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McCain Unveils Ambitious Economic Plan.--

I am surprised by the aggressiveness of McCain's economic plans:

In his most wide-ranging speech on the economy, presumptive Republican nominee John McCain on Tuesday laid out an agenda that would change the tax code, freeze discretionary spending and temporarily suspend federal gas taxes. . . .

McCain, with the exception of military spending and veterans' benefits, called for a one-year freeze on the amount of money Congress allocates to discretionary programs.

"'Discretionary spending' is a term people throw around a lot in Washington, while actual discretion is seldom exercised. Instead, every program comes with a built-in assumption that it should go on forever, and its budget increase forever. My administration will change that way of thinking," McCain said.

Taxes: Time for a new system

In terms of taxes, McCain will make several proposals. Taking a page from the book of former Republican candidate Fred Thompson, McCain said he would offer an alternative tax system that would consist of just two tax rates and a larger standard deduction than under the current code. Tax filers would be allowed to choose whether they wished to file under the current system or the new one. . . .

McCain also proposed phasing out the Alternative Minimum Tax and boosting the dependent child exemption from $3,500 to $7,000 per child.

For corporations, he said he would seek to lower the top corporate tax rate from 35% to 25%.

Oil, loans and jobs

In a proposal sure to get the most attention in the near-term given record-setting oil prices, McCain proposed a suspension of the federal gas tax from Memorial Day to Labor Day - traditionally the heaviest season for driving. At just over 18 cents per gallon, that would save the average driver about $2.35 every time he fills up his tank. . .

He also proposed that unemployment insurance taxes be used to build "a buffer account" for each worker, which he could draw on directly if he loses his job.

"We have an unemployment insurance program straight out of the 1950s. It was designed to assist workers through a few tough months during an economic downturn until their old jobs came back. That program has no relevance to the world we live in today," McCain said.

There is plenty for supporters to get excited about and for opponents to attack. In particular, expect complaints that McCain wants to privatize unemployment insurance.

And the best way to lower gas prices a dime or so would be for the government to suspend purchases for our strategic petroleum reserves and to reduce greatly the size of those reserves.

J. F. Thomas (mail):
Sheesh, if anything the gas tax needs to be higher, not lower.
4.15.2008 1:59pm
KeithK (mail):
I can understand the desire for higher gas taxes to affect demand when a gallon cost $1.20. But now it's three times that. We're already getting the positive effects of high prices in consumer's car choices (fewer SUV's, more fuel efficient models sold). But gas demand isn't especially elastic in the short term, so raising prices (through taxation) isn't going to dramatically cut usage. And the impact of fuel prices is greatly driving inflation. It would be irresponsible to raise gas taxes at this point.

I'm not saying that cutting the gas tax is the right thing to do, but raising them would be foolish.
4.15.2008 2:08pm
alkali (mail):
McCain, with the exception of military spending and veterans' benefits, called for a one-year freeze on the amount of money Congress allocates to discretionary programs. ... "Instead, every program comes with a built-in assumption that it should go on forever, and its budget increase forever. My administration will change that way of thinking," McCain said.

I'm breathless with anticipation. Federal courts replaced by a Magic 8-Ball? National parks sold to the Chinese? Military bands replaced by John Cusack and a boom box?

McCain said he would offer an alternative tax system that would consist of just two tax rates and a larger standard deduction than under the current code. Tax filers would be allowed to choose whether they wished to file under the current system or the new one. . . .

Hmm ... sort of an alternative, minimum tax regime, if you will ...

McCain also proposed phasing out the Alternative Minimum Tax ...
Whoops.

"We have an unemployment insurance program straight out of the 1950s. It was designed to assist workers through a few tough months during an economic downturn until their old jobs came back. That program has no relevance to the world we live in today," McCain said.

Indeed. The 1950s was a far-off time when people ate "food" and breathed "air" and drove places in "cars" and watched "TV." Not at all like our modern world.
4.15.2008 2:09pm
Bretzky (mail):
Unfortunately, non-defense discretionary spending is not a very large chunk of the budget. In the FY 2008 budget, discretionary spending amounted to just over $1 trillion. Defense and veterans benefits totaled about $700 billion. So, McCain's talking about freezing budget spending for about $300 billion, or roughly 11 percent of the budget. The FY 2008 budget deficit has been projected to hit $250 billion. It's a start, but not nearly enough to restore some semblance of sanity to the government's finances.

