Monday, March 03, 2008

McCain's economic bridge to nowhere

The Wall Street Journal's Bob Davis, reporting on an interview with John McCain focused on his economic platform, does a nice job highlighting multiple inconsistencies -- not to say an overall incoherence -- without any explicit diss. Repeatedly, Davis presents McCain's claims against an understated backdrop of inconvenient truths.

Among the highlighted lacunae:

Social security reform
: "the Arizona senator says he still backs a system of private retirement accounts that President Bush pushed unsuccessfully, and disowned details of a Social Security proposal on his campaign Web site." That is, the website calls for a plan similar to Hillary Clinton's, creating personal investment "supplementing" social security, without touching the structure of the existing program. That's a switch from his 2000 campaign, when McCain called for diverting a portion of social security taxes to fund private accounts, as Bush tried to do in 2005. McCain's chief economic aide, Douglas Holtz-Eakin, chalks up the change to the runup of the deficit in the Bush years.

But, Davis reports, "asked about the apparent change in position in the interview, Sen. McCain said he hadn't made one. 'I'm totally in favor of personal savings accounts," he says. When reminded that his Web site says something different, he says he will change the Web site. (As of Sunday night, he hadn't.) ' As part of Social Security reform, I believe that private savings accounts are a part of it -- along the lines that President Bush proposed."

This repudiation highlights the article's subtext: that McCain claims to be a deficit hawk but avoids any serious attempt to make his numbers add up - that is, to deal with the deficit. Which brings us to self-repudiation #2:

Bush tax cuts and more: As is well known, McCain voted against Bush's massive tax cuts in 2001 and 2003 but now opposes letting them expire. Now he wants to pile on with a cut in the corporate tax rate from 35% to 25% at a cost of $100 billion per year, and elimination of the Alternative Minimum Tax, at a cost unspecified in the Journal article but estimated by the Urban Institute-Brookings Institution Tax Policy Center at least $800 billion over the next decade (Aviva Aron Dine, Center on Budget and Policy Priorities). "In all," Davis reports, "his tax-cutting proposals could cost about $400 billion a year, according to estimates of the impact of different tax cuts by CBO and the McCain campaign. The cost will make it difficult for him to achieve his goal of balancing the budget by the end of his first term."

Offsetting savings? Davis makes it clear that they're pitifully inadequate:

To show he can control spending, Sen. McCain cites his long record as a spending hawk, who battles sweetheart deals between the Pentagon and defense contractors, as well as projects that lawmakers of both parties cram into appropriations bills -- "earmarks," in budget lingo.

Congressional earmarks total $18 billion a year, according to the Taxpayers for Common Sense, a Washington, D.C., research group -- and each has a member of Congress who will ferociously fight to keep that spending going. Mr. Holtz-Eakin, the McCain adviser, says that earmarks actually cost $60 billion a year, counting programs that started in earlier years and get funded year after year.

Another source of spending cuts eyed by the McCain campaign is a White House hit list of underperforming or redundant programs. But again, the numbers are relatively small -- $18 billion annually -- compared to the cost of Sen. McCain's tax plans, and the programs include housing loans, education grants, and water projects popular with Congress.

The accompanying interview highlights the absurdity. Asked by Davis, "are you worried your numbers don't add up?", McCain responds:
If you just look at two spending bills that the president signed into law, there's $35 billion just in those two bills [that could be cut]. I saved the taxpayers over $6 billion on one Air Force tanker deal. I'm not worried about being able to find savings in government.
I love the use of brackets above - $35 billion [that could be cut] -- if the President got every cut he claimed to want in two bills totaling several hundred billions in spending. That's in a budget with a current deficit of over $400 billion. Tack McCain's $400 billion in new tax cuts onto that, and then take a guess at the cost of maintaining over 100,000 troops in Iraq indefinitely.

Slow Stimulus: To get the economy going, Davis emphasizes that McCain "said he might have 'a couple of fireside chats with the American people.'" Beyond that, nothing -- except extending the Bush tax cuts and adding his own:
While other candidates were scrambling in January to put together stimulus plans to boost flagging consumer spending, he proposed long-term tax cuts which could take years to come into law. "In the shorter term, if you somehow told American businesses and families, 'Look, you're not going to experience a tax increase in 2010,' I think that's a pretty good short-term measure," he says.
The Bush tax cuts have already been justified, first by the surplus of 2000, then by the recession of 2001, then by the recovery of 2003-07. Now McCain is tacking on the anticipated recession of 2008. Here we go again: massive tax cuts are the cure for every economic slowdown, and the cause of all economic growth.

Pat Buchanan recently said that McCain running our foreign policy "could make Cheney look like Gandhi." With this deadpan presentation, Bob Davis makes it clear that McCain running the economy could make Bush look like Alexander Hamilton.

Related posts:
Obama and Clinton share a pander on trade
Obama channels Edwards in Janesville

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