Brand New View

The 100 Year Winter

Many years ago I owned a boutique hotel company. It included a resort located in a mountainous area known to get light dustings of snow in the winter, but it was rare that winters were severe. Except in our first year of ownership. A few months after acquiring the resort we confronted a '100 Year Winter', which meant it was the type of winter one sees only every 100 years or so. The normal light dusting of snow turned into many feet of the ice cold flakes and the rivers that traversed the property froze. The permafrost layer, normally 10-12 inches in the ground, penetrated nearly 3 feet, causing plumbing pipes buried all over the resort to burst. As temperatures began to warm, the ice in the rivers broke apart, creating small icebergs that crashed into guest rooms adjacent to the waterways. The subsequent cash cushion we had, equivalent to running the company for 3-4 years, was whittled to virtually nothing as we used the cash to make massive and significant operational repairs. Interestingly, our insurance policy did not cover "Acts of God" (such a policy would have prohibitively expensive), so we had to use our cash. Fortunately, we had an emergency plan in place that enabled us to ultimately weather this storm, and our subsequent Spring and Summer seasons were exceptionally profitable, enabling us to return to a strong cash position. It included working with suppliers and banks to secure unusually favorable terms (terms that we would ultimately pay back once our crisis was past and our financial position became healthier). To do this we had to describe how we would repair the damage caused by this unforeseen storm and protect the resort from future such occurrences. Additionally, we had the sympathy of our loyal guests who actually increased their usage following the 100 Year Winter because they believed that our resort was unique and they wanted it to survive so that they could enjoy it for years to come. This loyalty came about from the hard work of the staff, each of whom had fostered a terrific reputation for taking great care of our guests so that their visits were positive and memorable.

Today the US economy is facing a 100 Year Winter. The insurer in this case is the US government and, more specifically, Congress, and the cash cushion is the US taxpayer. Unfortunately, the US government is currently acting like my hotel company's insurer...unwilling to vote for protection due to the acts of 'Gods' (those in the financial system whose credit swap products and similar financial instruments facilitated the current crisis, although years of anti-regulatory efforts from the US Congress inspired the current financial debacle). Whether or not one believes that the banks and Wall Street should be rescued is immaterial because there is a larger issue at stake: regaining the trust of citizens (the equivalent of my loyal guests) and returning the US economy to a position of strength. Congressional 'leaders' should be appalled by their own lack of leadership in dealing with the $700 billion rescue plan, and the taxpayer is paying attention. As is the rest of the world. My resort's rescue plan was not perfect, but it was better than the alternative. The US Congress needs to demonstrate leadership at this critical time by passing a plan that helps regain the confidence of citizens, businesses, and even other countries whose own economic health depends on a healthy US economy. For now, however, Congress is keen on assigning blame rather than solving the problem. Where do Obama and McCain stand on this financial issue? Obama has been clear that what protects Wall Street must also protect main street. He has also stated that he and McCain need to be careful how they insert themselves into this debate since Presidential politics may unnecessarily hinder progress on approving the final rescue plan. McCain 'suspended' his campaign last week to deal with the crisis. He said at the time that he would not debate last Friday night until a plan had been passed. By Friday evening he was debating, but no plan had been passed. After the failed Congressional vote, many members of Congress said that McCain's efforts were either irrelevant or even unhelpful. Of course, there were a few hard-core Republicans that said he displayed great leadership. But where was his leadership when members of his own party rejected the plan? Interestingly, John McCain said we should stop pointing fingers and focus on finding a solution. Of course, he said this immediately after he blamed Barack Obama for not doing enough to pass the plan. That irony alone explains the state of US politicians today.

