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Thursday, 16 October 2008

The Wurzelbacher Falls

The final Presidential debate between Obama and McCain was about the Joe Wurzelbacher economy. CBS’s Bob Schieffer presiding opened with expert opinion that the 2009 budget will be a deficit of somewhere between $400bn and $1,000bn (which is 3%-7.5% ratio to GDP!) added to which (or of which?) the economic plans of both candidates requires $200bn deficit spending. This was a measure of the economic and financial crises; requiring between 1 & 4 times as much deficit as the candidates need for their own plans. Similarity ends there. Confirming the statements made in the second debate, McCain wants an across-the-board spending freeze, a $2-300bn corporate tax cut plus capital gains tax cut in order to head for the same 11% profits tax as the Republic of Ireland (which corporation tax is 12% and just raised capital gains tax from 20% to 22% though capital gains in 2009 is unlikely to amount to much, if anything). Both candidates want to cut all spending on ‘earmarks’ (also called ‘pork’) and any programs that are not working. Obama wants to raise taxes on the 5% top earners (corporations and households earning over $250,000) and deliver tax cuts (zero increases) to everyone else plus provide universal health insurance for the uninsured and more for education. Obama supports TARP, but McCain has decided to kill it. He wants to use £300bn of Congress’s $350bn to buy out defaulted mortgages of 11m homes (a massive public housing investment that would leave mortgagees in occupation paying rent). TARP may be dead, or just dead until January at the earliest, other than for $100bn of it left to the discretion of President Bush. If a CDS and CDO clearing system gets going in November and experts to run TARP are selected there is a faint hope of TARP beginning to transact before Christmas, but I deem this to be unlikely. In the debate there was much about voting records. Obama has voted 95% of the time with his party and 5% across the aisle. He wants to reach across the aisle on key issues. McCain marks himself out almost as if a one-man third party, a maverick Republican, but not to left and centre. If McCain is elected the White House will be occupied by the most committed neo-liberal since Calvin Coolidge, 13th President, 1923-1929, oops!, (Ronald Reagan, who is McCain’s hero, talked the talk but let the deficit balloon, while Bill Clinton talked liberal yet balanced the budget!). The ideological differences are a yawning gap between Obama and McCain. McCain says he will balance the budget in 4 years. Obama says 10 years (implying this is his trough to peak period estimate, probably informed by his adviser Paul Volker). McCain wants smaller Federal government, Obama wants a Federal government that invests directly in human capital. McCain’s investment in health and education is to be by private sector third parties e.g. insurance companies and charter schools with households getting education vouchers and $5,000 health subsidies (refundable tax credits, when even if, as Obama says, average insurance cover is $12,000, for many if not most taxpayers this is an income gain). Obama seems to understand the liberal basics of a Keynesian redistributive fiscal stance over an economic cycle, while McCain has the opposite neo-liberal view that government borrowing and taxes depress growth. Both candidates intend to back alternative energy and expect to reduce dependency on energy imports (except from Canada) by up to 100% reduction within 10 years, which is bad news for the Middle East and may mean oil prices falling faster than alternative energy can afford?). McCain is unambiguous in his enthusiasm for nuclear and offshore drilling. Obama is ambiguous on this. Obama only smiled broadly and derisively at McCain during the economics part of the debate. McCain smiled at Obama like a cat at the cream during the Roe v. Wade part of the debate. Both candidates opposed the policies of the Bush White House over the past 8 years and stand for change. All commentators agree that since stock markets began falling steeply in The Fall, Obama’s lead grew decisively, currently 14% (with enough States and electoral college votes still teetering either way for McCain to yet win, if only by a whisker). Commentators said Obama won the debate strategically by looking cool and collected in a crisis, while McCain appeared the more nervous and desperate to the extent of low-balling Obama repeatedly to knock him off the economics including the dirty tactic of implying guilt by association with an ex-Weatherman Professor. When Obama mentioned Joe Wurzelbacher, a plumber he met at a rally, McCain jumped on this and Wurzelbacher got famous (24 mentions in despatches) with McCain at the end talking as if he had met Wurzelbacher and Wurzelbacher was his supporter and he’d make sure Wurzelbacher got rich and a tax cut and could job-hire and fulfill his capitalist dream of owning his own business. If Joe’s not in hiding he probably gets to decide a few million votes just by telling the media which candidate would serve the Wurzelbacher economy best – that’s democracy, when the small guys get the votes! If Obama v McCain over Wurzelbacher may be compared to Sherlock Holmes v Moriarty at Reichenbacher Falls (not so far fetched as McCain supporters at his rallies had been chanting "kill Obama", and as Obama said Joe Biden, who is a bit like one imagines Dr. Watson, would make a very good President "should God Forbid something happen to me". At Reichenbach both Holmes and Moriarty apparently died and it was some time before one of them was found alive, so too will the growing economic crisis drown all budget plans and it may be some time before we really know what the Presidential Race or TARP has achieved for the world economy?
Late in: Reached by Huffington Post at his home in Toledo, Ohio, Mr Wurzelbacher refuses to say which way he'll vote. But he was clearly surprised: “It’s pretty surreal, man, my name being mentioned in a presidential campaign."

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