The problem with Mr Obama's tax and fiscal proposals is that he keeps changing it, as Glenn Hubbard explains. Earlier he had planned to make Social Security solvent by eliminating the caps on payroll taxes. Now his economic advisers plan to only unveil payroll taxes that affect the top 3% of earners, which is much more restrained, but he still plans to shore up Social Security. So which is it?
One argument is that either candidate's plan will go haywire once January 2009 rolls around, because they will be facing a macroeconomic crisis. But if judgment in times of (relative) calm predicts judgment in times of crisis, we may have reason to fear. This is an investment blog, so I'll make myself perfectly clear. Wall Street seems to prefer Mr McCain's economic proposals, and Wall Streets movements predict the success of the economy as a whole. You could argue that Mr Bush's terms proved that Republican economics is failing, but I would take issue with that counterfactual because you haven't controlled for any other variables.
The question becomes, how can Mr Obama make his policies more friendly to investors? Or perhaps more appropriately, will he do so?
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