For Democrats, instincts differ on economics

Sticking to their economic guns
Both campaigns defend their proposals. Mr. Obama’s advisers say he would pay for his plans by, among other things, raising the capital-gains tax more than Mrs. Clinton would and doing more to crack down on corporate-tax evasion. His broad cut in the payroll tax is an aggressive response to middle-class income stagnation, they say, and, because most senior citizens do not pay payroll taxes, they need additional help.

“I’m the only candidate who’s proposed a genuine middle-class tax cut,” Mr. Obama said Saturday in Indianapolis, “that’s paid for in part by closing corporate loopholes and shutting down tax havens.” He also talked about his support for a tax credit to help homeowners who do not itemize their taxes and thus do not benefit from the mortgage deduction.

Clinton advisers say that her remedies to the economic slowdown have been more focused than Mr. Obama’s and that, early on, she correctly identified the housing market as needing specific help. Her economic plans would provide short-term relief to families in the months and years before her longer-term plans — on energy conservation, for instance — would have an effect, the aides say.

Mrs. Clinton often talks about other countries, like Germany, that have created jobs and cut their reliance on imported oil by investing in alternative energy.

“We lost 20,000 jobs last month, and people are saying, ‘Well, that’s better than we thought,’ ” she said at a John Deere sales center in North Carolina on Friday. “I don’t accept that at all.”

More similarities than not
The Clinton and Obama approaches still have many more similarities than differences. Whether through focused tax breaks or sweeping ones, both candidates would reduce taxes on middle-class households and raise taxes on those making more than $250,000 a year.

Senator John McCain, the presumptive Republican nominee, by contrast, would make permanent nearly all of the Bush tax cuts, including those on high earners. McCain advisers say allowing taxes on high earners to return to their pre-Bush levels would damage the economy when it is already vulnerable.

Both Democratic candidates have also promised to regulate corporate America more closely than President Bush has and to spend more than $100 billion a year on an overhaul of the health-care system.

The one major difference between their health plans has received more attention than it deserves, economists say. Although opinion is divided, they generally favor the Clinton policy, which would require all Americans to have insurance, potentially making the health-care system more efficient. But health analysts say the Clinton campaign has falsely suggested the Obama plan would exclude people who wanted to sign up for insurance.

More substance than usual?
Despite the individual criticisms of the two agendas, policy experts praise both candidates for an unusually substantive primary campaign, each having come forward with detailed plans to address climate change, the middle-class squeeze and the decline of company-provided health insurance.

Mrs. Clinton and Mr. Obama have also been more forthcoming than Mr. McCain about how they would pay for their plans. Mr. McCain has proposed almost $300 billion a year in new tax cuts, on top of President Bush’s cuts, but has offered little detail about how he would pay for them.

Douglas Holtz-Eakin, the McCain campaign’s top economic adviser, has said Mr. McCain would later offer more details and that the tax cuts would spur economic growth, reducing their cost.

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Perhaps the most important question, policy analysts say, is how Mrs. Clinton’s and Mr. Obama’s different approaches would affect their governing style.

On many budget matters, Mrs. Clinton’s instincts seem similar to her husband’s. Both favor carefully crafted tax credits that can help people who most need it, that come with relatively modest price tags and that seem likely to survive a divided Congress.

Mr. Obama sometimes talks of his vision of an “iPod government,” with simple programs that people can understand. He also talks of persuading voters and members of Congress, including Republicans, to support his plans.

Either way, the debate may not last much longer. No matter which Democrat is nominated, the disagreements with Mr. McCain are likely to be far larger.

Patrick Healy and Jeff Zeleny contributed reporting.

This article, For Democrats, Instincts Differ on Economics, originally appeared in The New York Times.

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