Clinton, Obama seeing eye to eye on the economy

ELIZABETH CITY, N.C.

Tanaya Ewell opened Simply Divine Fabrics & Things in downtown nearly a year ago. Business has been slower than she'd like, though Ewell is getting by.

She'll vote for Sen. Hillary Clinton of New York in the state's primary Tuesday. "She's more for the working woman," Ewell said.

"As small business people, we're really suffering here," she continued. "She has a really good grasp of that."

Melissa Draper, a homemaker, moved with her husband to Elizabeth City from Williamsburg two months ago. She's seen the price of mushrooms jump 20 cents and a carton of milk soar by a dollar and a half in the past few months.

A lifelong Republican, Draper said she wants "a strong change in the White House and the country." She's for Sen. Barack Obama of Illinois on Tuesday.

Obama, she said, won't reward companies that move jobs overseas. "It would be a good thing to keep business here and give jobs to Americans."

With national polls showing the stuttering economy eclipsing the Iraq war as the top concern, voters in northeastern North Carolina can point to stances affirming how their candidate will be best to right the country's finances. Still, more than a dozen interviews late last month in Moyock and Elizabeth City suggest that the economy doesn't loom large as a factor in deciding which Democrat to support.

On Monday, the Democrats engaged in a rare economic tussle while campaigning in North Carolina. Siding with presumptive Republican nominee Sen. John McCain of Arizona, Clinton called for a temporary suspension of the federal gas tax, which Obama discounted as virtually useless.

Mostly, though, the economic distinctions between the Democrats are "pretty trivial," said Olivier Coibion, assistant professor of economics at the College of William and Mary. Aside from health care - where Clinton, unlike Obama, would provide insurance for all Americans - "there are really few differences in terms of overall goals."

Clinton would pump significantly more money - $30 billion versus Obama's $10 billion - in a fund to bail out struggling homeowners. Obama would throw in a few more tax breaks, such as the elimination of income taxes for senior citizens who make less than $50,000 a year.

But they embrace strikingly similar philosophies: repealing President Bush's tax cuts for the upper brackets, raising the capital gains tax, promising no new taxes for middle- and lower-income people, championing unions and job retraining, deploring benefits for companies that outsource jobs.

So to many northeastern North Carolina voters, it comes down to their perception of each candidate's leadership and toughness.

Marvenia Wills of Elizabeth City leans toward Obama because "he seems more sincere about what he's saying. He's trying to be honest and open."

Underlying Ewell's support of Clinton is her belief that "she has the better chance of taking McCain." Clinton, she said, is used to being a fighter. "I've seen Obama stumble when they pick at him," Ewell said.

Lunching recently at the Southland convenience store in Moyock, N.C., down the block from the state line with Virginia, three women groused less about what the candidates were saying than about what they weren't saying.

"It really annoys me that they're not talking about the economy," said Janet Newell, who works as a driver. She cut off her home phone service a few months ago to reduce costs. "I haven't heard them say anything that we need to know."

That's because "you really have to go into the details for them to draw a difference," Coibion said. And "going through their economic plans in excruciating detail does not make for a very exciting speech."

In Elizabeth City, the unemployment rate for February, the latest figure available, was 6.0 percent. This compares with 5.8 percent in January and 5.2 percent in February 2007.

When Betty Meggs shops in Elizabeth City, her hometown, she can sense the difference from a few months ago.

"When you go to a department store now or a Wal-Mart or a grocery store, you don't see people piling up their carts with as much," said Meggs, a retired teacher and member of City Council. "Even for myself, sometimes I'll think, 'Do I really need this? Is this something that can wait for later?' "

Meggs, a former chairwoman of the Pasquotank County Democrats, backs Clinton. "Instead of sending more jobs overseas, she would lean more toward jobs staying at home," Meggs said.

Meggs' top reason for supporting Clinton, though, is "her experience, her having been there with all of the ones that make the decisions."

Sabrina Hoffler, a case manager in Elizabeth City who has foresworn weekend visits to Chesapeake to save money, is for Obama. Like Meggs, her rationale doesn't much deal with fiscal policy.

