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Does the socialist label fit Obama's proposals?

In Commentary

12:00 am on Tue, 10.28.08

A recent line of attack for the McCain campaign has been to portray Barack Obama's economic plan as socialist.

At the last debate between the two, McCain first brought up the now infamous "Joe the Plumber," seizing upon a conversation Obama had with a would-be business owner while campaigning in Ohio. Joe asked Obama if buying a company that makes more than $250,000 a year would increase his taxes. Obama's response, in part, was:

"My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody. If you've got a plumbing business, you're gonna be better off if you're gonna be better off if you've got a whole bunch of customers who can afford to hire you, and right now everybody's so pinched that business is bad for everybody and I think when you spread the wealth around, it's good for everybody."

From the seemingly innocuous phrase "spread the wealth around," the McCain campaign has raised the fearsome specter of socialism.

At a recent rally in New Hampshire, McCain asserted that "before government can redistribute wealth, it has to confiscate wealth from those who earned it, and whatever the right word is for that way of thinking." As if on cue, several eager crowd members shouted the answer the candidate wanted to hear: socialism.

The McCain campaign simplistically equates redistribution with socialism. However, if this were the case then the 16th Amendment would have to be considered socialist. This amendment to the Constitution created an income tax that is progressive according to what people earn.

According to the Encyclopedia Britannica Online, socialism is the "social and economic doctrine that calls for public rather than private ownership or control of property and natural resources." The article says that socialists believe that the government "should own or at least control property for the benefit of all its members."

Does Barack Obama believe that government should control property for the benefit of everyone?

Unlike the McCain campaign, which has the power to read the candidate's mind, I have to resort to Obama's official economic plan as found on his campaign's website .

Some notable "highlights" of Obama's plan for the economy are:

1. $60 billion in new spending to help households, companies and states hit by the recession, which consists of the following programs:

  1. Temporary tax credits for businesses that create jobs in the United States.
  2. A 90-day moratorium on home foreclosures; this is only available for those who are making "good faith" efforts to keep up their payments.
  3. Temporary lifting of the tax on unemployment benefits.
  4. A new lending agency for state and city governments that are seeing their access to credit markets dry up.
  5. Withdrawals of up to $10,000 from people's retirement savings plans without penalties.

2. $115 billion in tax relief to working households earning under $250,000.

The last item in the list is what initially earned McCain and Joe the Plumber's ire and led to his plan being branded as redistributive. Obama proposes income tax credits of up to $1,000 for working families. However, not all tax filers pay income tax - as many as 39 percent pay only the payroll tax. For those who do not pay income tax, a tax credit means that total taxes on wages declines and therefore they receive a tax cut. It is true that Obama advocates repealing the Bush tax cuts on the top 2 percent income earners.

Ironically, given McCain's protests, tax credits have had a long, illustrious history in Republican presidential administrations. One of the country's main anti-poverty programs is the Earned Income Tax Credit, which was signed into law by Republican Gerald Ford and subsequently expanded by fellow-GOP presidents Reagan, (HW) Bush and (W) Bush.

Clearly, the tax credit proposal can hardly be designated as socialist. Mildly redistributive, perhaps, but no more so than the 16th Amendment.

What, then, of the other highlights listed? Ben Bernanke, chairman of the Federal Reserve and a Wall Street favorite, has recently thrown his support behind a second stimulus package to go along with the $700 billion financial sector bail-out. Although Bernanke did not go into specifics, he did make clear that he thought more government spending was needed to prevent an extended period of negative growth for the U.S. economy.

Nigel Gault, director of U.S. Economic Research at Global Insight , endorsed Bernanke, saying , "The government is acting as a support for the financial system but it's also got to act as a support for the real economy, almost as a spender of last resort because the private sector spending is going to be declining pretty sharply." 

Apparently, a consensus is also forming on the necessity of further government spending to boost private spending and get through what is now thought to be long economic slowdown. This is coming from pro-business types like Bernanke, not share-the-wealth socialists.

Obama's plan would lead to a moderate expansion of national power in economic affairs. But it can be called socialist only by a McCain camp facing increasingly long odds and running out of time.

Robert Cropf chairs the Department of Public Policy Studies at St. Louis University. To reach him, contact Beacon features and commentary editor Donna Korando.


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