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By Jeff Mason
MAUMEE, Ohio (Reuters) - Memo to White House hopefuls John McCain and Barack Obama: be careful what you wish for.
The victor in Tuesday's presidential election will face a host of acute economic problems on a scale not seen since the 1930s.
The spiraling financial crisis, meltdown in the housing market, and chaos on Wall Street coupled with longer-term challenges like high health care costs and foreign energy dependence will be on the next president's to-do list.
But analysts say whether the Republican senator from Arizona or the Democratic senator from Illinois wins, his biggest challenge will be navigating a deep and potentially prolonged economic downturn.
"The United States is in a profound recession, and when the next president takes office, chances are things will look as bad or worse as they do today," said Kenneth Rogoff of Harvard University, a former chief economist at the International Monetary Fund, who has provided occasional advice to McCain.
"That problem's going to be so pressing that it's going to push a lot of other items to the back of the agenda."
The two campaigns highlight contrasting approaches to that challenge.
Obama advocates a second government stimulus package worth $175 billion, which would include money for investments in infrastructure as well as another round of rebate checks.
"That's the type of package Sen. Obama believes needs to happen right away," Brian Deese, the Illinois senator's deputy director of economic policy told Reuters.
"Sen. McCain is comfortable taking a wait-and-see approach to immediate steps and has embraced the same economic philosophy that has gotten us into this mess."
Doug Holtz-Eakin, McCain's top economic adviser, said the Arizona senator has not opposed anything that would help the economy but criticized current stimulus proposals as disguised attempts to implement Democratic spending objectives.
"This is simply the Democratic spending plans rolled out under a new label," Holtz-Eakin told Reuters, saying McCain's $300 billion proposal to buy up troubled mortgages using funds from the recent Wall Street bailout package would do more good for the economy, translating into direct stimulus without widening deficits.
LONGER TERM CHALLENGES
Though a recession will likely dominate the next president's agenda, other short- and long-term economic challenges will also feature high on the to-do list, economists and advisers to both candidates said.
Both promise to revamp regulations governing Wall Street, work to bring down the costs of health care, boost indigenous energy sources, and fight climate change by setting caps on carbon dioxide emissions for big industries.
McCain has also pledged to balance the budget by the end of his first term.
But limited resources -- diverted to ease the financial crisis and fund the wars in Iraq and Afghanistan -- will hamper the ability of any president to achieve many of those goals.
"These are not things that are achievable," said Jeffrey Frankel, an economist at Harvard's Kennedy School of Government.
"Energy independence is basically not achievable. Balancing the budget is not achievable. Preventing us from going into a recession? It's too late."
Deese said health care reform would not be placed on the backburner. The Illinois senator has proposed a national program to allow individuals and small businesses to buy health care similar to that available to federal employees.
"Sen. Obama understands that our nation's long-term financial challenges are intimately tied up with addressing our nation's health care crisis and that we cannot wait on the type of ambitious reforms that he's talked about," he said.
McCain would end tax breaks for employer-provided health insurance and provide a refundable tax credit of $2,500 per person, or $5,000 for families.
"A refundable tax credit makes sense because it actually drives costs down," Rob Portman, a former Ohio Congressman and U.S. Trade Representative who advises McCain, told Reuters.
Both candidates would address energy issues differently, with McCain emphasizing offshore oil drilling and increases in nuclear power production while Obama supports massive investments in renewable energy technology.
The two men's approaches to the economy would also be colored by differences over taxes, a topic that has risen to the forefront of the campaign in recent weeks.
Achievable or not, Harvard's Rogoff said the next president's efforts on U.S. economic challenges would look solid by comparison to President George W. Bush's administration.
"The next president's going to look pretty good even though the problems are very difficult," he said.
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