mccainomics

Posted on April 17, 2008

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Presumptive Republican presidential nominee John McCain has said that economics isn’t his strong suit.

His economic policies speech on Tuesday in Pittsburgh shows why.

The bulk of his focus was on tax cuts, such as making permanent the income tax cuts introduced by George W. Bush, proposing the elimination of the alternative minimum tax and doubling the value of exemptions for dependents to $7,000 from $3,500. He also wants a simpler tax system.

AP photo

Sounds suspiciously like Reaganomics.

While he railed against the high salaries of Wall Street executives and called for tougher regulation, he proposed slashing corporate taxes to 25 percent from 35 percent, businesses be allowed to write off the cost of new equipment and technology from their taxes and tax credits for research and development.

The cost of all his proposed cuts? McCain says it would cost the Treasury $200 billion annually. The truth is probably closer to $400 billion, according to analysts.

To offset that, McCain has suggested cutting spending, such as getting rid of earmarked pork-barrel projects, economic growth and other savings in government programs such as reducing spending in Medicare’s prescription drug program.

Which are still unlikely to balance the budget, something he had often mentioned as a goal before.

In a populist measure, McCain called for a tax holiday on the 18.4 cent a gallon federal gas tax and 24.4 cents a gallon tax on diesel from this Memorial Day until Labor Day, which is a seriously bad idea.

Not only will that give a false sense of how much oil costs, it will not help the US lessen its extreme energy dependence on fossil fuels and love of gas-guzzling vehicles, which have contributed to much of the US’ geopolitical headaches in the first place.

Making gas cheaper would only encourage more people onto the roads, which also means more carbon dioxide emissions — didn’t McCain pledge to do more for the environment? The whole idea of those gas taxes is to have money to pay for the roads. But McCain’s proposal will only cause more wear and tear on roads and highways, while the revenue to upkeep them will be lost during that period. Fortunately, that proposal is unlikely to become reality.

McCain might be trying to assuage the perception that he is weak on economics and proving that he has plans to get things under control as the economic picture gets gloomier. But he ought to play up his abilities in national security and foreign policy more. That could get him a better shot at the White House.

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