Amy Traub

Are You Better Off Now Than You Were Eight Years Ago? McCain offers more of the same on economic policy

John McCain can talk a pretty good game when he wants to. On Tuesday, as he unveiled his economic plan at Carnegie Mellon University, the presumptive Republican Presidential nominee acknowledged that “economics is not a subject that can be wrenched apart from the rest of life, or from the values that give life direction.” He felt the pain of those like the Pennsylvania woman who “work and save for years, and at the age of 47, still struggle for the basics of life.”

Ah, but that was the introduction. When McCain delved into actual policy proposals, the man who had scarcely finished announcing that “it will not be enough to simply dust off the economic policies of four, eight, or twenty-eight years ago” did just that. As with President Bush, tax cuts were presented as the main solution to any economic problem. McCain vowed to maintain the Bush tax cuts – predominantly benefiting the wealthiest Americans and to introduce vast new tax cuts to further undermine an already dangerously indebted federal treasury. But middle-aged worker struggling for the basics of life so vividly evoked in the introduction was quickly forgotten. She would be unlikely to benefit from the proposed corporate tax cuts, which the non-partisan Congressional Budget Office found (pdf) “typically does not create an incentive for [businesses] to spend more on labor” (i.e. hiring or providing raises). Nor would she be likely to get a raise or a new job as a result of incentives for new business investment, since, as the same CBO report noted “last time such incentives were employed, the results were not encouraging.”

Even doubling the personal income tax exemption for dependents does little to help someone whose wages are too low for them to pay much taxes to begin with. And low-income workers “struggling for the basics” have never paid the Alternative Minimum Tax. McCain positions a repeal of the Alternative Minimum Tax (AMT) as a middle-class tax cut, yet 89% of the revenue raised by the AMT comes from households making more than $100,000, and more than half comes from households that make more than $200,000. Permanently exempting these households from the AMT hardly requires that the whole tax – intended to make sure the wealthiest Americans can’t exploit so many loopholes that they evade their tax responsibilities entirely – be repealed. And we haven’t even gotten to the summer-long repeal of gas taxes, a sop to the oil companies and a blow to the environment. MSNBC points out that this is in fact an old idea from the Dole campaign back in 1996, before the nation had awakened to the dangers of global warming. So much for not dusting off old economic policies. But that’s hardly the extent of it.

If you have problems affording health care, McCain proposes substantially the same ineffective tax credit plan as Bush and, while he’s at it, the same proposals for Association Health Plans that would ultimately raise costs and undermine state laws protecting patients.

Unemployed? McCain proposes Lost Earnings Buffer Accounts – a shiny new name for what sounds suspiciously like the failed Personal Re-employment Accounts Congress considered back in 2004. McCain would also like to see community colleges do more to retrain and educate unemployed workers –which could be helpful to many people, if colleges received additional resources to take on the task.

But when it comes to funding for the programs he hails, McCain is suddenly vague. The hard numbers that studded the tax cut proposals have disappeared. And it’s not hard to see why. McCain insists that tax cuts can be paid for by cutting that old standby, government waste. Earmarks, he suggests, are a major problem. Yet earmarks account for less than half of one percent of the overall budget. Not much savings there. What else might be eliminated to offset even a portion of those tremendous tax cuts?

McCain’s record provides a clue. He has, for example, voted to cut health care funding for the poor, child support, and student loans. He vows to reform Social Security without raising taxes, which leaves only two options for the program. Tellingly, McCain voted against a 2005 resolution rejecting any Social Security plan that would require deep benefit cuts or a massive increase in debt.

The conclusion? If you liked Bush’s economic policy, you’ll love McCain.

Amy Traub: Author Bio | Other Posts
Posted at 7:25 AM, Apr 17, 2008 in Economy | Politics | Tax Policy
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