Suspend the Histrionics

Both presidential candidates, indeed most presidential candidates in any election, are prone to excessive theatricality in their efforts to convey authenticity. The latest is McCain's call to suspend Friday's presidential debate so that he can return to Washington to help resolve the current impasse over the proposed $700 billion dollar financial markets bail-out proposed by the Treasury. On the surface, this appears to be the considered decision of a seasoned leader who is focused on solving a long-term problem, forsaking his presidential ambitions in the process. But dig just below the surface and one should question what added benefit will come from McCain's proposed participation with their congressional colleagues on a Friday night (and, presumably, Obama's, should McCain's ploy box Obama in...). Having McCain and Obama suspend their campaigns injects presidential politics directly into the economic crisis and could hinder the ability of congress to take the best possible action on behalf of the economy. I do agree that both candidates need to describe their economic plans in greater detail in light of this current crisis (Obama has done this far better than John 'the economy's fundamentals are strong'/'we are in a crisis' McCain).  But McCain looks cynical yet again. He says his motives are genuine and he is doing this because the economic crisis is more important than the presidential campaign, but if that is the case why then is McCain still speaking at the Clinton Global Initiative conference in New York on Thursday? Wouldn't his time be better spent working alongside his senate colleagues at this very critical stage in the bailout plan's congressional discussions? What is unique about the timing of Friday evening that makes it important for McCain to participate then, as opposed to now? The answer, of course, is the debate is scheduled for Friday evening. McCain's poll numbers are worsening and Obama is seen by the majority of Americans as being better able to address economic concerns. While Friday's debate is slated to focus on international affairs, it is inevitable that the domestic economy will work its way into the debate, which is not what McCain wants right now when his poll numbers are declining. He does not want to remind voters that he so recently declared the economy 'strong', so instead he is attempting to display leadership. But it looks more like distress and the patented McCain knee-jerk reaction that can lead to bad decisions as a president.

No Need for Map

Just a quick post today. McCain has said and done many curious things during his presidential campaign. Among those, here are just a few:

• Selected the laughably ill-equipped Sarah "I can see Russia from my house" Palin
• His infamous, oft-repeated statement that the US's 'economic fundamentals are strong'
• His regulatory 180 degree direction changes (he has been both for and against government regulation of the financial markets this week; and he has been both for and against the AIG bailout this week)
• His contention that the US will be 'in Iraq for 100 years' just as US policy began to shift toward increases in troop withdrawals
• His contradictory position as "inside Washington for 26 years as an outsider"

Most glaring are his comments about economics. Read Newsweek's Jonathan Alter's article 'McCain and the Zigzag Express' (http://www.newsweek.com/id/159883) to read a summary of McCain's economic comments just in the past week. When one does not know where to go or how to get there, any map will do.

Finger Pointing or Problem Solving?

Yesterday I discussed McCain's numerous assertions that the 'fundamentals of our economy are strong', including his most recent use of this statement 3 days ago. At the same time Lehman Brothers had just declared bankruptcy, Merrill Lynch was acquired by Bank of America for $50 billion in stock (virtually a fire sale price), and AIG was dangerously close to collapse. The next day, he said we are in a crisis. I went on to say that Obama needs to be more forceful with his economic message, including establishing an overall economic strategy under which his various programs (energy, global warming, healthcare, social security, taxes, education, domestic infrastructure investment, trade...) would be housed. Obama's economic message has not resonated with the public in recent weeks, despite the fact that he has had a detailed description of his economic policy on his website since early last Spring and has discussed various components of it throughout the Democratic primaries and, more recently, the Presidential race. With the barrage of coverage of Sarah Palin, little else has been discussed by the media since the conventions ended, further pushing Obama's economic plans to the back, which is why Obama needs to recapture the public's attention and take command of the conversational agenda.

Yesterday, he began to make a breakthrough. The Obama campaign ran a new ad called "Plan for Change" showing him speaking directly to the camera and succinctly describing his economic proposals (see http://www.youtube.com/watch?v=ONM7148cTyc). These proposals have existed for several months, but the disastrous situation in the financial markets enabled the 'perfect storm' of conditions to emerge, refocusing the public's attention back on the economy.  Andrew Romano of Newsweek writes a great blog called 'Stumper'. On September 17 Romano thoughtfully discussed Obama's economic plans and why they are far more detailed than anything offered by McCain (see the blog entry entitled "On Wall Street, Obama's Wonk vs. McCain's Words" http://www.blog.newsweek.com/blogs/stumper/), despite McCain's claims to the contrary. In addressing questions from journalists about McCain's lack of detail in his economic plans, his main economic advisor, Douglas Holtz Eakin, said "I don't think it's, at this moment, imperative to write down exactly what the plan has to be,". So if it isn't important for McCain to be precise, why is he demanding such precision from Obama? The answer, of course, is politics. McCain himself admitted last Spring that his knowledge of economics is weak, and he went on to describe his admiration for Alan Greenspan's economic know-how. McCain even said he was reading Greenspan's book "The Age of Turbulence" to improve his understanding of economics. It appears he may not have finished the book because Greenspan very recently said that McCain's tax cuts are not economically viable because they are not accompanied by corresponding spending cuts (this is a familiar comment Greenspan has made repeatedly throughout the years with respect to tax cut proposals...).

