I covered Obama's play the other day, check it out here.
No intro today—reread the Obama one if you're dying for an intro—here is McCain's economic policy in his own words. I'll try to make it easy.
-- McCain will keep Bush's tax cuts on wages, capital gains, and dividends all of which are supposed to expire in 2010 (the top tax rate will stay at 35% and capital gain and dividend income will be taxed at 15%). This plan, while it would not discourage saving, would increase the gap between the rich and poor. The Tax Policy Center believes that the top 1% would see their incomes rise 2.2%. As I wrote while disusing Obama's plan, the Gini Index in the U.S. has continued to grow at a fairly quick pace over the last twenty years; slowing this down isn't the worst policy idea.
McCain would also cut the corporate tax rate from 35% to 25%, but would also get rid of some deductions. Corporate taxes are always somewhat miss leading... there are so many loopholes and deductions for corporations that it's hard to know what rate companies turely do pay.
Finally, McCain would allow companies to immediately write off the cost of new equipment. This would incourage investment and theoretically lead to higher producvity and thus growth.
Overall, McCain's tax policy is a pretty good plan for long term growth. But with the U.S. government already in debt and then involved in a costly war and now handing out over a trillion dollars to save Wall Street on top of this, McCain's plan does or says little about slowing down this debt. McCain has hinted at reducing spending (even talking about cutting defense spending in the second debate), but he hasn't provided any proposals to reduce spending. The Tax Policy Center estimates that McCain's policies would increase the debt by $758 billion in the next ten years.
-- McCain would increase the exemption for dependants from $3,500 to $7,000.
-- McCain has promised to balance the budget in his first term, but I'm not sure how he would do it with this policy and hasn't offered a credible means of doing so either. Plus, the Federal government doesn't really need to balace the budget for a bunch of macro reasons that I won't go into right now.
-- McCain has been a supporter of free trade while in the Senate and there is little reason to believe that he would stop being a supporter as President.
-- McCain's economic advisors are not as highly reguarded as Obama's team (here is some harsh treatment or if you have time here is a debate between advisors for both candidates). McCain's advisors, unlike Obama's team, does not feagure as many economists from academia. His team is headed by Carly Fiorina the former head of HP and Nancy Pfotenhauer who was a former director at Americans for Prosperity Foundation and has worked for Koch Industries, which does a little bit of everything but oil and energy are the biggest areas of focus in the past.
-- Like Obama, McCain has yet to say much about Medicare or Social Security.
Sadly, neither McCain or Obama has said too much about simplifing the tax code, which is currently a mess. Personally, I think tearing up the current tax code and rewriting it (like Congress did in 1986) would be a wonderful undertaking and something I would get behind.
-- Quick editorial note on McCain and his economic policy. McCain's economic proposals haven't hit home with the American voter. Obama's policies have a more populist tone them—but the reality is that they aren't all that poulist. McCain needs to do the same. If I were him or on his campagin, I would have been working hard over the weekend to roll out a new set of idea and proposals. Maybe concede to raising taxes on the rich, keep corporate taxes low, and find a deduction or two for the American worker. Oh and maybe get Micheal Phelps to pitch the plan for you.
10 Wednesday AM Reads - My midweek morning train reads: • No One Wants Your Used Clothes Anymore (Bloomberg View) • Follow the Money (Of Dollars And Data) • The Antitrust Case A...
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