April 16, 2008
Tax Cuts at Center of McCain Economic Plan
By MICHAEL COOPER
PITTSBURGH — Senator John McCain offered the broadest look yet at his economic policies in a speech here Tuesday, calling for tax cuts, a freeze of discretionary spending for a year, higher premiums for better-off Medicare recipients and elimination of federal gas taxes this summer to reinvigorate the sagging economy.
Mr. McCain, who made no mention of his previous pledge to balance the budget by the end of his first term, outlined a long list of tax cuts he favored in the speech, which was delivered on the deadline for filing taxes. He called once again for making the Bush tax cuts, which he voted against, permanent, and for cutting corporate taxes, phasing out the alternative minimum tax and doubling the value of exemptions for each dependent to $7,000 from $3,500. He also proposed giving people the option of using a simpler, shorter tax form.
One of Mr. McCain’s tax proposals would take effect even before the Republican Convention: he called on Congress to suspend the 18.4 cent a gallon federal gas tax from Memorial Day until Labor Day. Mr. McCain said that doing so would provide “an immediate economic stimulus,” but some environmentalists said that the change might encourage more people to use their cars, while Mr. McCain has made combating global warming central to his campaign.
On the spending side of the ledger, Mr. McCain pledged to veto every bill that comes to his desk with earmarked pork-barrel projects in it, and to order a one-year freeze on increases in most discretionary spending — a relatively small portion of the overall federal budget — while he reviews every federal program, department, and agency.
“While that top to bottom review is under way, we will institute a one-year pause in discretionary spending increases with the necessary exemption of military spending and veterans benefits,” he said. “ ‘Discretionary spending’ is a term people throw around a lot in Washington, while actual discretion is seldom exercised.”
Mr. McCain said that the savings from eliminating earmarks, reviewing federal programs and other budget reforms would be “on the order of $100 billion annually,” and that he would apply those savings to lowering business taxes. But it was unclear how Mr. McCain plans to pay for the other tax cuts that he outlined while the nation incurs large expenses fighting the wars in Iraq and Afghanistan.
An analysis by the Center for American Progress Action Fund, a liberal think tank, estimated that the overall cost of Mr. McCain’s tax cuts would be three times as much as the $100 billion he estimates that he can save. And they questioned whether his programs would really save $100 billion a year.
Mr. McCain also called for wealthier Medicare recipients to pay higher premiums to qualify for the prescription drug coverage that President Bush and the Congress added to the program a few years ago, over his objections.
“People like Bill Gates and Warren Buffet don’t need their prescriptions underwritten by taxpayers,” he said. “Those who can afford to buy their own prescription drugs should be expected to do so. This reform alone will save billions of dollars that could be returned to taxpayers or put to better use.”
The higher premiums for the drug benefit would not just apply to billionaires, though. The campaign said that the proposal calls for charging the higher premiums 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 1 million people — and net the government an additional $2 billion a year.
Mr. McCain also called for state and federal action to make sure that the credit crunch does not make it harder for students to get loans for college.
Mr. McCain took a few swipes at his Democratic rivals, Senators Barack Obama and Hillary Rodham Clinton, for calling for a rollback of some of the Bush tax cuts. “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 one 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.”
Neera Tanden, the Clinton campaign’s policy director, called the McCain plan “a corporate lobbyist’s dream.” She said that Mr. McCain had proposed “an economic policy that Americans simply cannot afford,” based on corporate windfalls and tax cuts for the wealthy, and that ExxonMobil, which recently reported record profits, would get a $1.4 billion tax cut under the McCain plan.
In his speech, Mr. McCain also reiterated his support of free trade, saying that while it poses challenges to the economy it also offers benefits by opening new markets to American goods.
“That is why I object when Senators Obama and Clinton and others preach the false virtues of economic isolationism,” he said. “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?”
But while he called for a slew of tax cuts, Mr. McCain also suggested that he would be willing to break from some of the economic policies of the Reagan and Bush administrations. “In all of this, it will not be enough to simply dust off the economic policies of four, eight, or 28 years ago,” he said. “We have our own work to do. We have our own challenges to meet.”
[QUOTE]Mr. McCain took a few swipes at his Democratic rivals, Senators Barack Obama and Hillary Rodham Clinton, for calling for a rollback of some of the Bush tax cuts. [B]“They’re going to raise your taxes by thousands of dollars per year, and they have the audacity to hope you don’t mind,” [/B]he said, in an allusion to the title of one of Mr. Obama’s books, “The Audacity of Hope.”[/QUOTE]