I definitely don't like the two-track tax structure. Either reform it or don't. Don't make the tax system more complicated than it already is by adding a whole new structure beside the one you already have. It will only increase the already gross amount of money that Americans spend on paying their taxes--beyond simply what we pay in taxes themselves.

The idea of creating a "buffer account" is intriguing. However, I think it ignores what exactly an "insurance" system entails. The idea of unemployment insurance is that those who are working would provide temporary support to those who aren't. This is kind of like those folks whose houses haven't burned down providing money to those whose houses have so they can find a new home. The employed support the unemployed until the unemployed finds a new job.

I'd much rather see this type of ownership account applied to social security and Medicare than to unemployment insurance.
4.15.2008 2:15pm
Thoughtful (mail):
Like Stephen Colbert says, fist clenched, whenever the name "McCain" is heard, "I *HATE* that guy!!"

Having said that, these are not bad ideas. And it would make for more substantive discussion than whether the black guy worth several million or the white gal worth over $100 million is more elitist...whether the guy who got a sinecure for his wife or the gal who has the taxpayers providing a sinecure for her husband is the worse bowler...
4.15.2008 2:16pm
Maniakes (mail) (www):
I'm breathless with anticipation. Federal courts replaced by a Magic 8-Ball? National parks sold to the Chinese? Military bands replaced by John Cusack and a boom box?

Or cutting farm subsidies, corporate welfare, and earmarks?

Hmm ... sort of an alternative, minimum tax regime, if you will ...

The difference is that with the AMT, you pay the more expensive of the two tax systems, and with McCain's proposal you pay the cheaper.

Indeed. The 1950s was a far-off time when people ate "food" and breathed "air" and drove places in "cars" and watched "TV." Not at all like our modern world.

I think the difference McCain's talking about is that there's no longer an expectation that most people will work the same job their entire careers. Job changing is normal and expected these days.
4.15.2008 2:18pm
alkali (mail):
Or cutting farm subsidies, corporate welfare, and earmarks?

Corporate welfare is not discretionary spending; virtually all of it is implemented through the tax code. I'm all for cutting farm subsidies and earmarks but they don't amount to a big fraction of the whole.

The difference is that with the AMT, you pay the more expensive of the two tax systems, and with McCain's proposal you pay the cheaper.

And this is better for what reason?

Job changing is normal and expected these days.

Yes, but when you leave one job to take another you aren't eligible for unemployment anyway.
4.15.2008 2:28pm
Temp Guest (mail):
Knowledge is not always good: Ideas like these tempt me to vote for John McCain.
4.15.2008 2:33pm
SIG357:
I see that McCain is also backing a "shield law" for his friends in the press. Or to put it another way, he's once again displaying his contempt for the First Amendment.
4.15.2008 2:37pm
The Unbeliever:
I second Thoughtful's post. There is no way I'm voting for McCain in the fall, but there is surprisingly little fodder here for me to beat McCain over the head with.

However I will disagree with Lindgren's comments about the <i>Strategic</i> Petroleum Reserve. It is not intended to be a government tool for commodity price manipulation; like the name indicates, it is an emergency reserve with critical national security ramifications. It should not be neglected or drained simply to advance short-term policy preferences.

Naturally this will have a distorting effect on the market, and I know my libertarian friends will have their objections; but given energy's importance to infrastructure and logistics, I think it is one of those legitimate costs of government that we should just put up with.
4.15.2008 2:42pm
Maniakes (mail) (www):
Corporate welfare is not discretionary spending; virtually all of it is implemented through the tax code.

Some of it is implemented through the tax code, yes, but I'm pretty sure there's also a lot of it implemented as subsidies.

I'm all for cutting farm subsidies and earmarks but they don't amount to a big fraction of the whole.

McCain's talking about freezing discretionary spending, which only really requires a small fraction of the whole. If you eliminate 3-4% of the programs, that saves enough money that you can let the rest of the programs grow to keep pace with inflation and still keep total discretionary spending flat. I'd prefer pure tax reform, but an optional alternative system is probably a necessary political compromise to get it passed.

And this is better for what reason?

AMT is a tax increase for those who pay it. McCain's proposal is a tax cut.

The argument for making tax reform option is that people tend to be afraid their taxes will go up despite the lower rates because of the loss of deductions. Making the reform optional does clutter the tax code, but it also reassures people that it's not a tax increase in disguise.

Yes, but when you leave one job to take another you aren't eligible for unemployment anyway.

