2008 Presidential Race: Candidate Q&A

We ask the Republican and Democrat presidential contenders to detail their stands on issues that affect you.

September 1, 2008

The Republican and Democratic candidates for president share a belief in the private sector's ability to lift the economy back into growth mode. But their paths diverge on how the federal government should contribute to this goal.

For example, both Sen. John McCain and Sen. Barack Obama embrace the need to close the health insurance gap. Sen. Obama would take an aggressive approach by creating a national health insurance exchange; Sen. McCain favors providing a tax credit for households who purchase individual coverage.

To see where the candidates stand on issues vital to real estate practitioners, REALTOR® magazine went to the sources.

What’s the most important action the federal government can take to ease the mortgage crisis and prevent a recurrence?

Sen. Barack Obama: For the short term, the housing relief legislation [signed by Pres. George W. Bush July 30] authorizing the FHA to refinance the mortgages of struggling homeowners is the right approach. I’ve also called for the creation of a $10 billion foreclosure prevention fund that works in tandem with state, local, and community nonprofit efforts to help households facing foreclosure renegotiate with lenders or put their homes on the market. We also need to expand the mortgage revenue bond program to give state housing agencies $10 billion in new resources to help struggling homeowners. For the long term, the Stop Fraud Act that I introduced two years ago would create criminal penalties for mortgage professionals found guilty of fraud and increase funding for federal and state enforcement of antifraud programs. I also want to see a simplified, standardized metric for calculating the costs of a home mortgage, similar to the annual percentage rate used by banks to identify the effective interest rate a borrower ends up paying on a loan.

Sen. John McCain: First, we need to boost the economy to help borrowers in economically challenged states like Michigan. To this end, we need to keep tax rates low and increase business investment incentives while arming households with tools like middle-class tax cuts. Second, we need to help borrowers in fast-growth states forced into risky mortgages refinance into safe FHA financing through the housing relief bill. But it’s important that borrowers, not lenders, be the ones to initiate the restructuring process. That way, undeserving lenders can’t try to use the FHA as a dumping ground for all of the bad loans they made. We also need to crack down on unprofessional conduct among lenders and advance greater transparency about the risk of new mortgage securities that the market has developed. We also need to give the new national mortgage standards developed by banking regulators a chance to work.

What role should the federal government play in reducing gridlock and carbon emission and in promoting livable communities?

Sen. McCain: We need to work with cities to help them grow—and downsize—effectively. Cities that are losing population have an opportunity to downsize in a smart way by converting obsolete areas into green space that can increase the quality of life for the people there. For growing cities, it’s important not to stand in the way of local governments using federal community development block grants to grow in a sustainable way. That said, it’s clear that allocations of CBDGs and other federal grants should be made based on need rather than size, with rich cities getting less and struggling cities getting more.

Sen. Obama: Our long-term competitiveness depends on the development of new transportation networks that reflect our increasingly mobile society. That’s why a strengthened transportation system is a priority for me. We must renew the federal government’s commitment to high-speed rail and take steps at the front end of planning processes for many transportation options. For example, I support a measure by Sen. Tom Harkin (D-Iowa) to require states and metropolitan planning organizations to adopt policies that incentivize bicycle and pedestrian use of roads. I’ll double the federal Jobs Access and Reverse Commute program to ensure that additional federal public transportation dollars flow to the highest-need communities and that urban planning initiatives take this aspect of transportation policy into account.

Even though prices have been easing for the last two years, housing affordability remains a challenge for many people. What can the federal government do to improve this situation?

Sen. Obama: I’ve proposed a universal mortgage interest tax credit for families that aren’t benefiting from the mortgage interest deduction. They would get an average credit of $500 a year. And I worked to pass the bipartisan homeownership tax credit. That’s a strong incentive because it gives developers a credit to bridge the gap between the cost of building a house and a sale price that’s affordable to low- and moderate-income households.

Sen. McCain: Housing affordability is really a question of good-paying jobs and making sure wages aren’t eaten up by taxes and escalating costs like health insurance. If wage earners have to sink all their money into health care, they can’t save for a down payment or meet a monthly mortgage payment.

How should the federal government help millions of small-business owners and the self-employed obtain affordable health insurance?

Sen. McCain: The solution requires a two-pronged approach: First, lower the cost of health care by emphasizing prevention, early intervention, new treatment models, more competition in drug markets, expanded use of coordinated care, and reforms to payment systems. Then, improve insurance options by building on our existing employer-based coverage. I support a refundable tax credit of up to $5,000 per household to help offset its insurance costs. Families would use the credit to buy the coverage that works best for them and put any balance remaining into their own health savings accounts. We would also work with states to establish a guaranteed access plan for individuals who are otherwise unable to get insurance.

Sen. Obama: Let’s build on our existing private health care system by allowing small employers and independent contractors to participate in a “national health insurance exchange” so they can purchase affordable health coverage similar to the plans available to federal employees. Individuals who need help paying for premiums will receive tax credits to ensure they can afford coverage. Employers that do not make a meaningful contribution to the cost of quality health coverage for their employees will be required to contribute a percentage of payroll toward the costs of the national plan. Small employers that meet certain revenue thresholds will be exempt. The plan will reimburse employer health plans for a portion of the catastrophic costs they incur above a threshold if they guarantee these savings are used to reduce workers’ premiums.

What’s the federal government’s role in promoting energy efficiency in commercial properties?

Sen. Obama: I’ll establish a goal of making all new buildings carbon-neutral by 2030 and work to improve new building efficiency by 50 percent and existing building efficiency by 25 percent over the next decade. To achieve that, I’ll seek to make federal buildings zero-emission by 2025, starting with a goal to make them 40 percent more efficient in five years. I’ll create a competitive grant program to recognize states and localities that take the first steps in implementing new building codes that prioritize energy efficiency. I’ll also seek to provide a federal match for states with public benefits funds that support energy-efficiency retrofits of existing buildings. In addition, I’ll invest in green-collar job training programs and create a “Green Jobs Corps” to connect disadvantaged youth with job skills in high-growth clean-energy industries.

Sen. McCain: Government can encourage developers to make buildings more efficient with incentives for using what’s already available—such as energy-efficient lightbulbs. But there shouldn’t be a mandate. It’s appropriate to use the White House as a bully pulpit on green building, motivating the private sector to migrate to a smarter way of doing things. What we don’t want to do is go into a building and start measuring its carbon footprint.

What IRS code changes are needed to spur growth while ensuring tax burdens are spread evenly?

Sen. McCain: We have to keep tax rates low because that’s what spurs business expansion. I would reduce the corporate tax rate to 25 percent from 35 percent, keep taxes on dividends and capital gains low, and allow for immediate deductibility of business equipment. We also should scale back the estate tax and eliminate the alternative minimum tax. The mortgage interest deduction should be left alone; it’s embedded in the U.S. tax code.

Sen. Obama: We need to reform our tax code so that it’s simple and fair and advances opportunity rather than loopholes for special interests. I’ll end tax breaks for companies that ship jobs overseas and reward companies that create good jobs here. I’ll encourage innovation and entrepreneurship by extending the research and development and renewable energy production tax credits and eliminating capital gains taxes for small and start-up businesses. And I’ll provide broad middle class tax relief—a “Making Work Pay” $500 tax credit, among other things—to help working families struggling with stagnant wages and skyrocketing energy and health costs.

Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.