WITH the prospect of a U.S. recession roiling stock markets across the world, and with violence down in Iraq, the economy has emerged as the issue of the hour for the American voters and the political class.
In Washington, members of both parties and the White House have worked out an economic stimulus package, and on the campaign trail the presidential candidates have chimed in with their own suggestions to address the immediate problem.
Though the candidates' recent reactions say something about them, the voters are also interested in their overriding philosophies.
The candidates tend to divide according to a fundamental question: whether the government can be (or is) a help or a hindrance to economic performance. This divide has its gradations, but the Democrats are clearly in the former camp and all are in favor of rolling back the Bush tax cuts for the wealthiest Americans.
Hillary Clinton is a self-admitted policy wonk with a long list of goals, including lower taxes for middle-class families in such ways as extending the child tax credit and offering new tax cuts for health care, college, and retirement. She wants to freeze estate taxes at 2009 levels, not abolish them, and also promises to move back toward a balanced budget and surpluses.
A large part of her platform is in expanding what she calls America's role as the "innovation superpower" in order to create more jobs. For example, she would establish a $50 billion Strategic Energy Fund to help the nation become energy independent. And she would increase the National Institutes of Health budget by 50 percent over five years and aim to double it over 10 years which would be a boon to major medical research institutions in a number of cities.
Barack Obama would cut taxes for workers, homeowners, and retirees. He would expand the child and dependent care tax credit and he would eliminate income taxes for seniors making less than $50,000. He would not abolish the estate tax and he would raise capital gains taxes from 15 percent to as high as 28 percent. He would raise the minimum wage every year and take on credit card companies charging onerous fees.
The senator from Illinois has also expressed concern about globalization's effects on American workers while acknowledging its economic benefits and he would insist on strengthening and enforcing international trade agreements.
John Edwards, more than the other Democrats, is an old-fashioned, left-leaning Democrat who talks about the economic inequity of "two Americas" and condemns failed trade policies. To help the suffering half, he proposes middle-class tax breaks, including a new "get-ahead" tax credit to match up to $500 in savings for families earning up to $75,000 that could be used for retirement, college education, buying a home, investing in a small business, or for financial or medical emergencies.
The former North Carolina senator would raise the capital gains tax to 28 percent and keep the estate tax on large estates.
The positions of the Republicans have the virtue of simplicity. For the most part, the candidates follow the playbook that was pushed, if not always followed, by Ronald Reagan.
John McCain supports making the Bush tax cuts permanent. His plan calls for reducing taxes on the middle class and cutting government spending - the classic conservative formula.
The senator from Arizona believes increasing taxes should require a three-fifths vote in Congress. He would repeal the alternative minimum tax, ban Internet taxes and new cell phone taxes, and seek a permanent research and development tax credit. He would cut the estate tax to 15 percent and exempt estates under $10 million. He would also cut the corporate tax rate from 35 percent to 25 percent, believing such a move is essential to competitiveness.
Mitt Romney, the former governor of Massachusetts, has variations on the same theme, including retaining the Bush tax cuts. He would reduce the corporate tax rate to 20 percent over two years and cut taxes across the board. In particular, he would eliminate all taxes on interest, dividends, and capital gains for anyone with adjusted gross income under $200,000. And he would eliminate permanently the "death tax," as conservatives refer to the estate tax. He proposes strict spending limits on non-defense discretionary appropriations.
On the way to winning the Michigan primary, Mr. Romney seemed to be passing himself off as a conservative prepared to be more interventionist in the economy than most, suggesting that he would be the savior of the ailing American auto industry. But boiled down to the essentials, it was the same old stuff larded with attacks on regulatory burdens and motor vehicle fuel- economy standards - a short-sighted view if ever there was one.
Mike Huckabee, the former governor of Arkansas, has shown more interest, at least rhetorically, in the beleaguered American worker than any of the other Republicans. He says that, while he believes in free trade, America is losing jobs because of an unlevel, unfair trading arena, which his populist instincts propel him to rectify.
On taxes, he differs from the other candidates by supporting what he calls a "Fair Tax," which would replace the federal income tax with a national consumption tax that could be as high as 23 percent. Americans would get a monthly rebate that would reimburse them for taxes on purchases up to the poverty line, so that they're not taxed on necessities.
It sounds too good to be true, and it could play havoc with other government sales taxes.
Rudy Giuliani, the former mayor of New York City, has mostly run on national security and the war on terror and has only lately come to stress economic issues. Not one for half-measures, Mr. Giuliani proposes what he calls "the largest tax cut in American history." He would make all the Bush tax cuts permanent and eliminate the estate tax.
All in all, the candidates from both parties make some worthy suggestions. But our view is that government's role requires a sensitive balance. As history bears out, government policy can enliven the economy, but its heavy hand can also strangle it.
While we support lower taxes in principle (especially on those with modest incomes), we do not think all taxation is the work of the devil and so we do not favor making permanent the Bush tax cuts for the rich. As Oliver Wendell Holmes wisely said, taxes are the price we pay for a civilized society.
A civilized society is one whose leaders don't sit idly by as economic forces crush its most vulnerable members. It worries when its citizens' jobs are out-sourced to foreign places and it is sensitive to the risk of burying future generations under a mountain of federal debt. It encourages all its people, not the favored few. It abandons no one.
Sadly, we have retreated from such a society in the last seven years. To bring America back, we seek a president who best synthesizes what is sensible and fair.