In what is shaping up to be a mad dash for the White House, Senators John McCain (R-Ariz.) and Barack Obama (D-Ill.) each has about a month to convince people who vote with their pocketbook that he will do the least harm to the U.S. economy and to their portfolios. On Wall Street magazine asked analysts and economists about the candidates' proposed policies on several major issues that impact investors: tax policy, the general economy, Freddie Mac and Fannie Mae, and healthcare.

Tax Policy & Its Effects on the Wealthy

Believing that entrepreneurs are at the heart of American prosperity, McCain says they should not be overly taxed. He would keep the top tax rate on individuals at 35%; the tax on dividends and capital gains at 15%; and he would phase out the Alternative Minimum Tax. The corporate tax rate would be cut from 35% to 25%. He would allow first-year deductions of equipment and technology investments to provide an immediate boost to capital expenditures and reward investments in cutting-edge technologies. McCain would also establish a permanent tax credit equal to 10% of wages spent on research and development. McCain believes this reform would simplify the tax code, reward activity in the U.S., and make the U.S. more competitive abroad.

Obama would provide 150 million workers tax relief by creating a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family. The "Making Work Pay" tax credit will completely eliminate income taxes for 10 million Americans. Obama would also eliminate all income taxes for the seven million seniors who make less than $50,000 per year, providing them with an average savings of $1,400 each year. He also would simplify tax filings so that millions of Americans would be able to do their taxes in less than five minutes.

So which is better for investors? "High-net-worth investors would see big tax cuts under McCain, and a small tax increase under Obama," says Gus Faucher, a managing director of economics for Moody'sEconomy.com. "In particular, Obama would increase the regular personal income tax rate, and also increase the rate on dividends and capital gains." On the other hand, argues Brian Dolan, chief currency strategist at Forex.com: "In terms of near-term economic growth, there is more [of a catalyst for] growth from the tax cut on lower and middle-classes than a tax rebate or tax cut for the wealthiest group."

General Economy

Sen. Obama would enact a windfall-profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate. He aims to create five million new jobs by investing $150 billion over the next decade to encourage private efforts to build a clean energy future and reduce oil imports. He also wants to see one million plug-in hybrid cars—that can get up to 150 miles per gallon—on the road by 2015, and ensure that they are built domestically.

Sen. McCain's plan would attempt to boost small businesses by addressing the rising costs of energy. McCain would increase domestic exploration of oil and natural gas and believes this would send a strong signal to oil markets that future supplies will be more plentiful, easing pressure on price increases. He also plans to build 45 nuclear power plants by 2030, creating 700,000 jobs and providing cheaper electricity as well as incentives for the production of electricity from renewable sources. Finally, he would devote $2 billion annually to research into the clean use of coal. "McCain is pursuing policies of the past, by generating nuclear energy, enhancing the use of coal, and drilling here and now," says Dolan, adding that the plan to build 45 new nuclear power plants is unlikely to be completed during his administration because of the long lead time involved. "The market is savvy enough to know that none of those plans will have immediate benefits."

Freddie and Fannie

Fannie Mae and Freddie Mac, the mortgage marketplace titans, were summarily humbled by a detailed government bailout package in early September. Traditionally, the Republican Party has been more inclined to do away with Government Sponsored Enterprises, arguing that they are an extension of big government. Yet many entities stand to lose once the GSE government finance system is downsized, argues Dolan, including local savings and loan institutions that sold their mortgages to the GSEs and used the proceeds to make new mortgages, the underwriters of the mortgage-backed securities and major financial institutions that bought those securities.

While eliminating the GSEs might increase the cost of mortgage finance long term, Obama is expected to support the plan short term because it keeps certain borrowers in their homes at lower costs. "They don't want to remove government's hand entirely from supporting the U.S. housing market," says Dolan.