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Reality Check: Economic Policies Of McCain, Obama Examined

Published On: Oct 16 2008 06:40:58 AM CDT
Updated On: Oct 16 2008 06:50:59 AM CDT
MADISON, Wis. -

The economy is now one of the most important issues in the presidential election.

VIDEO: Watch The Report

WISC-TV examined the differences between the economic policies of Republican Sen. John McCain and Democratic Sen. Barack Obama and what citizens can expect from the next U.S. president.

"I'm worried about you losing your jobs, I'm worried about you losing your homes, I'm worried about you losing your life savings," said Obama.

Said McCain: "If I am elected president, I will help create jobs for Americans in the most direct, effective way a president can do this, with tax cuts that are directed specifically to create jobs."

On the economy, people hear a lot about taxes and the George W. Bush tax cuts, which are set to expire in 2010.

McCain would make them permanent and Obama would not.

McCain would end them for families making more than $250,000 a year.

Obama's plan centers around a middle-class tax credit.

For people who make less than $150,000, they would get a tax credit of $500 or $1,000 per family.

McCain would keep tax rates as they are now, at income levels.

His big tax benefit would go to families with children. He wants to double the child tax deduction from $3,500 to $7,000 per child.

Both candidates said they'll keep the tax rate policy the same even though the economy is hurting. However, each candidate has a different way to help.

"We have to act immediately. We have to change direction now, and we have to fight. And you and I know how to do that," said McCain.

McCain this week proposed his new economic aid plan. He'd temporarily decrease the tax rate on IRAs and 401(k) withdrawal for those over age 60 and would suspend rules requiring seniors over age 70 to sell off stocks.

He also calls for a 50 percent reduction in the capital gains tax through 2010 and to stop taxing unemployment benefits through 2009.

This is on top of McCain's plan to buy back troubled mortgages from homeowners.

He would use federal bailout funds to purchase delinquent mortgages and replace them with fixed-rate mortgages at the home's current value.

"We need to pass an economic rescue plan for the middle class and we need to do it not five years from now, not next year we need to do it right now," said Obama.

Obama has also recently proposed a number of new ideas to spur economic growth.

He'd offer $3,000 to businesses for each new full-time employee they hire and make available $50 billion in loan guarantees to the struggling auto industry.

Obama would allow residents to make penalty-free withdrawals from their IRAs and 401(k)s through 2009 up to $10,000 and offer $25 billion in state aid so property taxes don't have to be raised to fund services.

In either of these plans, don't expect a balanced budget.

McCain's plan is estimated to cost some $52 billion, and Obama's would cost $60 billion.

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