John McCain's speech today had few surprises. It
continued the strange combination of tough talk about “corporate welfare” and
$1.7 trillion in corporate tax cuts, complete with massive new corporate
loophole. As we predicted this morning on TNR, McCain finally did offer a tax cut that benefits actual families, the doubling
of the dependent exemption. But the measure remains true to form: It is
enormously expensive ($65 billion per year, per the WSJ), and it is more
regressive than similar proposals from Bush. Bush doubled the child tax credit,
providing $500 to every taxpayer with any at least that much tax liability. By doubling an
exemption rather than a credit, McCain provides far more to taxpayers in higher
tax brackets. His proposal provides more than twice the benefit for his CEO
advisors ($1,225 per child) than their secretaries with average incomes ($525 per
child). Low-income families will get little or nothing. McCain also suggested
a temporary gas tax holiday, to expire before he could become president, that
would save drivers some money but drain $11 billion from job-creating
investments in crumbling bridges and roads.
Today's speech also continued McCain's drift from straight talk to free lunch. McCain is now up to about $280 billion per year in tax cuts, far more than the Bush tax cuts in their first 10 years. (His campaign gets a lower number only by claiming that his corporate expensing proposal costs nothing over the long term. This is not a serious argument. A CBO report signed by McCain advisor Douglas Holtz-Eakin shows otherwise.) Against these $280 billion in costs, McCain has still proposed to cut not a single specific discretionary program and not a single specific tax expenditure. His ballyhooed plan to hike prescription drug premiums will save $1 billion per year, again according to CBO. Just $279 billion to go.
As Human Events has reminded us, there used to be a guy named John McCain who worried about tax fairness and fiscal responsibility. We're sorry to see him go. You can read more of our take on McCain's plan here (PDF) and here.
Related: Why McCain Needed A Tax Cuts Do-Over
--Robert Gordon and James Kvaal