McCain, Obama clash on minimum wage, tax cuts, Social Security

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WASHINGTON -- It's not God, guns or gays that Dave Christensen hears about when he talks to his friends and neighbors about this year's presidential campaign."Everyone right now is concerned about money," said Christensen, a retiree who lives in Maryville, Tenn. "Our economic situation is getting bleak here for a lot of people. That's what people are worried about right now."With the nation's financial system near collapse and the stock market taking a daily dive, the social issues that shaped the 2004 presidential campaign have lost their importance this year for many voters, who are more concerned about pocketbook matters, such as mortgages, jobs and wages.Democrat Barack Obama and Republican John McCain have each offered detailed plans for getting the economy back on its feet and helping Americans through these troubled times.-- Obama's newest economic proposal -- a $60 billion, two-year plan -- calls for extending unemployment benefits and suspending the tax on them.The Illinois senator also is proposing a 90-day moratorium on home foreclosures at some banks, allowing a $3,000 tax credit for each additional full-time job a business creates and permitting people to withdraw up to 15 percent of their retirement funds this year and next without any penalty.-- McCain, who has offered a $52.5 billion, two-year economic plan of his own, wants to eliminate taxes on unemployment benefits and order the federal government to guarantee 100 percent of all savings for six months.The Arizona senator proposed that people who withdraw money from retirement accounts this year and next pay a 10 percent tax rate instead of the higher rates they would normally face. He also suggested cutting the tax rate on capital gains in half -- down to 7.5 percent -- over the next two years.Regardless of who wins the election, the candidates' economic plans probably will have to be scaled back when one of them settles into the Oval Office, said Bill Watkins, director of the Economic Forecast Project at the University of California Santa Barbara."They are going to be facing a huge deficit, and that is going to limit the freedom of either one of them, how much they can do," Watkins said.On some financial matters, the differences between the two candidates are more pronounced.-- Tax cuts:Obama would allow tax cuts enacted under President Bush to expire for people making more than $250,000 a year, proposes eliminating income taxes for seniors making less than $50,000 a year, wants to increase the number of working parents eligible for Earned Income Tax Credit and would like to give several new tax cuts to low-income people.McCain initially opposed the Bush tax cuts, which are scheduled to expire in 2010. He now argues they should be made permanent.But extending the Bush tax cuts probably won't be possible in light of the federal deficit and the current economic slowdown, predicted Matt Murray, associate director of the University of Tennessee's Center for Business and Economic Research."I just do not see how that is feasible," he said. "There is no way we are going to be able to deal with long-term fundamental problems with Medicare and Social Security without a combination of tax increases and spending cuts."-- Social Security:The future of Social Security is a big concern for many seniors, said Christensen, who is active in the AARP."In my chapter, we have a bunch of people that are living very close to the bone," he said. "Most of our folks are 60 and older. They're not that concerned about Social Security going away for them. Any concerns would be for the newer generation.'' Obama has said he is committed to ensuring the long-term financial security of the program but has said little about how he would achieve that goal, other than possibly taxing those who earn above $250,000. He has ruled out raising the retirement age for benefits.McCain, however, has said nothing should be off the table. He favors allowing workers to invest part of their Social Security taxes in the stock market -- something that Obama opposes."That would be a disaster if we adopted that kind of a program," said Hank Lacayo, state president of the Congress of California Seniors. "I just don't think we can afford to be playing Russian roulette with our future."-- Wages:On the subject of wages, Obama has pledged to raise the federal minimum wage to $9.50 an hour by 2011 and index it to inflation. The federal minimum wage is currently $6.55 an hour and is set to jump to $7.25 an hour next July.McCain has said he favors a living wage for all Americans, but he has voted numerous times against raising the minimum wage.Critics contend that Obama's plan to raise the minimum wage could hurt workers in the long run because it would force small businesses that already are financially strapped to eliminate some jobs."In these tough economic times, any additional expense or burden put on a small business is definitely going to be a detriment to the success or the ability of that business to continue to operate," said Larry Rossini, director of the Tennessee Small Business Development Center in Knoxville.But Socorro Lopez Hanson believes increasing minimum pay would benefit the people who show up at the non-profit agency she runs in Oxnard, Calif.Community Action of Ventura County provides assistance to the low-income and the poor. Everyone who walks through the agency's doors needs something, whether it's food for the table or help paying the rent and electric bills. Their look of desperation is always the same. But many of the faces are new.Just recently, a Porsche SUV pulled into the parking lot, and a woman in a business suit walked through the door. Like the agency's other clients, the woman needed help paying her bills."We are beginning to see people who have lost their jobs -- well-paying jobs," said Hanson, the agency's executive director.Raising the minimum wage would benefit everybody in the long run, Hanson said."Yes, the immediate benefit is to (the workers)," Hanson said. "But I think society as a whole would benefit. They would be better able to take care of themselves and then would not need to draw on public dollars."(E-mail Scripps Howard News Service reporter Michael Collins at collinsm(at)shns.com.) (Distributed by Scripps Howard News Service, http://www.scrippsnews.com)