road and bridge maintenance, and to fund school repair. He says this effort will save more than 1 million jobs.
• 'Green' Jobs: Obama wants to create 5 million new "green jobs" and invest $150 billion over 10 years in biofuels and fuel infrastructure, plug-in hybrids, commercial-scale renewable energy, low-emissions coal plants, and a new digital electricity grid. He also wants to expand federal transportation investments to the tune of $60 billion over 10 years, which he says will create 2 million jobs.
• Unemployment: Obama is calling for a temporary expansion of the unemployment insurance program for those who have exhausted their current benefits. He'd also extend unemployment insurance to a bigger pool of workers, including some part-time workers.
• Trade: Obama says he opposes new deals that lack labor and environmental safeguards. Obama wants to renegotiate the North American Free Trade Agreement with Canada and Mexico so it has more favorable terms for U.S. workers. He wants to expand the Trade Adjustment Assistance program, which trains workers who lose their jobs because of offshoring.
• Labor Rights: Obama wants to strengthen the ability of workers to organize unions through what's known as the Employee Free Choice Act (EFCA). The bill allows workers to join a union if a simple majority sign authorization cards instead of holding an election. He has won the support of the two major U.S. labor federations, the AFL-CIO and Change to Win, whose leaders say EFCA is their top legislative priority.
• Immigration: Obama supports strengthening border security with more personnel, technology, and infrastructure. He also wants to create tougher penalties against employers who hire undocumented immigrants. At the same time, he wants to increase the number of legal immigrants in order to keep families together and meet the demand for jobs that employers say they can't fill. Undocumented workers who clear background checks will have a path to citizenship.
• Work/Family Balance: Obama wants to double funding for after-school programs, provide low-income families with a refundable tax credit to help with child-care expenses, and encourage flexible work schedules. Obama wants to extend the Family Medical Leave Act—which allows workers three months of unpaid leave—to cover eldercare and cases of domestic violence.
• Minimum Wage: Obama wants to raise the minimum wage to $9.50 an hour by 2011 (up from 2009's rate of $7.25 an hour) and index it to inflation. He says these measures will help ensure that full-time workers earn a "living wage."
Obama on Education
• Early Childhood Education: Obama proposes a $10 billion "Zero to Five" early childhood education plan that would expand access to Early Head Start, preschool, and child-care services. Would establish an early learning council to coordinate federal and state early childhood education programs.
• K-12 Education: Obama supports goals of No Child Left Behind but says law has significant flaws, including lack of adequate funding. Says he will improve assessments and accountability for NCLB. Proposes funding of intervention strategies to reduce dropouts.
• Teacher Pay and Training: Obama supports bonus pay for teachers and additional support and training for teachers and principals. Wants to make it easier to remove bad teachers from classrooms. Proposes that all teaching programs be accredited.
• Math and Science: Obama says math and science must be a national priority. Will step up recruiting of math and science teachers. Wants to enhance science instruction and enhance science assessments.
• School Choice: Obama wants to increase federal funding for charter schools from $200 million a year to $400 million, but wants to make it easier to close low-performing charter schools. Opposes school vouchers for private and parochial schools.
• School Funding: Obama's early childhood and K-12 plans call for additional spending of $18 billion a year. Obama says cost of plan would be offset by spending cuts and reforming federal contracting procedures.
• Classroom Technology: Obama proposes a $500 million matching fund for technology in the classroom. Program will include more classroom technology and student performance data tracking. Will create a new technology-based curriculum.
• Higher Education: Obama wants to change the student loan program by eliminating the subsidies to private lenders and mandating that all federal student loans be provided through the federal direct loan program. Proposes a $4,000 refundable tax credit for college tuition; recipients of the credit will be required to perform 100 hours of community service.
Obama on Health Care
• His Approach: Obama would achieve universal coverage through an expansion of employer-based and government insurance programs, and create programs and incentives that will rein in health-care inflation.
• Coverage: Obama thinks all employers should be required to offer insurance or pay into a public fund, with subsidies available to small businesses. All children would be covered, Medicaid would be expanded, and a National Health Insurance Exchange created to offer policies to individuals not covered through their employers.
• Insurance Changes: Obama would prohibit the denial of coverage due to a preexisting condition.
• Malpractice Reform: Obama wants to reform malpractice while preserving patient rights by coming up with new forums for addressing physician errors.
• Drug Prices: Obama wants to allow re-importation of drugs and faster introduction of generics, and would repeal the ban against Medicare negotiating prices directly with drug companies.
• Technology: Obama wants to commit $50 billion to the adoption of electronic medical records and wider deployment of information technology.
• Quality of Care: Obama wants to support a national institute to monitor quality and set standards, and reward health-care providers for high-quality care.
Obama on the Financial Crisis
• Homeowners: Obama has proposed requiring financial institutions participating in the Treasury Dept.'s assistance programs to halt foreclosures for 90 days for homeowners living in their homes and making "good faith" efforts to pay. He has also backed efforts, including a law passed this summer, to encourage mortgage lenders and servicers to modify more loans voluntarily but requiring them to give up some of the loans' value. As with McCain's plan, and nascent Treasury loan-modification efforts, it is unclear how many such homeowner-relief programs would apply to mortgages that had been divvied up into tranches and sold to investors. Before the crisis worsened this fall, Obama proposed more scrutiny of the subprime mortgage industry, standardized disclosure of mortgage terms, and allowing judges to modify mortgage terms in bankruptcy, much as they can modify the terms of other loans.
• Unemployment: Obama also proposes temporarily eliminating taxes on unemployment benefits, and proposes to extend unemployment benefits.
• Jobs: Obama is calling for a temporary $3,000 tax credit for each net new full-time job companies create in the U.S. over the next two years. He also proposes a national, $50 billion program to improve roads and other infrastructure, and supports spending $150 billion on green-energy initiatives, both of which his campaign touts as fostering job growth.
• Other: Obama proposes short-term federal loans for cash-strapped state and municipal governments, which are facing dramatically lower tax receipts and gaping budget deficits amid the housing downturn and weakening economy.
Obama on Retirement
• Temporary Assistance: Obama proposes allowing working Americans to make withdrawals of up to 15% from IRAs and 401(k)s during 2008 and 2009, to a maximum of $10,000, without triggering the standard early-withdrawal penalty of 10%; the withdrawals would still be subject to income taxes. Like McCain, Obama supports temporarily suspending mandatory minimum withdrawal rules for retirees over 70½, but he also proposes to temporarily waive taxes on withdrawals for those who do withdraw up to those minimums.
• Retirement Plans: Obama proposes matching 50¢ on the dollar for the first $1,000 of retirement-plan contributions for families earning less than $75,000 a year, to encourage savings. He also has proposed requiring employers that don't sponsor employee retirement plans to set up automatic contributions to IRAs for employees, with provisions allowing workers to opt out.
• Taxes: Obama proposes eliminating income taxes for seniors making less than $50,000, which the campaign estimates will save 7 million seniors an average of $1,400.
• Social Security: Obama supports increasing payroll taxes on annual income over $250,000, perhaps by 2% to 4%, to improve Social Security's financial position; currently, only income under $250,000 is subject to the 12.4% withholding tax, which is split between employers and employees. He opposes increasing the age at which Social Security benefits may be collected, which is another commonly cited fix for the program, and also opposes privatizing benefits.