-- A typical family of four "would see an average of $5,138 more in disposable income under McCain plans compared with $3,631 more under Obama's."
A strategic weakness in Obama's income-redistribution plan stems from his decision to give low- to middle-income taxpayers a refundable tax credit, instead of cutting their tax rates, said Heritage analyst William Beach, who led the study.
"Because Sen. Obama relies largely on tax credits to achieve his redistribution, his plan does not find a large economic benefit from lower tax rates, nor a more efficient tax structure," Beach wrote.
"This lower economic performance stems in large part from the modest decreases in marginal tax rates on taxpayers earning less than $250,000 and increases in those rates above that level," he said.
Obama has sold his plan as something it is not: a plan that will grow the economy when, in fact, it would grow the government at the economy's expense.
At the core of his plan is the belief that renewed growth depends first and foremost on income transfers to low- and middle-income people and a mountain of "infrastructure" spending on roads, bridges and other public-works projects, and grants to state governments to spend as they please.
McCain's plan is rooted in the belief that economic growth, job creation and higher incomes can only be fueled by lower tax rates to stimulate business expansion, entrepreneurial risk-taking and capital investment that will grow the economy, not the government.
Even Democrats, some of whom are now advising Obama, have raised questions about his pump-priming infrastructure spending and his rigid opposition to McCain's proposal to cut the 35 percent corporate income tax.
"It's going to be very hard to compete for jobs if we keep high corporate tax rates," David Rothkopf, a trade official in the Clinton administration, told the Washington Post last week.
Notably, two other economists in Clinton's administration wrote earlier this year that spending on infrastructure, as Obama proposes, is among the "less effective options" to combat looming recessions because the money usually trickles down into the economy when it is too late to do any good.
The authors of that study: Douglas W. Elmendorf, now an adviser to House Democrats, and Jason Furman, who is Obama's chief economic adviser.