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.
Related: Why McCain Needed A Tax Cuts Do-Over
--Robert Gordon and James Kvaal