True, but:

1. Job switching is easier these days even if you're layed off, because companies are used to hiring people mid-career.

2. There are much more opportunities when picking a job to make tradeoffs around job security (e.g. working for a startup that might fail, in exchange for more money if it succeeds), so there's more of a moral hazard problem with unemployment insurance than there was in the 1950s.
4.15.2008 2:44pm
fripper (mail):
The idea of creating a "buffer account" is intriguing. However, I think it ignores what exactly an "insurance" system entails. The idea of unemployment insurance is that those who are working would provide temporary support to those who aren't. This is kind of like those folks whose houses haven't burned down providing money to those whose houses have so they can find a new home. The employed support the unemployed until the unemployed finds a new job.

Private unemployment insurance would be better. Goverment run unemployment leads to too much pandering and rent-seeking.
4.15.2008 2:46pm
jonzyx (mail):
SIG357,

I disagree with a media shield law, but I don't see how McCain's support for it equates to him ignoring the first amendment. Would you enlighten me?
4.15.2008 2:55pm
mogden:
He has exactly the wrong idea on the gas tax. It should be multiplied by a factor of ten, not eliminated, in order to properly account for the externalities of our strategic reliance on Arabian princes as well as climate change and pollution.
4.15.2008 3:05pm
rarango (mail):
Since Obama and Clinton's proposals are pretty much the same, there is definitely going to be a big difference in issues--and that isnt even counting Iraq or Immigration. (This assumes, of course, the voters really care about issues--a questionable assumption at best).
4.15.2008 3:06pm
calmom:
Obama wants to raise taxes on the rich, whom he defines as people making over $75,000, and wants to double the capital gains tax.

McCain wants to lower taxes. Makes the decision easy.
4.15.2008 3:09pm
bwan:
"He has exactly the wrong idea on the gas tax. It should be multiplied by a factor of ten, not eliminated, in order to properly account for the externalities of our strategic reliance on Arabian princes as well as climate change and pollution."

wouldn't that just make some voters more, er, bitter? i mean, as a city boy, the gas tax won't hit me too hard. but if i had to, say, drive an hour to work, mightn't this tax increase cause me significant harm? heck, i'm contemplating buying a gun to cling to just thinking about it....
4.15.2008 3:11pm
calmom:
If anyone were to raise the gas tax by a factor of 10, I'd go into the pitchfork business. With stores at every exit ramp. On the way to Washington, D. C.
4.15.2008 3:13pm
Pon Raul (mail):
This alternate tax scheme thing is stupid. Most everyone will then want to calculate which scheme allows them to pay less taxes. That is just more paper work for everyone, which makes H&R block richer.
4.15.2008 3:17pm
Pon Raul (mail):
The gas tax should be increased along with a cut in the income taxes.
4.15.2008 3:20pm
Thorley Winston (mail) (www):
Obama wants to raise taxes on the rich, whom he defines as people making over $75,000, and wants to double the capital gains tax.


Obama also wants to raise the cost of hiring workers by mandating that employers provide health insurance for their employees and adding new mandates at the federal level that will make that health insurance even more expensive than it is now.

McCain in contrast wants to let individuals who buy their own health insurance get a tax break and let individuals and employers shop around across State lines which means they could buy a more affordable policy so long as it's licensed by one of the 50 States.

Another easy decision.
4.15.2008 3:22pm
A. Zarkov (mail):
"Obama wants to raise taxes on the rich, whom he defines as people making over $75,000 ...."

Really? Do you have a link for that? I don't disbelieve it, but I would like a reference because my liberal friends won't believe me. They think it's $200,000.

BTW be careful of words-- what does "making" mean? Adjusted gross income on your 1040? Or more likely a fantasy number the Treasury uses called "Family Equivalent Income." This income is always higher because it imputes the rental value of an owner-occupied home.
4.15.2008 3:25pm
stunned:
"Military bands replaced by John Cusack and a boom box?"

I saw John Cusack and a boombox at a small club about 4 years ago -- absolutely AMAZING.

@pander: "Private unemployment insurance would be better. Goverment run unemployment leads to too much pandering and rent-seeking."

This seems a little conclusory. If you're gonna comment put some meat on those bones! Or follow my example and just post inane drivel.
4.15.2008 3:30pm
A. Zarkov (mail):
These pols never really answer the tough questions. It's no secret that the Federal Reserve is a much bigger player in the US economy than the president. Very few people have any idea of how the Fed works and how powerful and secretive it is. For example, the Fed is exempt from audits. You can't ever get detailed minutes of Fed Open Market Committee meetings. Ron Paul goes overboard in calling for abolishment of the Fed. But how about reforming it? How about making it more transparent? These question never seem to get asked.

