Barack Obama vs John McCain – What Will They Do With Your Money?

October 25, 2008

The Presidential election is just over a week away, and there are millions of undecided voters out there. The economy seems to be the hottest topic for this election, because we have recently seen the stock market go crazy, investment banking firms go under, and the sub-prime mortgage industry wreak financial havoc throughout the country.

We try to avoid partisan political discussions on this site, however, we want you to be be aware of some of the economic policies we might see when you vote for Barack Obama or John McCain. As the election draws near, we’re going to look at the candidates financial plans for topics like energy costs, tax reform, job creation, and home ownership.

We’re not political experts but this is what we understand from listening to McCain and Obama, if we didn’t explain something correctly or you disagree with our take, let us know in the comments.

Energy Costs

One of the things Obama promises to do is enact a windfall profits tax on excessive oil company profits to give Americans a $1,000 energy rebate to help pay for rising energy costs. How he will define “excessive” is not explained, and now gas prices are back to the price they were a year ago, so this concept may not have as much traction as it would of a while back. 

Tax Relief

This tax relief is part of his plan to restore the economy, which is different from his tax reform plan.

  • Provide a tax cut for “working” families. He will set up a tax credit called the “making work pay” tax credit, not sure what criteria he will use to classify a working family.
  • He’ll eliminate taxes for senior citizens that make less than $50,000 a year.
  • Obama wants to amend the way taxes are filed by requiring the IRS to gather basic financial information from banks and employers, pre-fill the forms, and send them to taxpayers whom then can verify that the information is correct and add or delete anything else on the forms.


Obama’s philosophy and plan towards trade is to make moves that help American workers keep their jobs and create new manufacturing jobs for American workers.

Part of this plan is to amend the NAFTA with Canada and Mexico. This was the center of controversy during the primary season, because he took a very strong position against NAFTA early on his campaign, and then retracted his strong comments after that. Although, he still wants to amend it, he is not specific what he would like to do with it.

Creating New Jobs

Obama takes two issues, creating jobs and creating alternative sources of energy, and fuses them together. He starts out by investing $150 billion dollars toward clean energy, and thus creating more jobs for workers because more of these plants will be created.

Obama also wants to mandate that all households derive 25% of their energy from renewable energy by 2025, and this will in effect, force the creation of more jobs due to higher demand for renewable energy sources.

Supporting Small Business

  • Eliminate capital gains taxes on start-up businesses and small businesses; which I don’t undertand because small businesses don’t typically pay capital gains taxes do they?
  • Plant entrepreneurship incubators around disadvantaged areas of the country to encourage small business start-up in areas that need their economies boosted.

Homeownership and Mortgage Reform

  • Create a universal mortgage tax credit that will give an average of $500 tax savings to households making less than $50k per year.
  • Ensure more accountability for the subprime mortgage industry, and create a more standardized way of helping consumers learn the true cost of a loan or mortgage product.
  • Work to eliminate the provision that allows mortgage companies to prevent bankruptcy courts from modifying the mortgage payments of individuals that file for bankruptcy.

Those are some of the economy policies proposed by Obama that could effect your wallet in one way or another. Make sure you note that political candidates make a lot of promises on the campaign trail so you should do your own research and make an informed opinion about whether you think the promises are feasible or realistic. Next time we’ll take a look at John McCain’s economic plan.


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Erik Folgate is a husband and father living in Orlando who's been writing about money online for 6 years. Digging himself out of $20k of debt after college and his former experience in the insurance industry give him some useful insights into personal finance issues.

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8 Responses to Barack Obama vs John McCain – What Will They Do With Your Money?


    I want to say a little more on taxes. I feel you didn’t include enough information on Obama’s tax plans… all you included was a tax relief section, when Obama intends to increase a lot of different taxes that, despite what he says, will reach the middle class… perhaps not income taxes, but I assure you, estate taxes, dividend taxes, capital gains taxes, and the like, will hit the middle class right in the pocket book and on some of their most important assets (their retirement accounts!!!!).

    Some of the proposed tax increases are to be above 50%… Read “The Audacity of Deceit” and focus on some of the planned tax increases. Taxes above 50% on ANYONE give me the ability to call some of his plans socialistic. Don’t tax anyone or anything above 50% and I won’t call it socialistic… but anything above 50% crosses a line into majority control… When this excessive control is exerted by a government, I call it socialism. I’m not against corporations paying taxes, but over 50% is ridiculous and a hindrance to our economy… why should any company have its headquarters in the US? You can’t compete in a world economy with one hand tied behind your back. Just to keep up with a foreign competitor, a US company would have to much higher profits, just to come out even with the foreign competitor! We have a hard time competing as it is… do we really want to shoot the left leg of every corporation and see how well they walk and run in an economic race that is being held against competitors from around the world?