In business, success is associated with those who solve problems, while failure follows those who point fingers. Obama has a clear and detailed economic plan and, as of yesterday, is now starting to find better ways to articulate it. Furthermore, he is focusing on solving problems. McCain's solution? Well, he doesn't appear to have one, or at least a clear one. Instead, he pointed fingers by saying Obama "offers nothing but talk". When one has nothing to offer, then that leaves only one strategy: disparage the other guy's proposals. Unfortunately, that just makes McCain look weak and uninformed...two more qualities we don't want in a President.

About Those Fundamentals...

As the November 4 US presidential election draws ever nearer, both Obama and McCain continue the long-standing tradition of presidential candidates engaging in 'vague-speak'. Essentially, they say enough to make the headlines, and not much else. My guess is that John McCain wishes one headline had not been repeated: "The fundamentals of our economy are strong" (as he said 2 days ago in the midst of the financial news about Lehman's bankruptcy, Merrill Lynch's fire sale to Bank of America, and AIG's downgrading and corresponding multi-billion dollar cash short-fall involving potentially trillions of dollars of international obligations). Unlike many vague presidential candidate statements, this one from McCain was clear as day and was not a one-time assertion, but one he has repeated at least 16 times in the past several months (see MSNBC's Chuck Todd's "FirstRead" http://firstread.msnbc.msn.com/archive/category/1207.aspx). While I am a believer in the power of positive thinking, it is hard to see how the current US economic news indicates a fundamentally sound economy. Granted, the US has a diverse economy that is still the largest and most productive in the world--and it is not going to disappear anytime soon. But the worst housing slump in decades, coupled with international loss of investor confidence, plus the ever-growing fiscal and trade deficits, suggests that the economy is not fundamentally strong. McCain tried to correct his statement by saying he meant that the American economy is based on the good work of sound American workers. Interesting, but insincere--and too late, as the damage had been done (even Alan Greenspan, who McCain often cites as an important guide for economic policy, says that McCain's economic plan and tax cut proposals are not supportable).

The Obama campaign jumped on this quickly to show how out of touch McCain is. A few hours later McCain backpedaled further by saying the US was in a crisis and that if he were to become president, greed on Wall Street would stop, and he went on to suggest stronger regulation and the formation of a commission to study the financial crisis. So in the span of 24 hours, McCain's perspective on the US economy went from being fundamentally sound to being in a crisis--that must have set some sort of land-speed record for 180 degree political changes of direction. Interestingly, McCain's new love for regulation is at odds with his efforts the past 10 years to de-regulate, starting with his full-support in 1999 for the Gramm-Leach-Bliley Act, which removed the regulatory barriers that kept commercial banks from getting involved in investment banking activities and underwriting insurance products  {those barriers were enacted by the Glass-Steagall Act of 1933 in an effort to correct the banking conditions (when banks were allowed to invest in the stock market, among other non-banking activities) that led to the 1929 Wall Street crash and ensuing Great Depression. The Glass-Steagall Act created numerous competitive problems in its own right and the 1999 Gramm-Leach-Bliley Act was hailed as a long-overdue regulatory correction that President Clinton signed into law. Unfortunately, it appears to have enabled the conditions that led to the recent financial market woes.}.  There is nothing wrong with a candidate changing his or her position...this happens frequently. But the disturbing aspect of it in McCain's case is the suddenness with which he discovered his love for regulation--basically since 2 days ago.

As with his selection of Sarah Palin, his newfound regulatory love affair appears to have been a cynical and opportunistic choice--an economic one-night stand, if you will. It may look good for headlines in the short-term, but I am worried about a president who might make other knee-jerk reactions during future times of crisis.

