Debate #2 in Haiku

I don’t get it, John

Months of Town Hall challenges

And you kinda sucked

Presidential Debate #2 in 50 Words or Less

Dull.  Little new outside of a McCain plan to buy up mortgages and allow homeowners to refi at current home values, a plan that sounds pricey and vague.  Otherwise, both candidates mostly leaning on the talking points of debate #1.  I still think Obama presented better.  Not Brokaw’s best work.

The Genesis of the Credit Crisis

A very good article here from Newsweek about how the birth and evolution of the financial instruments that got us into the bailout mess.  Especially useful as a primer on Credit Default Swaps.  Election-year politics have begun to sneak into some of the coverage of the mortgage meltdown, especially in pundit-heavy havens such as talk radio, and to a lesser degree the cable news programs.  This piece illustrates that at the core of the problem are (mostly) well-intended financial products that ballooned way out of control. 

On a side note, I switched my Newsweek subscription to Time a few years back because I felt the quality of Newsweek had gone downhill with an increasing tendency to lean on pop-culture items.  Perhaps an election year and a major crisis has been good for them, in that there’s been a noticeable uptick in substance of late.  Fareed Zakariah’s work in particular is always good.

All Eyes Towards St. Louis

And now our attention turns to the lone VP debate on Thursday, if you still believe one will occur.  I’m not a conspiracy theorist, but based on what we’ve seen I can’t imagine the McCain camp wants Palin to take the stage against Biden, whose only concern at this point is that he buries her too deep.

Harsh?  Here’s what I noticed from the debate Friday:  Regardless of who you felt to be the victor, there was no denying that it was a good debate between two men who know their stuff and can effectively communicate their positions in an unrehearsed, high-pressure environment.  If you dropped Joe Biden onto that stage, the level of discourse would have remained the same, if not taken a notch higher.  For lack of a better word, Joe knows his shit.

Now put Sarah Palin on that stage with the three of them, based on what you’ve seen from the three interviews we’ve seen thus far.  There is no sane or objective argument to be made that she could hold her own with the other particulars of this race in an unscripted setting.  She’d have been torn apart, and based on prior performances would have been her own worst enemy to boot. 

I’m the first to admit an inclination towards Mr. Biden.  I’m rather looking forward to Thursday.

Tie goes to the (front)runner

Okay, it’s roughly midnight and I’m trying to erase all memory of tonight’s Georgia game, so let’s discuss last night’s presidential debate.  If you’re remotely familiar with SEC football you’ll excuse all spelling and grammatical areas at this time.  I’ll correct them in the morning.

So…the debate.

My brass tacks take on Friday’s debate is that if you went in with a preference towards one of the candidates, you probably think that candidate won.  McCain fans probably think McCain edged out a victory, and Obama supporters likely think the same about their guy.  No major punches seem to have been landed by either side, and more importantly no major gaffes were made as well.

There were things worth noting.  I thought McCain, on the whole, looked better than he had in most of his recent campaign events.  He got off to a sluggish start but seemed to kick into gear after about 20 minutes, and if you watched him sleepwalk through some of his recent rallys you had to consider this an improvement.  That being said, he seemingly refused to engage Obama at all during the debate, to such degree that he wouldn’t even make eye contact with the man.  I felt it came off as petty at best, and somewhat dismissive and disrespectful to boot.  NBC’s split screen caught him on numerous occasions doing his own version of the sigh that buried Al Gore.  In McCain’s case though, it was more akin to an angry glare towards his own lectern, occasionally punctuated by a weird grin.

Obama came across as very composed, and managed to seem measured and professorial without edging towards aloof or haughty.  He was more forceful than I’m used to seeing him, but tempered it with moments where he pointed out his agreement with McCain.  This probably provides some ammo for the McCain campaign, but nothing major.  I was surprised with how well he fared on foreign policy — if this debate was a litmus test for his chops in this area, he handled it adeptly.

On  the economy, both hedged, and somewhat understandably.  Pressed on the bailout package, neither was keen on giving a detailed or authoritative response that would pigeonhole them in on a position.  I can’t fault either since, as Obama noted early, they’re still waiting on the specific language to emerge from the proposal.  That having been said, I have one major issue with how they addressed the economy.  Both candidates, cognizant of a financial crisis and aware that some form of bailout will occur, have not been forthright enough in adjusting their fiscal plans to accommodate what is known:  that a massive expenditure is coming down the pike.

Yeah, I get that the specifics aren’t in yet.  But as I noted earlier, McCain and Obama have to understand that the tax plans and pet projects that each lined out prior to the Wall Street meltdown will have to be adjusted, or scrapped, or otherwise altered to fit our new economic reality.  Pressed on this matter, Obama mentioned clumsily that he’d have to back burner some of his plans, but then laid out a laundry list of spending programs he’d like to implement.  It was not one of his better moments.  McCain handled this only slightly better in that he didn’t answer a question about cutbacks with a wishlist of expenditures.  But his obsession with earmarks is becoming comical, especially given that his running mate has asked for plenty and supported the earmark poster child, the Bridge to Nowhere.  But even if that wasn’t the case, earmarks are a relative pittance of the federal budget — eliminating them looks great as a matter of principle, but does little actual good in the way of spending. 

The bottom line is this:  we are entering a new economic reality as a result of the mortagage crisis.  The next president will not be able to afford the sort of tax relief or tax breaks that they would like to implement, and on top of that will have to make difficult cutbacks in areas that aren’t necessarily politically palatable.  I would appreciate if one or both would start being upfront and honest about that.  I realize I’m a crazy person for suggesting such a thing.