    I do believe Obama’s heart is in the right place, so don’t get me wrong. I’m sure many things he will do are positive, but I think he will go overboard and spend and tax America into a worse position (yes, even worse than Bush, since the effects will be cumulative.) Just remember, those social programs you want aren’t free. Also remember, it’s a healthy economy that will fund such programs.


    Thought I should go through, step by step and say what I think, not that it matters, Obama won as soon as he showed his face because he was different and people wanted change.. Too bad Obama rarely defines change… and when he does, he doesn’t detail how it will come about. The devils in the details. His heart is in the right place, but his socialistic methods are faulty. Bush was dumb enough, now socialist policies to follow. I still think the Democrats are socialistic and the Republicans are liberal… Bush spent sooo much money, definitely not something a true economic conservative would ever do – balance the budget at all costs, which generally means less government spending, not more.

    Energy Costs: $1,000 to each family from the big oil… Wonder where big oil gets that money, or how they will get that money? Hmm, how will they raise the money? Oh, how about cutting back on drilling (which employs people) and letting the price of oil go up higher through even less supply. Or how about moving corporate headquarters off-shore to a more tax friendly country? Selling assets in the US and buying elsewhere would be another move… Ultimately, the money comes from somewhere and someone…

    Tax Relief: Fully 40% of Americans do not pay Federal Income Taxes… Eliminating taxes on senior citizens… does that mean that retirees won’t have to pay taxes on the money they withdraw from 401k’s? Doubtful! He could “make work pay” by not taxing dual income families so highly – remember he wants to increase taxes on capital gains, dividends, corporations, etc… even if income taxes aren’t increased, many other taxes that apply to the middle class will be increased. So, yes, middle class folks will feel it.

    Trade: Obama’s got a dumb plan. Does he honestly think America is in a position to get a “better deal” in NAFTA? Today, Canada is more powerful than ever in the trade relationship because it is America’s #1 supplier of oil. Yes, more than any single middle eastern country. If America can’t deal with Venezuela or the middle east, how does it think it will push around resource rich Canada? Canada’s prime minister already addressed Obama on this issue (in the media anyways) and said that Canada is in a better position today than it was when the agreement was first signed a long time ago. If Obama re-opens this, you will only have him to blame. We won’t sign anything stupid and without our resources (not just oil, but uranium, timber, ag, and minerals, not to mention tech). Of course, Canada could always start to develop a real friendly relationship with Europe, or even better, China/Russia, if that’s what the Obama wants.

    Creating New Jobs: We’ll see if government can create more jobs, more efficiently than the corporations he will be taking the money from. Getting 25% of energy from renewables is a noble goal, and one that has to be achieved – but 2025 is long after he is gone… Instead of promising stuff after he is gone, he should be making promises about what will happen during his term and by his term ending… this is a pet peeve of mine and many politicians are guilty of it… plans change as soon as another president is in office… yes, maybe 25% of 2025 is a nice title and a good long-term plan, but where should it be 4 years from now? and if 2 Obama terms, 8 years from now?

    Supporting Small Businesses: So he wants to raise payroll taxes… that will help small businesses?? No, small businesses do not pay capital gains unless they are selling property/assets for a gain… Most small businesses don’t pay this as they are usually trying to expand and buying assets, not shedding them.

    Home Ownership Reform: None of these truly matter… except, by law, yes, the lendor should inform the mortgagee’s what the payments will be each month, and if they are set to change after 1 year, the mortgagee should be informed of such changes… I agree with making it more transparent so that idiots don’t take mortgages they can’t afford by accident (in which case they may not be idiots, just uninformed, but what’s the difference?). Even better would be making stricter lending requirements… but Obama wouldn’t do this as it would make lower income folks less able to qualify for mortgages… and it would also cause housing prices to decrease (with less buyers)… and ironically enough, after damage hasbeen caused, lower home prices would help his lower income folks in being able to afford loans… but SHHH.. don’t tell Obama…

    Let it be known… any changes in NAFTA will HAVE to benefit Canada or it won’t be signed… You’d be surprised how many resources the second largest country in the world has… It’ll bite you.

  • Meg

    OMG I am SO TIRED of hearing about “what the candidates are going to do.” Hello!?!? Last time I checked there was this thing called Congress which actually gets to write and enact legislation. All that the President can do is sign the law or veto it. The candidates can talk all they want about what they would LIKE to do to health care, taxes, social policy, etc, but it’s all just a bunch of BS – especially in light of the economic crisis which is going to make it really hard for congress to cut taxes OR increase spending in any way.


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