The new economic proposals, which McCain is announcing in Pennsylvania as I write, seem pretty weak to me. Here's the Times's summary:
The adviser, Douglas Holtz-Eakin, said Mr. McCain would propose that people 59 years and older who withdraw money from IRAs or 401k retirement plans in 2009 and 2010 pay a tax rate of 10 per cent on the money rather than their higher normal tax rates. The plan would cost $36 billion, based on McCain campaign internal estimates, Mr. Holtz-Eakin said.
In addition, Mr. McCain is to propose three other new measures: a 50 per cent reduction in the capital gains tax on stock profits, from the current 15 per cent to 7.5 per cent, for a period of two years, at an estimated cost of $10 billion; an acceleration in the tax write-off for stock losses, allowing Americans to deduct $15,000 in losses a year for the tax years 2008 and 2009 (current rules allow deductions for up to $3,000 in losses), and a suspension on the tax on unemployment insurance benefits in 2008 and 2009.
“These are all targeted at people who have been hurt by the recent financial crisis —seniors, savers, workers, people who are trying to get to college,” Mr. Holtz-Eakin said.
The 401k proposal is just a somewhat more generous version of a proposal Obama announced yesterday. Other than that, we're really tinkering at the margins. In particular, I love the impulse to cut capital gains taxes. For one thing, almost no one has capital gains these days because of the financial crisis, so it's not much of a stimulus. For another, very few middle class people actually pay capital gains taxes even when the market isn't cratering. (Most hold stock through 401ks and IRAs, withdrawals from which are taxed as ordinary income, not capital gains, if I'm not mistaken.)
Update: Watching McCain's speech I'm getting the same feeling I almost always get when McCain talks economics--that he's reciting more than speaking. The only time he gins up any real emotion is when he's condemning Wall Street greed or Washington politicians, which fits nicely into his Manichean worldview. (He was just at his most animated while denouncing--surprise!--pork-barrel spending.)
Update II: Like Obama, he's just proposed suspending taxes on unemployment benefits.
Update III: I misread the Obama 401k proposal. Obama would let you withdraw a small portion (up to $10,000) of your 401k without penalty if you're under 59-and-a-half (people older than that don't face the penalty)--that is, it would help you borrow a bit from your retirement savings if you need help getting by today. The McCain proposal would dramatically slash the taxes older people pay when they withdraw money from their 401ks and IRAs, with no apparent limit on the amount they can withdraw. As some of our commenters have pointed out, that seems like a bad idea--it could drive the market much lower by giving people a big incentive to sell their stocks.
--Noam Scheiber