Primer: Obama vs. Clinton on the Top 10 Economic Policy Issues

News: The dueling Dems differ in key ways on health care, subprime bailouts, family leave, and social security. Here's how.

By Nomi Prins

February 28, 2008

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On the surface, based on their voting records, the media, and their own admissions, the difference in policy choices between Obama and Clinton may seem small. Mostly, they've been about health care (her plan to make it mandatory, his carrot-and-stick approach) and her vote for the Iraq War. (He wasn't around to vote—though his propensity, like Clinton's, to vote along party lines or not show up at all may say more about what he would have done than any statements to the contrary.)

But there are substantial differences between the two on another issue, one that you might think would have some traction, what with a recession in progress: economics. The distinctions take a rigorous analysis to identify—a look at what they've chosen to emphasize as well as their choice of words and presentation. I took the time to group and compare the top 10 economic policy topics presented in Hillary Clinton's "Solutions for America: Economic Blueprint" and Barack Obama's "Keeping America's Promise: Strengthening the Middle Class."

As a practical matter of readability, Clinton's document is a clear 12-page report, with nonduplicative points and slightly less detail. Obama's is a 48–page thesis in which several key ideas appear multiple times with slightly different descriptions each time. But that's stylistic choice. On the economic substance, Clinton beats Obama 5-to-3 and ties on 2 topics.

1) Housing/Subprime Policy (Edge to Clinton)

The amount of money both candidates suggest using to stave off a complete housing catastrophe is equal, at $30 billion. Clinton suggests a 90-day moratorium for subprime-financed owner-occupied homes, a five-year rate freeze on subprime adjustable rate mortgages, and the creation of a $30 billion fund for state and local groups to stop foreclosures.

Obama posits a $20 billion fund with $10 billion going to state and local groups, and $10 billion directly to families to avoid foreclosure. If implemented well, it sounds like it gives money directly to struggling borrowers, but it's not clear how it would work in practice. He also suggests $10 billion in Mortgage Revenue Bonds to refinance subprime loans, effectively a cross between a government bailout of the lending industry, and a way for Wall Street to earn some trading-fee income.

2) Tax Policy (Slight Edge to Obama with reservations over free-market speak)

A thorough tax plan is lacking in Clinton's plan in terms of detail, and in Obama's, because of repetition through slightly varied explanations. Overall, Clinton suggests a $650 emergency energy assistance to 37 million families at a cost of $24 billion.

Obama suggests $500 in tax relief to workers and families, with an immediate $250 for 150 million individual workers, at a $75 billion cost. Here, his language echoes that of the business focus of President Bush and Treasury Secretary Hank Paulson; he claims this tax relief would "stimulate consumer spending in the most rapid way possible."

But on the innovative side, he suggests a "Making Work Pay" tax cut that would eliminate income tax for 10 million Americans and a Universal Mortgage Credit for Americans who don't itemize taxes, a way of accommodating low-income homeowners.

3) Seniors/Social Security/Retirement Policy (Edge to Obama)

Obama's plans are more detailed than Clinton's. Clinton suggests a government-sponsored 401K savings plan, whereby plan holders would receive $1,000 in matching tax cuts for their first $1,000 invested to encourage savings.

Obama would create automatic workplace pensions to increase savings participation and match 50%, instead of all, of the first $1,000 of savings, for families earning less than $75,000. Though his health care plan is not mandatory, his savings plan is.

He also suggests a $250 "bonus" to be distributed to seniors in their social security checks, eliminating income taxes for seniors making less than $50,000 per year, and increasing the maximum amount of earnings covered by social security from the current $97,500 level. Clinton does not address this specifically in her plan.

4) College Education (Edge to Clinton)

Both plans are similar, beyond a minor difference in the size of tax credit, but Clinton's plan goes beyond Obama's. She suggests a $3,500 tax credit, an increase in Pell Grants, and $500 million for on-the-job training and apprenticeship programs for those who don't go to college, acknowledging the importance of noncollege education. Obama suggests a $4,000 tax credit. Neither plan would go very far to equalize the racial and economic class bias in college and graduate-level education participation.