I doubt that any of the candidates have any idea of how the Fed works. Although Bill Clinton would because he did have the brain power and interest to understand this kind of thing. It's too bad he was so corrupt.

You may not be interested in banking but banking is interested in you.
4.15.2008 3:33pm
Joe Kowalski (mail):

He has exactly the wrong idea on the gas tax. It should be multiplied by a factor of ten, not eliminated, in order to properly account for the externalities of our strategic reliance on Arabian princes as well as climate change and pollution.

What should happen is the gas tax shouldn't be a set number, it needs to be indexed to demand and increased on a logarithmic scale as demand increases. Now actually implementing this in a somewhat realtime (week to week?) manner that gas stations can change up on frequently will be hard, as well as creating a logarithmic scale that keeps the baseline demand rate relatively stable, with big spikes for increases over that baseline.
4.15.2008 3:37pm
Shertaugh:
calmom said:

If anyone were to raise the gas tax by a factor of 10, I'd go into the pitchfork business. With stores at every exit ramp. On the way to Washington, D. C.


How 'bout this: why not eliminate all federal, state, and local taxes and finance our government expenditures exclusively through borrowing?

Sound like a crazy idea because it would make America hostage to our lenders? Or is it a sound bit of economic policy?

I mean, it's not like any tax cut -- i.e., elimination of the AMT (which I support) -- would be self-financed.

Rather, every tax cut since 1980 has been financed through borrowing. The difference in this decade is our tax cuts, or more to the point, the consequences of our tax cuts, have been financed by the sale of US T-Bonds to foreign lenders coupled with a collapsing dollar.

I'm not sure I see the soundness of borrowing more money from our most powerful economic competitor so that the wealthiest among us can have more in the bank.

Again, the AMT is a disaster that needs to be solved. And I'm not for raising taxes on anyone making less than $1 million.

But let's get serious here about the strategic import of our National Debt.
4.15.2008 3:44pm
Shertaugh:
Sorry. Should have read:

calmom said:
If anyone were to raise the gas tax by a factor of 10, I'd go into the pitchfork business. With stores at every exit ramp. On the way to Washington, D. C.
Obama wants to raise taxes on the rich, whom he defines as people making over $75,000, and wants to double the capital gains tax.

McCain wants to lower taxes. Makes the decision easy.




How 'bout this: why not eliminate all federal, state, and local taxes and finance our government expenditures exclusively through borrowing?

Sound like a crazy idea because it would make America hostage to our lenders? Or is it a sound bit of economic policy?

I mean, it's not like any tax cut -- i.e., elimination of the AMT (which I support) -- would be self-financed.

Rather, every tax cut since 1980 has been financed through borrowing. The difference in this decade is our tax cuts, or more to the point, the consequences of our tax cuts, have been financed by the sale of US T-Bonds to foreign lenders coupled with a collapsing dollar.

I'm not sure I see the soundness of borrowing more money from our most powerful economic competitor so that the wealthiest among us can have more in the bank.

Again, the AMT is a disaster that needs to be solved. And I'm not for raising taxes on anyone making less than $1 million.

But let's get serious here about the strategic import of our National Debt.
4.15.2008 3:46pm
Houston Lawyer:
Obama wants to do away with the cap on Social Security taxes. In 2008, that cap is $102,000. So under the Obama regime, if you make over 100 grand, your marginal rate will increase 6.2% right away, or 12.4% if you are self-employed. I'm not sure how much he wants to increase the income tax on top of that.
4.15.2008 3:51pm
Dodsworth:
Lindgren's unquestioning enthusiasm for McCain's plan ignores the most revolutionary/statist provision: government-backed mortgages. The temporary conservative eyewash, which Lindgren breathlesly highlights in bold, are comparatively trivial parts of the plan which will have little long-term impact.

See
here.
4.15.2008 4:16pm
mogden (mail):

but if i had to, say, drive an hour to work, mightn't this tax increase cause me significant harm?


The answer is no. Gas is more than twice as expensive as it was a couple years ago, but consumer behavior has only changed very marginally. That means that despite all of the complaining, people do not care very much about gas prices, because there are many alternatives which could reduce their consumption if so desired (carpooling for example).

