McCain's economic plan
When I heard Mitt Romney on CNN this morning touting Sen. John McCain's economic plan, I figured it would be more of the same nonsense we've endured from Bush for the last seven years. Sorry to say, I was right. Sen. "Straight Talk" McCain , who once criticized Bush's tax cuts for the wealthy, said in Pittsburgh that he now wants them made permanent, plus he has a couple new ones of his own to further drain revenue from the federal government. This is far less about economic stimulus than in continuing the 25-year battle of movement conservatives to "starve the beast," meaning starving the federal government of tax revenue so it can't offer programs to help people--only imprison or kill them.
McCain wants the corporate tax rate cut from 35 percent to 25 percent. He rightfully pointed out that the current U.S. corporate tax rate is one of the highest in the industrialized world, but failed to point out that higher sales taxes and personal income taxes allow those European countries he's talking about to pull in the revenue they need to offer the government services, including health care, that a modern, civilized nation needs to provide for its citizens. McCain doesn't say how that revenue loss would be made up, other than a vague promise to end corporate tax breaks. Good luck with that. A corporate tax cut won't create jobs, especially in a pre-recession period when all businesses are becoming nervous and cautious. The extra revenue corporations get from a tax cut would likely flow in large part to wealthy shareholders and hedge funds in the form of higher dividends and stock buy-backs.
For the middle class, McCain offers a doubling of the dependent tax exemption from $3,500 to $7,000. That would be worth an additional $875 off your taxes if you're in the 25 percent bracket, considerably less if you are in the 15 percent or 10 percent bracket. For the well-off, McCain promises an end to the alternative minimum tax. The AMT does need to be indexed for inflation, but to abolish it would mean that well-off taxpayers with lots of write-offs, creative or not, could end up paying very little in taxes. That was why Congress created the AMT in the first place, to ensure tax equity.
Then there's the gas tax gimmick. McCain proposes suspending the 18.4 cents per gallon federal gasoline tax from Memorial Day to Labor Day. This would reduce the price of a gallon of regular--assuming the distributor didn't raise wholesale prices to grab some of this--from $3.37 to $3.18 or so. Wow. Get your motors running! Just avoid those crumbling bridges and deteriorating highways.
I'm not sure what to make of McCain's comments on ending the current system of unemployment compensation. He disparaged the current system as "something from the 1950s" and called for more job training--which is only of value if your small town has any jobs to be retrained for. But don't get bitter!. You must maintain a positive outlook. That's the law. Basicly, he seemed to be saying that he doesn't want the unemployed waiting around for jobs that "aren't coming back." He also talked about creating some sort of individual fund that laid-off workers could tap, but gave no details. Would you have the choice of using it to pay bills or pay for job training? One or the other? This sounds ominously like another movement conservative fantasy--eliminating the unemployment taxes paid by businesses. But don't worry--we'll retrain you for another job. Take spatula, flip burger...
What the U.S. needs to get out of this looming recession is a strong federal program of public works spending--God knows there's lots of crumbling infrastructure to rebuild. Something like Jimmy Carter's CETA program from 1976 would put even more people back to work. The federal government, in other words, needs to do something, not sit around and wait for the supposed glories of the free market to fix everything. It never has before--why should it now?