5) Worker Pay/Sick Benefits (Tie)

Their plans are identical. Both suggest a mandate to give workers seven paid sick days. Both would extend and expand unemployment insurance. Clinton does not specifically address the minimum or living wage in this blueprint, though she introduced legislation at the end of December to raise the minimum wage to $9.50 by 2011. Obama says the minimum wage should increase to that same amount by 2011 and be indexed to inflation. Both candidates are lacking in this department.

6) High Wage/Green Job Growth (Edge to Clinton)

Both candidates have jumped on the green jobs bandwagon with ambitious long-term plans that are difficult to quantify before being set in motion. Both would establish a national broadband strategy and create large national infrastructure reinvestment funds. Both would enhance research and development, she by doubling research budgets, he by making the R&D tax credit permanent.

Clinton would create 5 million new green collar jobs compared to Obama's 2 million, and establish a $50 billion clean energy strategy fund. He would invest $150 billion over 10 years to advance the next generation of bio fuels and renewable energy. The faster the shot in the arm, the better the results, so the edge here is to Clinton.

7) Health Care (Edge to Clinton)

Health care policy has been debated and discussed in great detail. In an economic context, Clinton's American Health Choices Plan provides a mandatory path to universal health care for all, ensures coverage is not denied because of preexisting conditions, and gives small businesses a tax credit for health care coverage. By widening the pool of coverage, it is more likely to be implemented by health insurance companies, create additional competition amongst them, and thereby possibly reduce rates.

Obama says his plan would provide universal health care, though not mandatorily, and reduce family premiums by $2,500 per year (though it's hard to see how he can commit to that number, an average 30% premium reduction). His plan would be available to the self employed, small businesses, and all children, and would also not turn anyone away for preexisting conditions. In place of a New Deal type of government-mandated inclusion, it utilizes a government watchdog, establishing a National Health Insurance Exchange to oversee plan fairness and standards, and increase competition amongst insurers.

8) Corporate Tax Policy (Edge to Obama for addressing tax haven problem)

Both would end tax breaks for companies that ship jobs overseas. Both would force competitive drug prices by allowing Medicare to negotiate with drug companies, repealing the current congressional act abdicating this right, saving $30 billion.

Clinton would scale back benefits and subsidies to big corporations by $55 billion per year, investing that money to help working families, and take tax credits from big oil companies to finance her $50 billion strategic energy fund. Obama's plan would provide $80-$85 billion in tax relief to ordinary Americans by closing corporate loopholes for oil and gas companies and cracking down on international tax havens.

Clinton would end no-bid contracting and cut 500,000 government contractors. Obama would ensure public contracts be awarded to companies committed to American workers.

9) Credit/Lending Policy (Tie. Points to Clinton for rate caps and suggesting real housing-oriented regulation. Points to Obama for reforming 2005 Bankruptcy Bill.)

Both say they will get tough on abuse. Clinton would create a Fair Credit for Families Agenda to combat abusive credit card practices, impose a 30% cap on interest rates, and work to lower the cap. Obama would create a Stop Fraud Act to combat abusive lending practices, but doesn't get specific on rate caps, beyond capping payday loan rates at 36%.

Clinton would establish a regulatory framework to crack down on mortgage lenders to prevent future housing crises, but doesn't go into specifics. Obama would create a Homeowner Obligation Made Explicit (HOME) score to provide borrowers a metric to compare risk of various mortgage products, and mandate accurate loan disclosure.

Clinton's plan does not discuss the 2005 Bankruptcy Act, whereas Obama would amend it to help ordinary families renegotiate loan terms for homes in bankruptcy, as well as reform the law so that if the reason for filing was medical expenses, people should be relieved of that debt. He would alter corporate bankruptcy laws to protect pensions by putting them higher on the list of debt companies can't shed if they go bankrupt.

10) Family-Oriented Policy (Slight edge to Clinton for grant vs. refund suggestions)

Both would expand the Family and Medical Leave Act (FMLA) to cover employers with 25 workers, instead of the current 50 employees. Clinton would commit $1 billion per year to a Family Leave Innovation Fund to support state-level parental-leave programs and expand at-home family care through individual and business tax credits. Obama would expand the Child and Dependent Care Tax Credit, making it refundable and allowing low-income families up to 50% credit for child care, instead of the current 35%.

Correction appended: The original version of this article incorrectly stated that Paul Wellstone was the only senator to vote against the Iraq war. We regret the error.

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