McCain's recent changes (is that what he means by bringing change to Washington?) does not automatically pave a clearer path for Obama. While I continue to support Obama, he has got to step up with a more compelling description of his economic plan that goes beyond the basic utterances he has made to date (middle class tax cuts, strengthening social security, improved federal regulation of Wall Street). While these are important suggestions (and are more consistent with his own previous comments in recent years, unlike McCain), they need to be positioned in the context of a large economic plan that sets bold strategic goals, and not just a series of policy tactics designed to ward off temporary consumer discomfort (or, worse, a series of opportunistic pronouncements...). John F. Kennedy's moon speech established the standard for modern presidential 'bold goal setting'. Obama offered something similar when he proposed his 10 year $150 billion investment in alternative energy technologies during his acceptance speech at the Democratic National Convention. He now needs do the same for his economic plan because it will ultimately be the house in which all of his other policy plans will reside (alternative energy technologies, health care and education reform, trade, housing, taxes, social programs...). A strong economy will give the US a stable domestic environment and help us regain a more credible international position. If Obama articulates a compelling economic strategy, as he is capable of doing, then he will once again dominate the public's conversational agenda and leave McCain scrambling around reactively with tactical responses.

Loss Leader May Result in Lost Leader

Businesses over time have often used a marketing technique called the 'loss leader'--discounting the price of a selected product below profitable levels in the hope that this promotion will bring in enough buyers who might find the company's other products more attractive. It is a risky strategy because it can backfire when customers, enticed by the loss leader, arrive only to find it is no longer available or that the company's other offerings are not as attractive as imagined.

Sarah Palin appears to be John McCain's loss leader. She has been successful the past 2 weeks in drawing attention to the McCain campaign and in improving his polling position vis-a-vis Barack Obama. The presidential race is currently a dead heat, whereas a few weeks back Obama had a 5-6 point lead. Sarah is John McCain's promotional strategy and I still contend she is a cynical selection as his running mate. But cynical or not, she is the center of media attention for now. She has become for McCain what McCain so recently accused Obama of being: a celebrity.

But what does this loss leader mean for you and me? Let's look at one stark reality: if McCain is elected and is either incapacitated or dies in office (a prospect no one wishes for any President, but his age is an issue for some...), then she becomes our President. Judging from her ABCNews interview with Charles Gibson, one has to worry. After fumbling the Bush Doctrine question because she clearly did not know what it was, she reaffirmed her belief that Bush Administration policies will be continued in a McCain administration. No, she did not do this by saying 'we will continue the Bush agenda'. But her answers departed little, if at all, from policies we have seen the past 8 years. Her response about Russia, Georgia and NATO was perhaps the most disturbing because it demonstrated a lack of understanding and/or tolerance about the skillful use of diplomacy--a skill that the Bush Administration has failed to use repeatedly until, sadly, only the past several months (witness the recent diplomatic efforts with North Korea--and even this is now at risk of unraveling). The Bush belief in speaking loudly, unilaterally, and simultaneously wielding our military might to impose our will has led to an intractable position in Iraq, a return of the Taliban in Afghanistan, and a significant loss of international goodwill. To paraphrase Bill Clinton's remarks at the Democratic convention, we have lost the power of our example. This loss of soft power has dramatically weakened our international standing, which undoubtedly influenced Russia to believe that their invasion of Georgia would yield little in the way of a credible American response. After all, how can we respond effectively to the Georgia crisis when we are struggling mightily with the Iraq and Afghanistan wars, fighting a losing battle over our battered international reputation, and dealing with a sinking US economy?  Apparently, the answer is Sarah Palin because, well, she can "see Russia from Alaska" (which apparently gives her keen insight into global politics--that is an impressive view, to say the least) and she understands the plight of the average American because she was once a small town mayor (never mind that the issues of Wasilla, Alaska are far simpler than the challenges people face living in the complex communities and cultures our largest cities).

Once we as a nation get past our infatuation with Sarah Palin, we have to get real and realize that the Oval office is no place for someone who has little idea what the Vice President does or what the Bush Doctrine is. Right now she is a loss leader, attracting interest to the McCain campaign. But in the unlikely, but possible, chance she becomes President, will she be able to deftly handle the onerous demands? Unless her political, economic, and international affairs education and experience is rapidly accelerated, she will likely go from loss leader to lost leader. And that would be the worst possible outcome for the U.S.

