THE ECONOMY, TAXES AND DEFICITS
The promise: Retain President Bush's tax cuts for families making less than $250,000 a year plus additional relief for lower-income and middle-class families; exempt seniors making less than $50,000 a year; expand college tax credit; savings incentives; help pay child care and mortgage expenses.
Obama supported the $700 billion financial bailout plan and backs a second stimulus plan that would provide up to about $150 billion on top of the $168 billion package of tax rebates passed this year. Obama also proposed a $1,000 emergency energy rebate to families and penalty-free withdrawals of up to $10,000 from 401(k)s and IRAs. He also proposes a $3,000-per-employee tax credit to companies for each new job they create.
The problem: Obama's spending plans and middle-class tax relief will confront exploding budget deficits – $438 billion this year, and growing as the down economy reduces tax revenues and increases spending on bailouts and anti-recessionary programs. The nonpartisan Tax Policy Center estimates Obama's proposals would reduce projected revenue by $2.95 trillion over the next decade, compared to what would happen if Bush's tax cuts were to expire on schedule at the end of 2010.
Digital Access for only $0.99
For the most comprehensive local coverage, subscribe today.
The promise: A crash program with a goal of reducing U.S. petroleum demand by an amount equal to 3.5 million barrels a day of imported oil. Would invest $15 billion a year over the next 10 years to spur commercial development of alternative energy and more energy-efficient buildings and automobiles. Wants short-term rebate of $1,000 per couple to help with rising energy costs.
The problem: Here, too, the economic crisis throws new spending into doubt – including Obama's alternative energy plans. The $150 billion program also is tied to Congress tackling global warming by putting a price on greenhouse gases.
The promise: Subsidize coverage for low- and middle-income families partly by increasing taxes for families earning more than $250,000. Would require employers not offering health coverage to pay a percentage of payroll toward national health plan. Small businesses would be exempt. Mandated coverage for children. Would let people choose a Medicare-like plan or browse private insurance plans. Insurers would have to issue every applicant a policy regardless of pre-existing health conditions.
The problem: Health analysts say the plan falls short of universal coverage. The Tax Policy Center says the Obama plan would reduce the number of uninsured by 18 million in the first full year of operation, from the current figure of 45 million. That still would leave millions of uninsured adults. Center says plan will cost an estimated $1.6 trillion over 10 years.
The promise: Engage allies and adversaries to repair U.S. image abroad. Would marshal international pressure against Iran, boost U.S. efforts against extremists along the Afghanistan-Pakistan border and get a faster start on Mideast peacemaking.
The problem: The Bush administration has already reversed many of its policies that other nations saw as isolationist or bullying – for example, by joining international diplomatic efforts with “axis of evil” nations Iran and North Korea. But even those haven't produced great results and neither has yet to achieve its desired goal. Obama has suggested he would continue such efforts, but there is no guarantee they will yield greater success.
The promise: Pull all U.S. combat forces out of Iraq within 16 months, send more troops to Afghanistan and provide better care for wounded troops and veterans.
The problem: A troop pullout by mid-2010 is feasible, although some argue Iraq forces might not be ready. The Bush administration has targeted departure by the end of 2011, although the Iraqis have yet to agree.
Until U.S. forces are pulled from Iraq, there are none to bolster the force in Afghanistan. Balancing needs in those two countries will be an immediate challenge for Obama.
Caring for veterans and the wounded entails enormous costs.
The promise: An $18 billion plan that would encourage, but not mandate, universal pre-kindergarten; teacher pay raises tied to, although not based solely on, test scores; an overhaul of Bush's No Child Left Behind; tax credit to pay up to $4,000 of college costs for students who perform 100 hours of community service a year. Obama would pay for part of his plan by ending corporate tax deductions for CEO pay.
The problem: With the budget stretched thin, a huge infusion of cash for early childhood education or college costs seems unlikely. The economy, the war and health care are stickier and more pressing concerns.