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. 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.

Fuel Prices

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

John McCain: Endorses offshore drilling as a way to reduce the country's dependence on foreign oil. The Arizona senator also wants to institute a $5,000 tax credit to consumers who buy a zero-carbon-emission car and smaller tax credits for those who buy cars with low carbon emissions.

Barack Obama: Suggests tapping into a limited amount of oil from the country's Strategic Petroleum Reserve. (He may consider offshore drilling as well.) Also, proposes energy rebate checks of $1,000 per year to middle-income families to help pay for home energy or fuel costs. And, he proposes a $7,000 tax credit for consumers who buy fuel-efficient cars.

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

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

McCain: In an effort to incite competition among insurance companies and medical providers, McCain wants to shift the responsibility away from employers and into individuals' hands. Under McCain's plan, almost everyone will receive a refundable tax credit ($2,500 for individuals and $5,000 for families per year) to use toward private insurance or an employer-sponsored plan. In addition, McCain plans to work with state governors to offer coverage to those with low incomes or who've been denied health insurance.

Obama: As part of his universal-health-care proposal, private insurance will still exist, and a public system, subsidized by the government, would emerge. Companies (excluding small businesses) that don't contribute to the cost of their employees' health coverage will be required to allocate a percentage of their payroll toward the national health plan. If a person doesn't qualify for Medicaid, but needs financial assistance, they'll receive an income-related federal subsidy to buy into a public or private plan.

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.

Housing Crisis

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.

McCain: His "HOME Plan" would help borrowers who can't keep up with mortgage payments trade their mortgage or are facing a rate reset for one that reflects the home's current market value. There are several eligibility requirements, however. Among them, borrowers will need to prove their creditworthiness at the time they took out the mortgage and meet the terms of a new, 30-year fixed-rate mortgage.

Obama: Proposes a 10% universal mortgage credit to homeowners who don't itemize tax relief. The credit, which will amount to roughly $500, will be doled out to an estimated 10 million homeowners, most of whom earn less than $50,000 per year. For those facing bankruptcy, Obama wants to empower judges to modify their mortgage payments so they can afford to hold onto their home.

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"