Below the Surface

Now that the two conventions are over, the actual presidential race begins and the candidates have 8 weeks to convince voters of their worthiness. Both conventions were interesting, primarily as media spectacles rather than forums for recommendations of substantive policies and proposals. The media has been captivated for months with Obama's magical eloquence and sometimes cruel with McCain's pedestrian prose and awkward public presence. The Republican National Committee and McCain's election committee, quick to spin Obama as an insubstantial celebrity lacking experience, have not been convincing in portraying McCain as distinct from the Bush administration, despite McCain's deserved (but no longer current) reputation as a maverick. Opportunity squandered? Perhaps. But Obama has had difficulty connecting to the average person and explaining what actual changes his presidency, should he win, would produce. So what did the conventions accomplish? The Democrats navigated a minefield of potentially debilitating internal squabbles, mostly between Hillary Clinton's camp and Obama's, and presented a united front, with ringing endorsements of Barack Obama. His acceptance speech hinted at deeper policy prescriptions, most notably to me his proposed $150 billion-10 year investment in alternative technologies. He did what he does best...articulated his vision with inspiration, weaving in personal stories that revealed far more about his background than he has  in prior speeches. His family story is especially noteworthy if for no other reason than it reduced (but did not eliminate) criticism that he is an elitist who doesn't understand the average American. Simply put, he gave a leader's speech and sounded convincingly like, well, a leader. Did he overcome doubts about his short resume? No. There is no denying that he does not have McCain's experience. And no amount of speech-making will fix that. So voters are going to have to look at his policy proposals to understand what an Obama presidency is likely to do in the coming years. However, a leader is more than his or her policy proposals. They have to implement and to do this requires a capable team, the ability to rally people around the main ideas, and the tenacity to see the proposals through.

McCain's convention challenge was different--he had to find a way to convince the public that he is different than Bush and that his three decades in Washington DC are the kind of experiences voters want in a President. On this score, McCain did ok, but not great. By most media accounts, his convention speech was flat and uninspiring. He appeared stilted, smiling at odd times as if the tele-prompter said 'smile now' to remind him to look natural. He was interrupted by hecklers, harming the flow of his speech. Despite these challenges, voters again need to look at his proposals to see if he is the leader they want.  McCain has been a maverick for more years than he has been a supporter of the party line. Unfortunately, he has been the latter far more frequently in recent years, which is the record Democrats are likely to focus on in the coming 8 weeks.

What about their respective running mates? Obama's Vice President, Joe Biden, is a Washington DC insider, like McCain. He is respected, like McCain. And he has excellent foreign policy experience as head of the Senate Foreign Relations committee (witness his exemplary work in the 1990s Balkins crisis). Biden comes from an average, middle class background and is from the Northeast of the US--one of the areas of the US where job loss and 'rust-belt' concerns are dominant issues. Biden is also 65 years old, so he helps Obama's campaign relate a bit better to older Americans. However, Biden also has a reputation for being long-winded, meandering, and occasionally reckless with his comments. Plus, he was discovered to have plagiarized British Labor politician Neil Kinnock's speech in his own speech when he was a presidential candidate in the 1988 democratic primaries. This ended his presidential run and was a significant public embarrassment to him at the time. Like many US politicians that err, Biden rehabilitated his image with his Senatorial work ever since and the plagiarism incident has virtually disappeared as an issue. Obama has been generally praised for selecting a Vice President whose experience fills in weaknesses that Obama had. As business leaders know, the best CEOs often populate their teams with people better than they, who strengthen the weaknesses in their own skills, creating a better leadership TEAM overall. The word team is important here because in the event the leader is incapacitated, having a competent successor is vital to maintaining momentum and instilling confidence in the public that the organization (in this case, the US government) will continue to function properly. Biden strengthen's Obama's foreign policy credentials and helps the Obama campaign connect more directly with the average middle class voter. If Vice Presidential choices are indicative of Presidential leadership and decision making ability (such narrow indicators are dangerous--nevertheless, we do gain some insight into presidential candidate), then Obama performed well.