The main point is that gas should be priced efficiently to include externalities like pollution or required armies. The gas tax is far too low right now.
4.15.2008 4:24pm
frankcross (mail):
I'm pretty sure that the spending reductions wouldn't nearly equal the lost revenue from the tax changes. More bigtime borrow and spend.
4.15.2008 4:34pm
Bretzky (mail):
Shertaugh:


How 'bout this: why not eliminate all federal, state, and local taxes and finance our government expenditures exclusively through borrowing?

Sound like a crazy idea because it would make America hostage to our lenders? Or is it a sound bit of economic policy?

I mean, it's not like any tax cut -- i.e., elimination of the AMT (which I support) -- would be self-financed.

Rather, every tax cut since 1980 has been financed through borrowing. The difference in this decade is our tax cuts, or more to the point, the consequences of our tax cuts, have been financed by the sale of US T-Bonds to foreign lenders coupled with a collapsing dollar.


Or, how about every increase in federal government spending since 1980 has been financed through borrowing? Of course, that's not true either.

Some data from the Congressional Budget Office:

In 1980, on-budget federal receipts totaled $517.1 billion and on-budget federal outlays totaled $590.9 billion. In 2007, on-budget federal receipts totaled $2568.2 billion and on-budget federal outlays totaled $2730.2 billion. Since 1980--Jimmy Carter's last year as president--on-budget federal receipts have increased a total of 397%, while on-budget federal outlays have increased a total of 362%.

Now, I will grant that year-to-year increases are probably more important as the budget deficit is a compounding, not a static number. The average yearly increase in on-budget federal receipts is 6.4%, while the average yearly increase in on-budget federal outlays is 5.9%. Of course, receipts have a much higher standard deviation than outlays: .053, which is about 1.7 times higher than the outlay standard deviation of .031.

In other words, the budget problem is not a matter of too many tax cuts, it's a function of spending outpacing the increases in receipts.

The Reagan and Clinton presidencies are instructive in this matter. The average yearly increase in on-budget receipts under Reagan (a tax cutter) was 7.4%, while the average yearly increase in on-budget outlays was 7.7%. As such the debt as a percentage of GDP increased during Reagan's presidency (from 26.1% to 40.9%).

The average yearly increase in on-budget receipts under Clinton (a tax raiser) was 8.0% (not much higher than under Reagan). However, the average yearly increase in on-budget outlays under Clinton was 3.3% (much lower than under Reagan). As such, the debt as a percentage of GDP decreased significantly under Clinton (from 48.1% to 35.1%).
4.15.2008 4:38pm
Tom952 (mail):
I wonder why McCain released this before the Democratic primary was decided? Now, both candidates get to shoot it full of holes, instead of just one later.
4.15.2008 4:40pm
Oren:
Notably absent was his earlier promise to balance the budget . . .
4.15.2008 4:43pm
Curt Fischer:

Gas is more than twice as expensive as it was a couple years ago, but consumer behavior has only changed very marginally. That means that despite all of the complaining, people do not care very much about gas prices.


I have read this factoid in many different places. Supposedly, we hear, gasoline demand is inelastic to price.

However, it seems to me that the time frame for the analysis that supports this conclusion is always very short.

Two years isn't very long. Most cars bought today will be on the road for 15 years or more. A given household is unlikely to move from one place to another in two years. I would like to see evidence that gasoline demand is inelastic with respect to price on time scales commensurate with new car purchases and with families moving, say, over 5 years or more.

Absent evidence to the contrary, it seems reasonable to suppose that families will buy more efficient vehicles (already happening) and move closer to their jobs in response to high gasoline prices. Although it takes time for these changes to have effect, they would certainly impact the national gasoline demand if widespread.

In other words, to me it is not a question of demand elasticity but a question of demand inertia.
4.15.2008 4:59pm
rarango (mail):
Tom: one good reason I can think of is that it should surface most of the arguments and give McCain time to formulate responses. Thats my take on. In reality, however, Obama and Clinton are probably too busy whupping up on each other to take notice of it.
4.15.2008 5:13pm
calmom:
To Zarkov: Obama's position on tax cuts is that they should only be for those earning $75,000 and under. Which means that those earning more than $75,000 would see an increase. He has also voted against repealing the AMT and has voted against repealing or modifying the confiscatory estate tax.
4.15.2008 5:15pm
James Lindgren (mail):

Dodsworth wrote:

Lindgren's unquestioning enthusiasm for McCain's plan . . . .