"I don't know about all that," she said, "but I think he really has something to say. It's about change."

Analysts expect the references to the economy and its import will expand before the general election, when Clinton or Obama faces McCain. McCain has taken a far less interventionist approach to the economy, though he vowed to maintain Bush's tax cuts and freeze the gas tax.

He also is likely to maintain a longer military presence in Iraq, which has deep financial implications, said Ross Eisenbrey, vice president of the Economic Policy Institute, a Washington think tank.

"If they're really going to withdraw from Iraq as they say they will," Eisenbrey said of the Democrats, "there ought to be a peace dividend from their proposals." That, he said, could reach $100 billion a year.

But it also could pose bad news for Hampton Roads, said Old Dominion University economist Jim Koch. "Getting out of Iraq could be slow," he said, "but is likely to be accompanied by lower rates of expenditure for defense and defense-related goods and services."

One more thing about the candidates and the economy: "All three have made proposals that cost a lot of money and don't have any means of paying for them," said Roberton Williams, principal research associate of the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution in Washington.

The tax center has calculated that McCain's package would cost $5.7 trillion over a decade, he said. The Democrats' proposals are too undefined to make similar analyses, but they too would end up in the red, Williams predicted.

The gas-tax exchange last week opened an unusual divide between the Democrats on economic policy.

Clinton allied herself with McCain in endorsing a suspension of the 18-cents-per-gallon gas tax, saying, "I understand the American people need some relief." Unlike McCain, she would levy a tax on oil company profits to recoup lost revenue.

Obama countered that the tax amounts to "about 5 percent of your gas bill" and that the suspension would be canceled out by higher prices.

Williams of the Tax Policy Center also doubted it would be of much help to consumers. "The odds are really good that it would be very ineffective at the retail level," he said. "Prices will end up at the same place because people will pay whatever they're willing to pay to travel" during the summer.

Another economic difference between the candidates involves their solutions to the subprime housing crisis.

Clinton has proposed a $30 billion foreclosure fund to help homeowners on the verge of losing their homes. She also has promoted a 90-day moratorium on foreclosures and a five-year rate freeze on adjustable mortgages.

Obama would provide $10 billion in foreclosure help - part of a $30 billion stimulus plan. But he does not support the moratorium or rate freeze.

Clinton has taken "a bolder, more interventionist attitude," said Eisenbrey of the Economic Policy Institute. "If I had one of those mortgages, I would say, 'Thank God.' " But to ODU's Koch, Obama's is the preferable approach.

Clinton's plan, he said, will be too late and might hurt the economy more than it helps. "Sometimes," Koch said, "it is better to take tough medicine than to create a situation in which decision makers learn that their bad decisions will be rescued."

Other differences:

- Obama would raise the capital gains rate to 28 percent; Bush and Congress cut it from 20 percent to 15 percent. Clinton said she would return it to 20 percent.

- Both have spoken about the need for job retraining, but Clinton has vowed $12.5 billion over five years to help displaced workers.

- Obama has identified more tax breaks for the less wealthy, including dropping income taxes for senior citizens who earn less than $50,000 a year and offering a $500 credit to help offset the payroll tax for some workers.

Clinton and Obama "are pretty similar on the core issues," said Carol Pretlow, associate professor of international politics at Norfolk State University. She and Eisenbrey predict the economy will play a larger role in November, as the contrast sharpens between the Democratic nominee and McCain.

"It should help the party that's not in power," Eisenbrey said. "It requires them persuading the public that McCain's positions are really Bush's positions."

No matter who wins, don't expect a platform to miraculously morph into policy, particularly with a closely divided Congress, economists warned.

"Typically," said Coibion, the W&M professor, "there's a pretty substantial difference between what a candidate proposes and what is passed at the end of day." However, he noted, "the Bush tax cuts were extremely close to what he proposed when he was first campaigning."

Philip Walzer, (757) 222-3864, phil.walzer@pilotonline.com