Sarah Palin, McCain's Vice Presidential choice, is the Governor of Alaska. Her selection was a complete surprise since few outside of Alaska had ever heard of her. However, the selection revealed a bit about McCain--his maverick side effectively came through loud and clear. She has been Governor for less than two years. Prior to this she was Mayor of Wasilla, Alaska, a town of 9,000. Her family, tout the Republicans, is a mirror of the average American family, with 5 kids spread over 20+ years and a pregnant teenager. She hunts moose, believes in God and that major issues like the Iraq war are "God's will", and favors drilling in the Arctic Wildlife Refuge (McCain does not want to drill in the Arctic...). Of course, hers is not the typical American family (the average family has just over 2 children, does not hunt for moose, and prefers separation of church and state as stipulated in the US Constitution). She delivered a stinging speech that received almost as much media attention as Obama's. Her comments were sometimes sarcastic, occasionally funny, delivered cleverly, and, according to analysts from around the world, lacking in substance. In effect, she came out swinging against Obama, yet offered nothing to counter the perception that the Republicans lack fresh ideas on how to 'change' the direction of the country.  Some argued that she helps McCain reach out to the hard-core, right-wing Republican base, enabling McCain to move more toward the center. That may be true, although I am not convinced that there is a large voting group of moose-hunting evangelists following God's orders to fight in Iraq seeking Vice Presidential candidates that share their narrow interests. It reminds me of a sign I once saw outside a business in a small town that said "Fresh Sandwiches and Chainsaw Repair"--yes, that is certainly a niche market, but how many people really want that?  (Sarah Palin is not the only cynic out there...). Pandering to the extreme elements of the party while also trying to straddle the political center is harder to do in practice than it appears. In recent years, US presidential candidates have typically moved more toward the center and away from the more extreme elements of their parties, for very practical reasons (i.e. why alienate half the electorate with extreme prescriptions?). While attempting to regain his maverick mantle, McCain also raised a new issue--will he make incautious or even reckless decisions as president?  As I read more about Palin, I find her fascinating, but her choice strikes me as cynical on McCain's part, which is disappointing. The next 8 weeks will show us how effective Sarah Palin is in understanding foreign policy, daunting domestic issues of inner-city challenges, complex international trade and, perhaps even more importantly, what a Vice President does (witness her remarks from just a few weeks ago when she stated she did not know what a US Vice President does--while it sounds cute and pokes fun at the VP role in the US government, it also appears naive and sends an unfortunate signal internationally that Americans are comfortable electing people unfamiliar with their own federal government).

Despite my support for Obama the past few months, I do have my doubts--I want to see and hear more specifics and have him demonstrate how he would lead. I was a supporter of McCain's presidential efforts in 2000 because at that time he was a more believable maverick. Now he just looks opportunistic. So on balance, I still heavily favor Obama. His ticket is stronger overall and his policy proposals appear more in tune with global (not just US) needs today--and the US does live in a globalized world, so international issues and perceptions do matter... As an ex-pat, the US's international reputation has suffered tremendously under the Bush administration this past 8 years. Most Americans are aware of this only peripherally and since it is not a pressing day to day issue for them, they don't see it is central to the future influence the US needs to have in the world. However, as Bill Clinton said during his speech at the Democratic convention, the world is more impressed by the "power of our example than the example of our power". Our reckless military adventures and muscular, unilateral foreign policy approach has alienated people around the world and given license to other countries to test our mettle, knowing that that US cannot send its military everywhere to protect everyone. Just witness the recent Russian invasion of Georgia. In decades past, the soft power of credible US diplomatic skills coupled with the threat of US military power was often enough to influence other countries to tame their aggressive ways. This is no longer true and a McCain presidency does little to change this. Obama, on the other hand, represents real change, both symbolically and practically. He exudes the qualities that help make leaders successful (yes, clear, inspiring communication is important--as long as it has substance and the leader shows the capacity to build a leadership team with complementary strengths).

Of course, this is just my opinion and you have yours. To help focus the discussion on the issues, I have pasted the following comparison between Obama and McCain from the MSNBC website (you can visit this directly at http://www.msnbc.msn.com/id/26575403/...scroll to the bottom and look for the box that says 'Fact File--McCain and Obama On the Issues'). You can also visit each candidate's respective websites to learn more:
www.barackobama.com
www.johnmccain.com

 

fact file McCain and Obama on the issues

Choose a category on the left to see where the two candidates stand on a selection of issues as the fall campaigns begin.