I expressed no enthusiasm at all for the McCain plan and my only substantive opinion offered was a suggestion that cutting back strategic reserves would be better than temporarily lowering the federal gas tax.

Reading is a skill.
4.15.2008 5:15pm
calmom:
Rasmussen Reports has a poll up showing that 60% favor suspending the federal gasoline tax until prices come 'under control'.
4.15.2008 5:36pm
mogden:


Gas is more than twice as expensive as it was a couple years ago, but consumer behavior has only changed very marginally. That means that despite all of the complaining, people do not care very much about gas prices.



I have read this factoid in many different places. Supposedly, we hear, gasoline demand is inelastic to price.

However, it seems to me that the time frame for the analysis that supports this conclusion is always very short.


People do not care very much about gas prices because they do not take advantage of the many short term ways to reduce their gas consumption. If they cared about gas prices very much, they wouldn't wait several years.
4.15.2008 6:10pm
bwan:

but if i had to, say, drive an hour to work, mightn't this tax increase cause me significant harm?


The answer is no. Gas is more than twice as expensive as it was a couple years ago, but consumer behavior has only changed very marginally. That means that despite all of the complaining, people do not care very much about gas prices, because there are many alternatives which could reduce their consumption if so desired (carpooling for example).


i'm not sure that addresses whether or not an increase in the gas tax would be harmful to people. because people haven't changed the fact that they have to drive to work, that means "people do not care very much about gas prices"?

are you suggesting we should tax people until they really start to feel the pain and carpool? or that we should tax people until they start to drive less and save the environment? or some other point that i may be missing because econ was a looooong time ago?
4.15.2008 6:12pm
Jen:

Obama wants to do away with the cap on Social Security taxes. In 2008, that cap is $102,000. So under the Obama regime, if you make over 100 grand, your marginal rate will increase 6.2% right away, or 12.4% if you are self-employed. I'm not sure how much he wants to increase the income tax on top of that.


Your marginal rate will only increase 6.2% on what you make OVER 102k. If I make 50k, I pay that 6.2% on 100% of my income. If you make 204k, you only pay 6.2% on 50% of your income. I'm sorry, but those making less than 100k aren't going to be crying because those making more than 100k would be paying SS tax on all of their income, just like the poor folk.
4.15.2008 6:42pm
Elliot Reed (mail):
Unfortunately, non-defense discretionary spending is not a very large chunk of the budget. In the FY 2008 budget, discretionary spending amounted to just over $1 trillion. Defense and veterans benefits totaled about $700 billion.
Plus another $200 billion minimum in "supplemental spending" for the Iraq war (Bush is asking for $200 billion now, no doubt he'll be asking for more later). I don't see why we should keep spending this money on the military if we can't even tell what it's being spent on because the Pentagon's accounting systems are really that bad.
4.15.2008 6:49pm
jfb2252:
Summarizing the comments as a Rockefeller Republican (remember them?):

McCain has demonstrated again that he knows nothing of economics and the Federal budget - or at least that he doesn't think the people and the media do.

Gas tax should be higher, or a carbon tax imposed.

Earmarks should be converted into an annual allowance for each Representative ($10M) and Senator ($50M) to allocate as they wish in their district/state. $9.36B, including DC. Less than present earmarks. Accountability.

[And as a physical scientist, I hope that President Bush's budget gets in present form before the inauguration.)
4.15.2008 7:24pm
Houston Lawyer:
"Your marginal rate will only increase 6.2% on what you make OVER 102k. If I make 50k, I pay that 6.2% on 100% of my income. If you make 204k, you only pay 6.2% on 50% of your income. I'm sorry, but those making less than 100k aren't going to be crying because those making more than 100k would be paying SS tax on all of their income, just like the poor folk."

You may or may not realize that those making the additional tax payments won't get any additional benefits under social security. So its just taking more money away from people who earn more. Obama and his allies count on the envy of those like you to support their policies.
4.15.2008 7:31pm
David Donar (mail) (www):
McCain's economic plan is nothing but anarchy or markets gone wild.

Feral Reserve
4.15.2008 7:59pm
Elliot123 (mail):
"And the best way to lower gas prices a dime or so would be for the government to suspend purchases for our strategic petroleum reserves and to reduce greatly the size of those reserves."

