Newly elected presidents have often played a decisive role in shifting the US economy. The choice of a president is particularly important when the economy and financial markets are in crisis, as they are now, and when a nonincumbent vows to make big changes — as both Barack Obama and John McCain have promised. In several instances, new presidents have helped to revive the economy.

Can either candidate revive our troubled economy in 2009? Probably not, with only 11 months between inauguration day and the end of the year. But in the second or third year of a new administration, the game can change dramatically.

KENNEDY, REAGAN, CLINTON

When John Kennedy was inaugurated in 1961, the country was in a recession. In an attempt to rev up the economy, Kennedy increased government spending and proposed cutting taxes. The eventual tax reductions stimulated consumer spending and business investment, and the economy entered a strong expansion.

When Ronald Reagan took office in 1981, the economy was stagnant while inflation was high. Reagan responded with big tax cuts and a massive increase in defense spending. That combination set off a boom that ran from 1982 through 1988.

After taking office in 1993, Bill Clinton changed the economy’s course, balancing the budget and reducing the deficit. With Washington borrowing less, interest rates declined. That allowed consumers and businesses to take out loans, spend and prosper. Clinton presided over the best decade the US economy ever had.

OBAMA VS. MCCAIN

The current financial crisis has forced the two candidates to hurriedly form views to address the immediate problems. But the differences in their basic economic policies remain clear. Obama would aim to reduce the income inequality between rich and poor. To do that, he would cut taxes on low- and middle-income households, stimulating consumer spending, and pay for the cuts by raising taxes on upper-income households. Obama would spend heavily and use tax credits to expand health care and provide other services — while cutting some areas of government spending.

McCain would attempt to shrink government spending while keeping the Bush tax cuts and relying on American enterprise to energize the economy. He would reduce corporate taxes and remove the alternative minimum tax (AMT), which now hits millions of households.

Of course, today’s high energy prices constrain the new president’s potential impact. And today’s financial disarray may make it difficult to carry out his policies. But given the immense challenges, whichever candidate wins is bound to make a huge difference — perhaps even more than Kennedy, Reagan or Clinton.

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