Abortion McCain: Opposes abortion rights. Has voted for abortion restrictions permissible under Roe v. Wade, and now says he would seek to overturn that guarantee of abortion rights while being open to a running mate who supports abortion rights. Would not seek constitutional amendment to ban abortion. Obama: Favors abortion rights. Afghanistan McCain: Favors unspecified boost in U.S. forces. Obama: Would add about 7,000 troops to the U.S. force of 36,000, bringing the reinforcements from Iraq. Has threatened unilateral attack on high-value terrorist targets in Pakistan as they become exposed, "if Pakistan cannot or will not act" against them. Campaign finance McCain: The co-author of McCain-Feingold campaign finance law, he plans to run his general campaign with public money and within its spending limits. He has urged Obama to do the same. He applied for federal matching funds for primaries but later turned them down so he could spend more than the limits. Federal Election Commission belatedly approved his decision to bypass the primary funds, but rejected McCain's claim that he needed no such approval. McCain accepts campaign contributions from lobbyists. Obama: The presidential campaign's fundraising champion has brought in $390 million. He plans to raise private money for his general election, despite his proposal last year to accept public financing and its spending limits if the Republican nominee does, too. Obama refuses to accept money from federal lobbyists and has instructed the Democratic National Committee to do the same for its joint victory fund, an account that would benefit the nominee. Obama does accept money from state lobbyists and from family members of federal lobbyists. Cuba McCain: Ease restrictions on Cuba once U.S. is "confident that the transition to a free and open democracy is being made." Obama: Ease restrictions on family-related travel and on money Cuban-Americans want to send to their families in Cuba. Open to meeting new Cuban leader Raul Castro without preconditions. Ease trade embargo if Havana "begins opening Cuba to meaningful democratic change." Death penalty McCain: Has supported expansion of the federal death penalty and limits on appeals. Obama: Supports death penalty for crimes for which the "community is justified in expressing the full measure of its outrage." As Illinois lawmaker, wrote bill mandating videotaping of interrogations and confessions in capital cases and sought other changes in system that had produced wrongful convictions. Education McCain: Favors parental choice of schools, including vouchers for private schools when approved by local officials, and right of parents to choose home schooling. More money for community college education. Obama: Encourage but not require universal pre-kindergarten programs, expand teacher-mentoring programs and reward teachers with higher pay not tied to standardized test scores, in $18 billion plan to be paid for in part by delaying elements of moon and Mars missions. Change No Child Left Behind law "so that we're not just teaching to a test and Crowding out programs like art and music." Tax credit to pay up to $4,000 of college expenses for students who perform 100 hours of community service a year. Energy McCain: Favors increased offshore drilling and federal money to help build 45 nuclear power reactors by 2030. Opposes drilling in Arctic National Wildlife Refuge. Proposed suspending the 18-cent a gallon federal gasoline tax but idea got no traction. Global warming plan would increase energy costs. Obama: Now would consider limited increase in offshore drilling. Opposes drilling in Arctic reserve. Proposes windfall-profits tax on largest oil companies to pay for energy rebate of up to $1,000. Opposed suspension of the gas tax. Open to tapping the Strategic Petroleum Reserve for short-term relief from high energy costs. Global warming plan would increase energy costs. Gay marriage McCain: Opposes constitutional amendment to ban it. Says same-sex couples should be allowed to enter into legal agreements for insurance and similar benefits, and states should decide about marriage. Obama: Opposes constitutional amendment to ban it. Supports civil unions, says states should decide about marriage. Global warming McCain: Broke with President Bush on global warming. Led Senate effort to cap greenhouse gas emissions; favors tougher fuel efficiency standards. Favors plan that would see greenhouse gas emissions cut by 60 percent by 2050. Obama: Ten-year, $150 billion program to produce "climate friendly" energy supplies that he'd pay for with a carbon auction requiring businesses to bid competitively for the right to pollute and aimed at cutting greenhouse gas emissions 80 percent by 2050. Joined McCain in sponsoring earlier legislation that would set mandatory caps on greenhouse gas emissions. Supports tougher fuel-efficiency standards. Gun control McCain: Voted against ban on assault-type weapons but in favor of requiring background checks at gun