McCain Economic Package

Seeking to burnish his economic credentials on income tax day, John McCain unveiled a package of tax cuts he said would, "be an immediate economic stimulus." McCain's cuts include suspending the 18.4 cents a gallon federal gas tax and the 24.4 cents a gallon federal diesel tax from Memorial Day to Labor Day, doubling the tax exemption for dependents to $7,000 and phasing out the alternative minimum tax.

McCain also proposed suspending oil purchases for the Strategic Petroleum Reserve which he believes drives up the price of oil, and increasing Medicare prescription drug funding by requiring higher payments from couples making more than $160,000.

Doug Holtz-Eakin, a McCain economic adviser, estimated the cost of the cuts at $195 billion. The Democratic Party came out with an estimate of $468 billion, but their estimate also counted the cost of his supporting the continuation of the Bush 2001 and 2003 tax cuts. Holtz-Eakin said the cuts would not add to the deficit because they would be accompanied by spending cuts and because of the additional economic growth they would generate. McCain said he would not be able to balance the budget until the end of his second term.

Harvard Public Policy Professor Jeffrey Liebman, speaking for the Democrats, instead remarked, "It's really extraordinary how fiscally irresponsible Sen. McCain's policies are."

Aside from his strong defense and Iraq War posture, McCain's views on many other topics have remained ill-defined in the public's mind up to now in the campaign. Today's announcements demonstrate his desire to assume the role of the traditional post-Reagan Republican, basing his domestic agenda mainly on tax cuts. This is a good political move, since it will shore up support in the conservative Republican base and because people generally like to hear about getting a tax cut.

It remains a bad move for the nation, however, since this supply-side cure for recession has never worked other than to produce additional wealth only for the extreme upper stratum of American earners at the expense of running up the deficit to astronomical levels. See my April 1 article "Supply Side Foolishness" for the previous results of this misguided and three-time failed theory. http://bravegnuwhirled.blogspot.com/2008/04/supply-side-foolishness.html