The US election still hasn't happened, the campaigning's been going on all year, who can put up with this much politics? It would probably be quicker and cheaper to sort it out by means of a civil war, and would make for more interesting television on the 24 hour news channels.
Anyhow, onto some of the policies. Obama's tax plan. Well it's the same one he's had for quite a while, but with the credit crunch, impending recession, billions added to the federal deficit and all, it seems a remarkable achievement that an economic policy that would be good in say June 2008 would also be exactly right for the conditions he may inherit in January 2009. Of course, there's the rub, like most politicians economic policies it's more about politics than economics, rewarding your supporters, and punishing your opponents.
As is almost universally the case, the analysis presented in the media by pundits and talking heads is about how somebody on such an income will gain x dollars, and somebody at some other income level will lose y dollars, like a high school algebra problem. The trouble with this sort of analysis is it assumes a static system, whereas in the real world the economy is a dynamic system which changes as it is prodded by various government policies, and those changes cause other changes which cause other changes .... well you get the idea. Obama's claim that only 5 per cent of people will be worse off, and everyone else will be unaffected or better off is very interesting, especially I should imagine to those 5 per cent. Since there will be more than a year from Obama appearing to have a realistic possibility of becoming to president to if when he finally does achieve it, those members of that 5 per cent group who are not completely over the moon about being charged more to support the government (and I suspect there may be one or two at least) have had plenty of time to consult with tax lawyers and accountants in order to reduce their US tax liabilities. I would suspect this program will raise rather less off the top 5 per cent of earners than is assumed by policy wonks with their clever spreadsheets. That combined with an almost certain drop in tax revenues because of impending recession, and the huge and the recent huge increase in the budget deficit and I will frankly be amazed if some of those voting for Obama expecting to be better off because of his tax policies don't turn out to be very disappointed.
Not that McCain's policies are necessarily any better. He has at least presented a major new policy since the latest trainwreck in the financial system, but unfortunately it's a bit of a lemon. His idea of using government money to stop some foreclosures and allow the borrower to renegotiate the mortgage based on the new lower value of their homes. One problem with this is the moral hazard of people who have been struggling to keep up with payments. Now if this policy is implemented they would be put in the position where they can give up making that effort in the expectation of being bailed out and being given a smaller amount to repay.
It is the same over most of the democratic world, policies presented by political candidates are more smoke and mirrors than realistic and sensible plans well rooted in sound economics, and it is often the one with the smokiest smoke and the shiniest mirror that wins the day.