McCain's Economic Plan a Mixed Bag

McCain's Economic Plan a Mixed Bag

by Mark Luedtke

McCain's economic plan has many facets including domestic energy production, health care, corporate income tax reduction, controlling spending, free trade, and hardship relief.

Because our government energy policy of ban, import, and subsidize severely limits domestic production of energy, the US imports nearly 70 percent of its oil. We're transferring $700 billion a year of hard earned wealth to countries that produce oil. Because growth in demand for energy is far outstripping growth in supply, this problem will increase. McCain plans to expand domestic energy production for fossil fuels and renewable energy in an arbitrary proposal similar to Obama's, but superior because of the addition of off-shore drilling and the construction of 45 nuclear power plants. But McCain doesn't know the details of America's energy needs any more than Obama, and he would only exchange one broken central plan for another instead of embracing a free market in energy.

In contrast, McCain's health care plan empowers Americans to create, sell and purchase cheaper, better health care plans tailored to the specific needs of consumers using free market forces. McCain would close the income tax loophole for employer tax benefits and replace it with a significant tax credit for every American who buys health insurance. His plan also knocks down the barriers keeping insurance policies from being sold across state lines. Americans can opt out of their expensive employer plans, enjoy all that money as income instead, buy much cheaper policies tailored specifically for them and their families, and pocket a lot more cash to boost other segments of our economy. Critics say this will end our employer based health system, but that's not a criticism, that's a great thing for every American and American business.

John McCain plans to keep our taxes low. I don't know where he gets the idea that our taxes our low. I guess when your wife owns 7 houses you're not aware of, taxes seem pretty low to you. I think this is McCain's way of saying he plans to extend the Bush tax cuts, which were across the board tax cuts, not tax cuts for the rich as Democrats have so successfully misinformed the public.

Corporations don't pay taxes – they collect taxes from their customers and send that money on to the government. If the corporate tax rate goes up, corporations raise prices or cut jobs to keep profits steady. If the tax rate goes down, corporations lower prices and hire new workers to increase profits. Cutting corporate taxes is a tax cut for all Americans, and it creates jobs.

And since capitalism defeated socialism with the fall of the Soviet Union, free nations around the world learned this lesson. The US used to be the best place in the world to do business because of our low corporate tax rates. Now we have the second highest corporate tax rate in the free world. That's why factories, corporations, businesses and jobs are racing out of the US at breakneck place. Ohioans know that better than anybody.

That's why McCain has made a 35 percent to 25 percent corporate tax reduction the centerpiece of his tax plan. But 25 percent only puts the US in the middle of the pack competitively. And if lowering the rate is good, getting rid of corporate income taxes is better. And getting rid of all income taxes and payroll taxes is best. This is a step in the right direction, but the FairTax is the best tax plan for the US.

McCain has a few other tax proposals: allowing a first year deduction for expensing new equipment, a tax credit toward research and development investment, an internet tax ban, and a new cell phone tax ban. These are all attempts to use our tax code to socially engineer our economy and society – more central planning. Adopting the FairTax would create an economic renaissance in America and empower Americans to build America the way we want, not the way Washington insiders want.

But it's useless to cut taxes without cutting spending. Both parties pretend that tax policy is a separate issue from government spending, but that's an artificial distinction employed for political gain. Cutting taxes increases the debt before it increases revenue. Raising taxes decreases revenue and increases the debt. That debt must be paid by taxes or printing money, but printing money deflates the value of the dollar, which is another form of tax.

McCain promises to cut spending and balance the budget in four years, but after two years of campaigning, he can't name one program to cut. Vetoing earmarks is a drop in the bucket. McCain can't cut spending by working with a Pelosi/Reid Congress. McCain also proposes $60 billion in new spending of his own. McCain's stated goal is really to reduce spending growth to 2.4 percent annually. Only in Washington could that be considered a spending cut. Like all Republicans, McCain pays lip service to reducing spending, but his promise to reduce spending and balance the budget is not credible.

McCain supports free trade, but free trade agreements in Washington are really thousand page social engineering programs. At least McCain doesn't support tariffs and protectionism like Democrats.

McCain also plans a summer gas tax holiday and to use some of the $850 billion Wall Street bailout for homeowners who can't pay their mortgages instead, punishing responsible taxpayers for the failures of irresponsible home purchasers in an attempt to keep the overbuilt housing market artificially inflated. While a mixed bag, this plan is light years ahead of Obama's.