“But a major component of his economic plan — like those of Presidents Bush and Reagan — centered on tax cuts. Besides making the Bush income tax cuts permanent and reducing corporate taxes to 25 percent from 35 percent, Mr. McCain called for eliminating the alternative minimum tax and doubling the value of exemptions for dependents to $7,000 from $3,500, among other recommendations. He also proposed giving taxpayers the option of filing a simpler, shorter tax form each year than is available now.”
April 16, 2008
McCain Outlines Broad Proposals for U.S. Economy
By MICHAEL COOPER
VILLANOVA, Pa. — Senator John McCain offered the broadest look yet at his economic policies in a speech on Tuesday in Pittsburgh, outlining a series of tax reductions and backing away from his pledge to balance the budget by the end of his first term.
The speech, delivered on the deadline for filing taxes, afforded the clearest view to date of what McCainomics might look like. There was a dash of populism, as Mr. McCain criticized executive pay and corporate wrongdoing. There was a strong supply-side bent, with Mr. McCain focusing on cutting corporate taxes and making permanent the Bush tax cuts that he once opposed. And there was a decidedly less hawkish note on deficits, as Mr. McCain called for spending cuts but did not mention balancing the federal budget.
With the address, Mr. McCain labored to overcome the impression that he does not understand the economy well, and the idea being pushed by his Democratic rivals that he does not comprehend the economic pain felt by many Americans.
Mr. McCain, the presumptive Republican presidential nominee, spoke at length about those economic hardships and suggested he might well break with the economic policies of President Bush and former President Ronald Reagan. “It will not be enough to simply dust off the economic policies of four, eight or 28 years ago,” he said in the speech, at Carnegie Mellon University. “We have our own work to do.”
But a major component of his economic plan — like those of Presidents Bush and Reagan — centered on tax cuts. Besides making the Bush income tax cuts permanent and reducing corporate taxes to 25 percent from 35 percent, Mr. McCain called for eliminating the alternative minimum tax and doubling the value of exemptions for dependents to $7,000 from $3,500, among other recommendations. He also proposed giving taxpayers the option of filing a simpler, shorter tax form each year than is available now.
Mr. McCain even called for cutting one tax before the Republican National Convention, let alone the election: he urged Congress to suspend the 18.4-cent-a-gallon federal gas tax from this Memorial Day until Labor Day. He said doing so would provide “an immediate economic stimulus,” but such plans have gained little traction recently in Congress, and some environmentalists fear such a cut would encourage more people to use their cars at a time when Mr. McCain has made combating global warming a central theme of his campaign.
The McCain campaign put the cost of his tax cuts at roughly $200 billion a year, but its estimate did not include the cost of making the Bush tax cuts permanent, which would more than double that figure.
The campaign said it would offset the lost $200 billion by eliminating from the federal budget earmarked pork-barrel projects; putting a one-year freeze on discretionary spending in most federal agencies, later eliminating wasteful programs; broadening the tax base by eliminating loopholes; and spurring economic growth. But its estimate of how much could be saved with such measures was far higher than those of some other independent budget analysts.
Mr. McCain’s Democratic rivals mocked the proposals, with the campaign of Senator Barack Obama saying the plans represented a continuation of failed Bush policies, and aides to Senator Hillary Rodham Clinton saying they would benefit corporations that had helped cause the nation’s current economic woes.
Mr. McCain — who said in February in Wisconsin that he would balance the budget by the end of his first term as president — seemed to reconsider that on Tuesday, saying at a news conference later in Villanova that “economic conditions are reversed” and that he would have a balanced budget within eight years. His economic aides said they could pay for all the tax cuts with spending cuts.
The Democratic National Committee did its own analysis, which it said suggested that Mr. McCain’s proposed tax cuts, coupled with the costs of the wars in Iraq and Afghanistan that he wants to continue, would put the budget trillions of dollars into the red.
In sum, Mr. McCain cast himself as someone who adheres to the general tax-cutting principles of the Republican Party, in a business-friendly way, while at the same time battling special interests and corporate wrongdoing, calling for unspecified “smarter regulation” of the financial markets and companies.
And he called for smaller government, while conceding that government job training programs were vital to dealing with the human cost of an economy undergoing rapid changes, and reiterating his new call — after initially signaling his opposition to broad federal intervention in the housing crisis — for having the government help refinance and guarantee some mortgages.
Dipping into a contentious issue that has stirred up the Democratic Party, Mr. McCain made clear his unequivocal support for free trade even as Senators Obama and Clinton have been speaking about its downsides. Mr. McCain argued that the benefits of opening new markets outweighed the costs of losing some manufacturing jobs.
“That is why I object when Senators Obama and Clinton and others preach the false virtues of economic isolationism,” Mr. McCain said in the speech. “Senator Obama recently suggested that Americans are protectionist because they are bitter about being left behind in the global economy. Well, what’s his excuse for embracing the false promises of protectionism?”
Mr. McCain painted his Democratic rivals, who want to roll back some of the Bush tax cuts on the wealthy to pay for their health care plans, as tax raisers. “They’re going to raise your taxes by thousands of dollars per year, and they have the audacity to hope you don’t mind,” he said, in an allusion to the title of one of Mr. Obama’s books, “The Audacity of Hope.”
Mr. Obama’s spokesman, Bill Burton, responded: “Senator McCain’s economic plan offers no change from George Bush’s failed policies by going full speed ahead with fiscally irresponsible tax cuts for the wealthiest Americans that John McCain himself once said offended his conscience. He also proposes a gift basket of new tax cuts for corporate America at a time when some C.E.O.’s are making more in a day than some workers make in a year. John McCain’s plan is one that could have been written by the corporate lobbyists who run his campaign, and probably was.”
Mrs. Clinton’s policy director, Neera Tanden, said Mr. McCain’s tax cuts would most benefit corporations, while Mrs. Clinton’s would most help middle-class families. “John McCain promises straight talk,” Ms. Tanden said in a statement. “But his speech today is really double talk. Senator McCain spoke about the excesses of companies like Countrywide. But what he fails to mention was that Countrywide would have received a $500 million tax cut under his plan.”
In one proposal rich with ideological overtones, Mr. McCain, who often complains that the Republicans have lost their way by not curtailing government spending, called for having wealthier Medicare recipients pay higher premiums to qualify for the prescription drug coverage that Mr. Bush and Congress added to the Medicare program a few years ago over his objections.
“People like Bill Gates and Warren Buffett don’t need their prescriptions underwritten by taxpayers,” he said.
The higher premiums for the drug benefit would not just be for billionaires, though. The campaign said the proposal called for charging them to single people earning more than $82,000 a year and married couples earning more than $164,000. Doing so, they said, would affect about 5 percent of Medicare beneficiaries — about one million people — and net the government $2 billion over five years.
Mr. McCain repeated his pledge to veto every bill that comes to his desk with earmarked pork-barrel projects in it, and called for a one-year freeze on increases in nonmilitary discretionary spending — a relatively small part of the overall federal budget — while he reviews every federal program, department and agency.
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