shows. Voted to shield gun-makers and dealers from civil suits. "I believe the Second Amendment ought to be preserved — which means no gun control." Obama: Voted to leave gun-makers and dealers open to suit. Also, as Illinois state lawmaker, supported ban on all forms of semiautomatic weapons and tighter state restrictions generally on firearms. Health care McCain: $2,500 refundable tax credit for individuals, $5,000 for families, to make health insurance more affordable. No mandate for universal coverage. In gaining the tax credit, workers could not deduct the portion of their workplace health insurance paid by their employers. Obama: Mandatory coverage for children, no mandate for adults. Aim for universal coverage by requiring employers to share costs of insuring workers and by offering coverage similar to that in plan for federal employees. Says package would cost up to $65 billion a year after unspecified savings from making system more efficient. Raise taxes on wealthier families to pay the cost. Housing McCain: Open to helping homeowners facing foreclosure if they are "legitimate borrowers" and not speculators. Obama: Tax credit covering 10 percent of annual mortgage-interest payments for "struggling homeowners," scoring system for consumers to compare mortgages, a fund for mortgage-fraud victims, new penalties for mortgage fraud, aid to state and local governments stung by housing crisis, in $20 billion plan geared to "responsible homeowners." Immigration McCain: Sponsored 2006 bill that would have allowed illegal immigrants to stay in the U.S., work and apply to become legal residents after learning English, paying fines and back taxes and clearing a background check. Now says he would secure the border first. Supports border fence. Obama: Voted for 2006 bill offering legal status to illegal immigrants subject to conditions, including English proficiency and payment of back taxes and fines. Voted for border fence. Iran McCain: Favors tougher sanctions, opposes direct high-level talks with President Mahmoud Ahmadinejad. Obama: Initially said he would meet Ahmadinejad without preconditions, now says he's not sure "Ahmadinejad is the right person to meet with right now." But says direct diplomacy with Iranian leaders would give U.S. more credibility to press for tougher international sanctions. Says he would intensify diplomatic pressure on Tehran before Israel feels the need to take unilateral military action against Iranian nuclear facilities. Iraq McCain: Opposes scheduling a troop withdrawal, saying latest strategy is succeeding. Supported decision to go to war, but was early critic of the manner in which administration prosecuted it. Was key backer of the troop increase. Willing to have permanent U.S. peacekeeping forces in Iraq. Obama: Spoke against war at start, opposed troop increase. Voted against one major military spending bill in May 2007; otherwise voted in favor of money to support the war. Says his plan would complete withdrawal of combat troops in 16 months. Initially had said a timetable for completing withdrawal would be irresponsible without knowing what facts he'd face in office. Social Security McCain: "Nothing's off the table" when it comes to saving Social Security. Obama: Would raise payroll tax on wealthiest by applying it to portion of income over $250,000. Now, payroll tax is applied to income up to $102,000. Rules out raising the retirement age for benefits. Stem cell research McCain: Supports relaxing federal restrictions on financing of embryonic stem cell research. Obama: Supports relaxing federal restrictions on financing of embryonic stem cell research. Taxes McCain: Pledged not to raise taxes, then equivocated, saying nothing can be ruled out in negotiating compromises to keep Social Security solvent. Twice opposed Bush's tax cuts, at first because he said they were tilted to the wealthiest and again because of the unknown costs of Iraq war. Now says those tax cuts, expiring in 2010, should be permanent. Proposes cutting corporate tax rate to 25 percent. Promises balance budget in first term, says that is unlikely in his first year. Obama: Raise income taxes on wealthiest and their capital gains and dividends taxes. Raise corporate taxes. $80 billion in tax breaks mainly for poor workers and elderly, including tripling Earned Income Tax Credit for minimum-wage workers and higher credit for larger families. Eliminate tax-filing requirement for older workers making under $50,000. A mortgage-interest credit could be used by lower-income homeowners who do not take the mortgage-interest deduction because they do not itemize their taxes. Trade McCain: Free trade advocate. Obama: Seek to reopen North American Free Trade Agreement to strengthen enforcement of labor and environmental standards. In 2004 Senate campaign, called for "enforcing existing trade agreements," not amending them.

Source: Associated Press

Updated: 1:06 p.m. ET Aug. 27, 2008

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