No matter who wins the looming presidential election – Barack Obama or John McCain – investors are likely to see a similar outcome: The new president will quickly remove the distortions in the U.S. and world economies that have resulted from this lengthy period of low interest rates, and he’ll do so without eviscerating portfolio values.

But while the outcomes will be similar – as we’ve reported – the routes the candidates will follow to achieve those similar outcomes are decidedly different. This week – in observance of the Democratic National Convention in Denver (see accompanying graphic) – I will look at the potential effect on investors of a Barack Obama presidency, which most experts refer to as “Obamanomics.” Then next week, in observance of the Republican National Convention in Minneapolis-St. Paul, I will examine how a McCain presidency would affect investors.

This exercise in analysis is made all the more worthwhile by the fact that Obama and McCain are now in a dead heat in the latest political poll, according to CNN.

Taxes Will Climb…

The main bad news from an Obama presidency is higher taxes. The Obamanomics platform includes a promise to repeal most of the Bush tax cuts. Obama has also vowed to stop the estate tax from disappearing as was scheduled in 2010, and to increase Social Security taxes on high incomes. He also said last week that both the capital gains tax and the dividend tax should be 20% compared to the current 15%.  At first glance, all those tax increases appear depressing for the stock market itself, as well as for U.S. investors’ pocketbooks directly.

However, the alternative to higher taxes may well be an out-of-control budget deficit, which is far more dangerous in the long run. We already have a deficit of close to $500 billion, without there having been an official recession.