This is essentially a cut in world demand coupled with an increase in domestic supply. We could accomplish the same by opening up ANWR and various offshore reserves for production. I realize that won't make much difference this July, but it will effect future Julys. Had it been done 10 years ago, it would easily have accomplished what you propose today for the strategic reserve.
4.15.2008 8:24pm
Curt Fischer:

mogden:People do not care very much about gas prices because they do not take advantage of the many short term ways to reduce their gas consumption. If they cared about gas prices very much, they wouldn't wait several years.


You assume that people know how to reduce their gas consumption immediately and without seriously inconveniencing themselves. I'm not sure most people do.
4.15.2008 8:25pm
ALS:

I'm sorry, but those making less than 100k aren't going to be crying because those making more than 100k would be paying SS tax on all of their income, just like the poor folk.


Which might be relevant if the "poor folk" paid any income taxes - at all - other than social security.
4.15.2008 8:26pm
John McCall (mail):
Odd. I'm pretty certain I paid income tax for the last few years, despite not making 100K. I am reminded of med students, who apparently believe it is impossible to live on less than $125k a year --- not just to live well, but actually to survive.

I see no compelling reason why social security shouldn't just be rolled into the general budget and formally declared a welfare program for the elderly. Or, well, eliminated along with all the others in favor of a single universal safety-net program.

A lot of McCain's proposals seem reasonable, but as far as I can tell, they're mostly funded by wishful thinking.
4.15.2008 8:46pm
SIG357:
"We have an unemployment insurance program straight out of the 1950s. It was designed to assist workers through a few tough months during an economic downturn until their old jobs came back. That program has no relevance to the world we live in today," McCain said.



That almost sounds like a smack at globalism, which would be odd coming from McCain.
4.15.2008 8:52pm
SIG357:
"I don't see why we should keep spending this money on the military if we can't even tell what it's being spent on because the Pentagon's accounting systems are really that bad."





I propose a one billion dollar program to study the accounting system problem, to be led by me.
4.15.2008 8:57pm
Smokey:
This is a chart of the U.S. increase in GDP over the past several decades. Isn't it interesting that the government has taken a significantly greater share of national wealth than the amount of wealth that accrued?

At this rate our beneficent gov't will probably allow us to keep maybe 15% of our earned income. Special interests need the rest, and pols need special interests to stay in office for most of their adult lives.

So, question: who represents the hard-bitten American taxpayer? Anyone?
4.15.2008 9:55pm
bwan:

Gas tax should be higher, or a carbon tax imposed.


again, why? is there a good reason? or is this just an enviro-guilt argument?

and once these taxes are raised, and the government's taken more of our money, what is the desired outcome? fewer poor people driving? because as far as i can see that's about all this would achieve. people who can afford to ignore the tax will. lear jets will still take off, hummers will still be purchased.
4.15.2008 10:17pm
Alan K. Henderson (mail) (www):
Notably absent was his earlier promise to balance the budget . . .
He should ask Mr. Newt how he did it.

Of course, the budget wasn't really balanced in the 1990s, once you factor in the yet-uncollected trillions promised by Social Security and Medicare.

The Democrats aren't talking about balancing the budget, either. They're talking about the opposite - creating more and more budget-busting government programs.
4.15.2008 10:46pm
Elais:

The Democrats aren't talking about balancing the budget, either. They're talking about the opposite - creating more and more budget-busting government programs.


I don't recall Bush and the Republicans shutting down government programs right and left during the eight years Bush as been in office. They even created MORE government.
4.15.2008 11:28pm
dodsworth:
David Donar:

You haven't read McCain's plan. He doesn't want free markets. He is proposing government mortgage guarantees, a massive expansion of govenrment. Of course, all of this will be backed with massive inflation by the Fed. The conservatives here who actually believe that the temporary gas tax reductions are meaningful compared to that massive leap toward government control are fooling themselves. McCain hates laissez faire and loves control.
4.16.2008 12:52am
dodsworth:
james Lindgren:

True. I was merely pointing out that you failed to "read" the most important part of the plan, government backed mortgages. All of the stuff you breathlessly highlighted in bold about temporary tax cuts pales into insignificance compared to that permanent great leap toward statism. The willingness of free market conservatives to believe that McCain is one of their comrades is quite surprising.
4.16.2008 12:57am
Proud to be a liberal :
Well, it looks like some elitist law professors think that it is easy for people who have lost their jobs in a recession to find work. It may be easy for well educated people with lots of skills who are mobile. It is much tougher for many people. If employers in your industry are cutting back, it may be hard to find work. Unemployment benefits actually help the economy bounce back from recessions because they give unemployed workers money that gets spent.
4.16.2008 1:48am
Alan K. Henderson (mail) (www):
The Democrats aren't talking about balancing the budget, either. They're talking about the opposite - creating more and more budget-busting government programs.
I don't recall Bush and the Republicans shutting down government programs right and left during the eight years Bush as been in office. They even created MORE government.
Nobody claimed otherwise. I'm the guy who slams Bush for spending money like a drunk teenager on Spring Break in Cancun with the parents' credit cards. And both parties - especially the Democrats - let him.

