What the Candidates' Proposals Mean for Consumers

From John McCain's (R., Ariz.) gas-tax holiday to Barack Obama's (D., Ill.) universal health-care plan, appealing to cash-strapped consumers is on the top of the presidential candidates' agendas.

Both candidates promise to lower prices at the pump, make medical bills more manageable and keep homeowners in their homes. Of course, no matter who gets elected, there's no guarantee that these plans will come to fruition.

"It's very typical for presidential candidates to say whatever they want now, but what will actually happen when they're elected can be a different story," warns Mickey Levy, chief economist at Bank of America (BAC). Another concern: Many of these proposals lack details, say, on how they will be funded, he says.

We looked at some of the fixes the candidate propose for gas prices, health care and housing, then spoke with Levy, Dean Baker, a co-director at the Center for Economic and Policy Research in Washington, D.C., and Jared Bernstein, senior economist at the Economic Policy Institute and author of "Crunch: Why Do I Feel So Squeezed?," to get their takes on what these proposals will mean for average consumers.

Gas prices may have retreated from a high of more than $4 a gallon, but Americans are still feeling the pinch.

Likely Result: The tax credits for fuel-efficient cars that both candidates propose should have a sizable impact on consumers' wallets, says Bernstein. Not only will it reward those buying the cars, but it should also decrease demand, and therefore prices, for gas, says Baker. Obama's plan to tap into strategic reserves, on the other hand, would lower prices at the pump, but only temporarily, he says. Meanwhile, McCain's offshore drilling plan could lower gas prices, but only by a few pennies per gallon and it will take close to a decade to realize that savings, he says.

Health-care costs continue to soar while more Americans are forced to pay out of pocket for medical expenses.

Likely Result: Most young, healthy people should be covered by McCain's $2,500 tax credit for health care. But families will have a hard time making do with just $5,000, says Bernstein. Both Bernstein and Baker say that, under McCain's plan, employees would have to pay taxes on the value of the health insurance they receive from their employer. However, the tax credit should offset that tax hit. Under Obama's plan, those who already have health care, will see few changes, says Bernstein. (Obama's campaign claims the average family's premiums will be as much as $2,500 lower.) Those with low income who don't have coverage, however, should be able to gain access to affordable health care with a government subsidy, says Baker. The downside? Funding the Democratic candidate's plan will come at a substantial cost to taxpayers, says Levy.

Foreclosure filings were up 55% year over year in July, according to RealtyTrac.com, an online marketplace for foreclosure properties. And many homeowners owe more on their home than it's worth.

Likely Result: Both candidates supported the housing package signed by President Bush in July, says Levy. McCain's plan is very similar to the existing package. It offers borrowers the opportunity to obtain a new mortgage, but only if the lender agrees to it -- which will be a long shot for many borrowers, says Baker. Obama's plan, meanwhile, will help those deeply in trouble to hold onto their homes, says Baker.

Footnote: Sources for Candidate's Policies: JohnMcCain.com, BarackObama.com, Bank of America's "Summary of Major Provisions of the Economic Policies of McCain and Obama"

Also See:
Obama and McCain Differ Sharply on Economic Policy
Presidents Often Surprise on Economic Strategies
Market Stats Point to Election Honeymoon