On CNBC yesterday, the theme seemed to be Obama vs. McCain. The McCain supporters focused on McCain’s pro-growth tax cuts and attacked what they called protectionism from Obama; while the Obama supporters attempted to show Obama’s policies moving towards the middle while attempting to portray McCain’s policies as impossible.

The main points that were brought up for McCain’s side were:
-Drill for more oil
-Quit bashing corporations
-Keep free trade
-Obama would unfairly increase taxes
-Obama’s policies undo years of FTAs

The main points from Obama’s camp are:
-Balance of tax cuts and increases
-Help the individual, not the corporations
-Remove tax burden from middle class
-McCain’s policies leave too much unspecified (i.e. where money comes from)
-McCain’s policy hinges on miraculous economic growth

For the most part, we believe that these economists got it right. Obama would increase taxes on the top 5% of the population (based on income). That’s people who make $145,000 or over. Now, this sounds like it would be fair, but these people make 35% of the income, yet already account for 60% of taxes. So in our opinion, it is safe to say that Obama’s tax increases would be unfair. As for undoing FTAs however, we believe that Obama’s earlier comments were extremely left for the benefit of his party, because of the primaries. But now that the nominees have been decided, we believe that Obama’s views on FTAs should begin to swing to the middle.

Speaking for FTAs, we like McCain’s support of them. Free trade is one of the best things for the economy, and with a McCain presidency we are sure the already standing ones will remain in place, and new ones would be negotiated. Also, we like McCain’s focus on not unfairly bashing corporations. McCain believes, and we agree, that taking financial pressure off corporations means that both employees and consumers benefit as well. This belief shows an understanding of the complex web of economics that Obama has yet to demonstrate as fully. However, the Obama supporters were right when they said that McCain’s tax cuts seem far-fetched. McCain has provided no information on how he would pay for the tax cuts, and it does appear that his entire plan hinges on miraculous economic growth.

So who would be better for the economy? Kudlow (on Kudlow & Co 6/10/08) thought McCain, largely in part because of his recent speech to small businesses. On the Fast Money segment, viewers were asked to vote on who they thought would be better for the economy and McCain won 68% to 32%. However, viewers were also asked who they thought would win the elections and Obama won 56% to 44%. So it looks like even though they want McCain, Wall Street is banking on Obama.

~Invest this!