EconomistMom.com

I understand why the McCain campaign is trying to change the subject–and why the Obama campaign feels compelled to respond in kind–but issue #1 still has to be the economy.  And on issue #1, I heard Senator McCain describe in his speech in NM yesterday the same economic platform he’s proposed throughout this campaign:  trillions of dollars in tax cuts, combined with enough cuts in government spending to achieve a balanced budget in four years.  From the transcript of the speech on the McCain website (emphasis added):

In 21 months, during hundreds of speeches, town halls and debates, I have kept my promise to level with you about my plans to reform Washington and get this country moving again. As a senator, I’ve seen the corrupt ways of Washington in wasteful spending and other abuses of power, and as president I’m going to end them – whatever it takes. I will propose and sign into law reforms to bring tax relief to the middle class and help to businesses so they can create jobs. I will get the rising cost of food and gas under control. I will help families keep their home, and help students struggling to pay for college. I will make health care more accessible and affordable. I will impose a spending freeze on all but the most vital functions of government. I will review every agency of the federal government, improve those that need to be improved and eliminate those that aren’t working for the American people. I will confront the ten trillion-dollar debt that the federal government has run up, and balance the federal budget by the end of my term in office.

I have run the “basic math” on these promises several times before (first in July when the numbers weren’t even as challenging as they are now), and the latest “basic math” based on more recent Tax Policy Center estimates and the latest CBO projections was featured in a Concord Coalition issue brief last month…

The simple fact and contrast is that Senator McCain is proposing to “spend” more in tax cuts than Senator Obama, and Senator Obama is proposing to “spend” more in direct outlay programs–and some additional middle-class tax cuts– than Senator McCain.  Senator McCain himself explained it in his speech like this (emphasis added):

Senator Obama and I both have differences with how President Bush has handled the economy. But he thinks taxes are too low, and I think spending is too high. The government’s out of control spending has resulted in a weaker dollar, raising the cost of groceries and gasoline, and killing jobs.

I will veto pork barrel legislation and cut wasteful government spending. Senator Obama has a different plan. According to third party estimates, he will increase government spending by over 860 billion dollars. He has denied it, but he has refused to tell you how much he does plan to spend. What is the total of his increased spending? Americans deserve to know just how much more of their money Senator Obama intends to spend, and how much more debt he plans to burden them with.

OK, and Americans deserve to understand how much more in tax cuts Senator McCain is proposing, and what the opportunity cost of those tax cuts would be.  The Tax Policy Center estimates that McCain is proposing tax cuts that cost $1.2 to $4.4 trillion more than Obama’s proposed tax cuts, over ten years.  The Tax Policy Center analysis also shows that the bulk of this additional cost goes toward delivering additional tax cuts to only the richest households and to corporations.  Federal money was already tight before the financial rescue package, yet the McCain campaign has refused to revisit their proposals for these expensive tax cuts for the rich, or even acknowledge that their tax-cutting plans may have to be scaled back.  Do they really want to tell the American people, in today’s awful economy, that this is still the best use of trillions of dollars?  Still?  Now?

Meanwhile, Senator McCain still claims he would balance the federal budget in four years (by fiscal year 2013).  The goal is laudable, but the math doesn’t add up–or if it does add up, it only points to a “horrifying” policy position (to paraphrase how McCain advisor Doug Holtz-Eakin once explained it).  Those facts combined imply a cut in federal spending from its current level of around 21% of GDP down to just 16 to 17 1/2% of GDP –or a cut in spending equivalent to between 3 1/2 and 5% of GDP.  Would a freeze on “all the most vital” government spending do it?  In the last debate, McCain appeared to exempt entitlement programs and defense spending from that “freeze.”  But all of discretionary spending is now just 7.9% of GDP, and all of non-defense discretionary spending is just 3.7% of GDP.  So Senator McCain appears to be promising not just to ”freeze” what he would consider non-vital spending, but to cut it out entirely.  I don’t understand how that tells the American middle class that a McCain Administration would be there to help them.  But that’s because I don’t see how most Americans, in the economic situation we’re in, and understanding at least a little about how we got into this mess (gee, that maybe it wasn’t because taxes were too high or the regulation too tough), want to hear that government is going to “leave us alone” and “get out of our way.”  Is that what the McCain campaign really thinks Americans want to hear?  Still?  Now?

And just to get me really riled up, Senator McCain had to bring up what I’ve dubbed the “banana peel” issue (regarding revenue levels under the congressional budget resolution) in yesterday’s speech as well (emphasis added):

Again on taxes, we see a difference between what Senator Obama says today, what he said yesterday and what he has actually done. Over the course of this campaign, he has had many different plans to raise your taxes. During the Democratic primary, he promised to double taxes on every American with a dividend or an investment. He promised to raise payroll taxes. He promised higher taxes on electricity. Now, Senator Obama claims he will give 95 percent of Americans tax relief. He actually promised the same thing when he was running for Senate in Illinois, but once elected he never introduced legislation to do so. Instead, he voted for the Democratic budget resolution that promised to raise taxes on people making just 42,000 dollars a year. At the time, he even said his vote was intended to get “our nation’s priorities back on track.” If he’s such a defender of the middle class, why did he vote to raise their taxes? Whatever happened to the tax relief he promised them when he was a candidate for the Senate? And why should middle class Americans trust him to keep promises he has already broken?

Just a reminder:  The budget resolution made no such promise about whose taxes would go up if any of the Bush tax cuts were allowed to expire; the budget resolution does not set tax law (does not “make tax policy”).  The reference to the $42,000+ is a reference to households who benefit at all from any of the Bush tax cuts.  The (House-passed) budget resolution only made a promise that any extended tax cuts would be paid for.  (The Senate-passed version was not quite as fiscally disciplined.)  Congressional Democrats who supported the budget resolution’s pay-go philosophy were implicitly endorsing the idea of extending the middle-class components of the 2001 tax cuts, which would be paid for/offset by raising other taxes (including–my goodness, yes–even taxes that would be paid mostly by rich people).  The idea was to keep tax cuts for today’s middle class, without putting a huge burden on the backs of our children and grandchildren.  (Congressional Republicans who were clamoring (and still clamor) for continued deficit financing of trillions of dollars of tax cuts were effectively saying “screw you” to our kids.  Apparently they think trading off a many-fold tax increase on our kids and/or a severely weakened economy for our kids, to keep a tax cut for ourselves, is worth it.)

So when Senator McCain brings up this “banana peel” issue and asks “Whatever happened to the tax relief [Obama] promised [the middle class] when he was a candidate for the Senate?”, I have to ask back to Senator McCain (and his economic team):  Whatever happened to the fiscally-responsible position you took on the Bush tax cuts before you were running for President?  Or to put it another way:  Whatever happened to the real “maverick” in John McCain–i.e., “McCain One“?