Like I said, you could probably argue that either or neither candidate won.  My feeling is that if McCain didn’t gain any real ground, then in effect he lost a little.  In other words, Obama held serve, and in doing so eliminated any remaining doubts about legitimacy — if he proved anything, it’s that it is ludicrous to suggest he didn’t belong on that stage with McCain.

McCain and Obama: Ignore pretty much everything to this point

Herein lies the trouble of blogging about personal finance during a financial crisis:  information can degrade in a blink.  If the Wall Street meltdown tells us anything about the next administration, it’s that there is no way that either candidates’ tax plans can be implemented as proposed. 

I’m not exactly going out on a limb here; rarely does the tax policy of a president mirror the tax policy of the candidate.  But in light of the massive bailouts underway, I just can’t imagine us being the recipient of any of the major tax goodies Obama and McCain have been proposing to toss our way.  For McCain, the financial crunch likely means it will be impossible to extend the Bush tax cuts.  For Obama, his middle-class tax break goes away.  Depending on how it plays out in the halls of Congress next year, we the people are facing either rising taxes or scorching debt.  Perhaps a combiniation of the two.

Of course, one can’t campaign under that premise, which means that both candidates get to spend the next five weeks pitching DOA tax plans during an economic crisis.  As voters, we have the unenviable task of wading through an economic crisis with the understanding that we won’t get any real-world answers or information until after the election.  So that’s fun.

Obama vs. McCain, Round 1: Taxes

So what exactly is in each candidates’ economic plan?  Let’s begin by taking a point-by-point comparison on taxes:

McCains’ plan promises to maintain the 35% top-tier tax rate as well as the 15% capital gains rate, and phase out the Alternative Minimum Tax.  Except for some verbiage about internet and cell phone taxes, the rest of the tax section of his economic plan is devoted to business.  The “Relief for Families” section also reiterates April’s gas tax-holiday proposal.

Obama proposes a “Making Work Pay” tax credit of up $500 for every worker and wants to eliminate taxes on seniors earning less than $50,000.  He also mentions working to simplify the tax-filing process with a system of pre-filled IRS forms that would reduce the time it takes for some people to do their taxes down to five minutes.

Perhaps the most bold of his proposals is a $1,000 Emergency Energy Rebate, funded by a windfall tax on oil companies.

Analysis:  On the Obama side, the $1,000 tax credit for working families certainly seems doable.  I’m not so sure about the plan to exempt seniors under $50K.  The real eyebrow-raiser to me was the windfall tax on oil profits to send us all $1,000 checks.  Even in our post-tax rebate economic landscape, I’m skeptical that this can get accomplished.  And as much as I liked the first rebate check, I’m not sure I’d even want that, from a fiscal responsibility standpoint.  It’s a slick proposal for the campaign, though, in that McCain can’t argue against it — his running mate did the same for her constituents.

As for McCain, I have to admit that my first instinct seems to have proven correct.  There is a stunning lack of specific substance, at least in terms of this part of his economic plan.  As far as personal taxes go, his site mentions a pledge to keep current tax levels and nothing more.  I read it several times on the assumption I must have missed something, and checked other sections of his economic plan to see if there was more info. 

Which is how I found the gas tax-holiday proposal.  I was real surprised that this was still part of his platform considering how soundly the idea was thrashed back in the spring, and how bad an idea it is to begin with.  At best, it’s gimmicky — there has to be better ways to go about tax relief.  At worst, you’re rewarding the very industry that’s causing you to enact the tax holiday to begin with by making their product cheaper.  Which in turn increases demand, which impacts supply, and gas prices go up and the entire tax benefit is negated.

I’m scoring this round for Obama.  Not everything he wants to do can or should get done, but at least his plan as outlined for the public was substantive and clear on some degree of details.  The McCain site is just maddening in that it speaks mostly in stump speech generalities.  Abolishing the AMT would be wonderful, but I hear this one every year.  Maybe McCain has more to offer, but all he’s saying in his plan is to keep on keeping on and he’ll get you 18-cents a gallon off your summer driving. 

*Wait, I forgot one other pledge of the McCain plan, one I thought was odd.  He pledges to ban all taxes on email and text messages (of which none currently exist).  This is going to sound snide when I ask, and I don’t mean it to:  was there risk of this happening?  I think I heard this idea tossed out about five years ago and it died a quick death.

Obama and McCain: Overall Economic Plans

Since I hit upon the tax plans yesterday, and both Obama and McCain rolled out new ads today specific to the economy, here are links to the candidates’ respective economic plans:

The Obama plan here.  And in the red corner, the McCain plan.

I’ll dig into these more in the coming weeks and compare and contrast.  On first walkthrough, the Obama plan appears to be a little more substantive in terms of specifics.  Just a first glance, so I’ll retract that it need be.

Also, and this I am sure of from first glance — the McCain website is a train wreck.  Ugly, clunky, and full of typos.  The typos are particularly irritating.  I’m sure my blog is full of typos, but my blog isn’t running for president.

Obama vs. McCain: Tax Plans

I’ve done a bang-up job of avoiding politics in this space to date.  This is no small feat, as I’ve been told that I have a tendency to express my opinions rather strongly (my wife’s friends are fond of noting this, for some reason).

But as it applies to personal finance I thought this handy little chart depicting the differences in Obama’s and McCain’s tax plans was worthy of posting, sans any editorializing on my part.  It shows the percentage change in current taxes paid for various income brackets.  Further down is the original chart, which includes rough dollar amounts for a more tangible effect.

Strong opinions welcomed.