The GOP made a serious go of implementing domestic spending reforms in the first year of Mr. Newt's speakership. But it lost its nerve when it lost two key PR battles: over the government shutdown, and over the Medicare battle, in which the Dems successfully preached the lie that the Republican plan would cut Medicare spending. (The GOP plan reduced the rate of increase - it was a smaller hike than what the Dems proposed.) The GOP stopped fighting for reform, thus since 1996 voters have put fewer and fewer of them in Congress.

The percentage of consistent fiscally conservative Republicans is not a majority, but it's a whole lot bigger than the percentage of consistent fiscally conservative Democrats.

Dem voters who hate government bloat but vote for the party that wants to bloat it the fastest really need to rethink their priorities.
4.16.2008 11:30am
Forsooth And:
Drain the strategic reserve? Do the words "strategic" and "reserve" mean nothing? Even CERA is forecasting declines in world oil production with increases in global oil demand. That is going to continue to send oil prices up significantly and also result in shortages. If we were being "strategic" we would quietly be increasing the strategic petroleum reserve, by a significant amount as well as developing alternatives.

Aside: When you add Cap and Trade and other carbon emission restrictions, the economic costs of petroleum go up even further--that's fine if you already own sufficient alternative energy sources, but who does? Certainly not the average consumer, nor the overall economy. The price of oil will continue gradually climbing until someone figures out transportation-suitable alternate energy source/process at moderate cost. Maybe that will be amazing and real like microprocessors, or perhaps impossible like alchemy. I see no current technology that fits the bill.

Increasing global scarcity of oil poses a real danger to our economy, and is a verification of many of the fundamental reasons for having a strategic petroleum reserve. Draining our strategic reserve will do nothing to solve the underlying problem (but you're right that it would temporarily offset some of the price pressure on gas). Robert Hirsch and Matthew Simmons are two interesting and informed authorities on this subject.
4.16.2008 11:38am
Dodsworth:
Alan:<P>

<i>The percentage of consistent fiscally conservative Republicans is not a majority, but it's a whole lot bigger than the percentage of consistent fiscally conservative Democrats. </i><P>

Not true. The only "consistent fiscally conservative" in the Congress is Ron Paul. The rest of the Republicans want to spend like drunken sailors on the Pentagon and policing the world.
4.16.2008 1:31pm
Jen:

You may or may not realize that those making the additional tax payments won't get any additional benefits under social security. So its just taking more money away from people who earn more. Obama and his allies count on the envy of those like you to support their policies.


I do realize that those who make the additional tax payments won't get additional benefits. I will be among that potential population again shortly. I'm perfectly willing to pay a proportionally equal amount with slightly less benefit to ensure that the system remains solvent and that the poorest are taken care of. Some are OK with that, and some aren't. Doesn't have a thing to do with envy.
4.16.2008 9:45pm
cubanbob (mail):
Cut entitlements. Enough already with the endless subsidizing of parasites. Cut the budget to 2005 actual cash expenditure and hold the line for three years. Eliminates a large number of subsidies starting with farm supports, Davis Bacon for government contracting and scale back student loan programs for those who are not true college material. Privatize unemployment insurance, flatten the tax code to one rate, 15% and eliminate all exemptions beyond a tax credit for social security and medicare taxes and a reasonable standard deduction for head of household and for each dependent.
4.17.2008 4:01am
Alan K. Henderson (mail) (www):
Dodsworth,

You claim assumes that there are at least two fiscal conservatives/libertarians among Congressional Dems. Who are they?

I believe that there are more Republican than just Ron Paul who desire reforms along the lines of those hawked by cubanbob, and that they tend to fall into two groups: 1) those who vote conservatvely on such issues with relative consistency, but don't get a lot of notice, and 2) the gutless cowards who really are fiscal conservatives, but have bought the notion that compromising to the fiscal liberals is the lesser evil compared to "not getting anything done."
4.17.2008 10:47am