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Economy

McCain Gas Tax Holiday Worth Only 60 Cents a Day

Our guest blogger is Sam Davis, Policy Analyst at the Center for American Progress Action Fund.

Sen. John McCain (R-AZ) has a prescription for the country’s gas woes, proposing to put the 18.4 cent federal gas tax on a three-month hiatus between Memorial Day and Labor Day. Indeed, we’ve heard this idea once before and economists continue to be weary of its intended net effect. What’s different this time however, is the spin and the reality.

Spin: Outlining his proposal, Senator McCain said last Tuesday, “The effect will take a few dollars off the price of a tank of gas every time a family, a farmer, or trucker stops to fill up.”

Reality: Most of the tax break will go to corporations, not families. Oil companies and their executives are already doing better than ever. Two years ago, Lee Raymond, former CEO of Exxon was given a severance package worth upwards of $400 million after leading the company to its highest ever recorded profit in 2006 of $36 billion. The previous year, his salary and bonus was a combined: $69.7 million or $190,915 a day. After just his first year on the job, current Exxon CEO, Rex Tillerson oversaw another record profit year for the company of $40 billion, earning him $21.7 million or $59,452 a day.

Even if all of the benefits from the tax breaks go to families, however, it will make little difference for them. The median American family’s daily savings during the three-month tax holiday proposed by Senator McCain? 60¢.

chart.JPG

Spin: McCain told CNBC this past Tuesday, “I think high gas taxes are a regressive tax. The people who drive the furthest are the lowest income Americans. It is incredibly regressive. Where’s the fairness there?”

Reality: Not only do families who make less, drive less, they do not consume more gasoline nor do they spend more on gasoline. An analysis of the latest available data reveals that in fact, Senator McCain’s “gas-tax holiday” idea is itself regressive. The more a family earns, the more they drive, and the more a higher-earning household would save under Senator McCain’s plan.

Methodology: Read more

Politics

Rove blasts Abrams in 2,100-word diatribe.

rove.jpgIn a more than 2,100-word letter containing 58 separate questions and written on April 13, Karl Rove blasted MSNBC’s Dan Abrams for reporting earlier this month on his alleged involvement in the politicized prosecution of former Alabama governor Don Siegelman, and for using the testimony of Republican operative Jill Simpson. Some excerpts:

– “Did you ever consider that the Governor’s security detail might have taken note of an ample-sized, redheaded woman who kept showing up at his events with a camera?”

– “In fact, it seems you believe that the absence of any concrete evidence is itself evidence of the conspiracy. If you don’t have any proof Karl Rove did it, that absence is proof enough. I am that good.”

– “As a matter of fact, I had other things to occupy my time in the White House in 2002 rather than ‘structuring’ a campaign for an Alabama gubernatorial candidate.”

Perhaps it was at this point that Rove decided to reverse himself and refuse to testify before Congress on the matter.

Politics

Baracky

The whole Atlantic crew seems to love this video but I think it’s kind of dumb:

Among other things, Rocky lost the fight so I don’t even think this makes sense.

Politics

Screw ‘Em

I’m not sure if you’re familiar with the rather silly controversy over whether or not Hillary Clinton said “screw ‘em” with regard to white working class southern conservatives at a meeting thirteen years ago (yes, this is the stuff of which controversies are made), but I’d say Theda Skocpol has the definitive take on the matter.

Politics

McCain: ‘There’s Been Great Progress Economically’ Since Bush Took Office

Earlier this week, Sen. John McCain (R-AZ) delivered a speech on the economy in which he outlined his ambitious plan to cut taxes and balance the budget. McCain’s plan would extend President Bush’s tax cuts, reduce corporate tax rates, repeal the alternative minimum tax (AMT), and increase exemptions for dependents.

But unfortunately for McCain, “economists and nonpartisan analysts” have dug deeper into the details of his plan and concluded that the numbers simply “don’t add up.” The offsets he proposes will not cover the estimated $3.3-$5.7 trilllion cost of the proposal and would end up ballooning the federal deficit. Bloomberg News reports:

“The huge imbalance” in McCain’s plan “is that the tax cuts are specific and large and the spending cuts are small and vague,” said Robert Bixby, executive director of the Washington- based Concord Coalition. [...]

This is really a massive increase in the deficit,” said Joel Slemrod, an economist specializing in tax policy at the University of Michigan. [...]

Stan Collender, a former analyst for the House and Senate budget committees [... said] “there’s no way McCain could balance [his budget] by the time he leaves, unless he doesn’t leave for 25 years.”

Sloppy preparation may explain some of McCain’s discrepancies. Indeed, his economic adviser, Douglas Holtz-Eakin has cited different reports to back-up aspects of McCain’s economic proposals, but in reality they undermine them:

To help pay for the tax cuts, Holtz-Eakin said he would save $30 billion a year by eliminating so-called “rifle shot” provisions. Those include items such as tax breaks for small insurance companies.

A Treasury Department report Holtz-Eakin cited as the source of his estimate states $27 billion could be raised by eliminating narrowly used tax preferences spread over a decade, not a single year.

Despite the country’s sour mood on the economy, McCain said last night that Americans perhaps feel they are better off than they were when Bush took office because “millions of jobs have been created” since then. So therefore, McCain said, “You could make an argument that there’s been great progress economically over that period of time” and that “the fundamentals of America’s economy are strong.” Watch it:

[flv http://video.thinkprogress.org/2008/04/McCainstrongec.320.240.flv]

According to tax filings released today, McCain’s net worth rose by $18 million since 1999. Perhaps that increase in personal wealth makes him think that most Americans, too, are better off than they were eight years ago.

Politics

U.S. Attorney accused of setting up quotas to increase federal funding.

U.S. Attorney for the central district of California in Los Angeles Thomas P. O’Brien “is facing sharp criticism from prosecutors within his office who say he is pressuring them to file relatively insignificant criminal cases to drive up statistics that make the office eligible for increased federal funding.” The unnamed prosecutors say the practice — which O’Brien has denied — “amounts to a quota system” and detracts them from working on more significant cases:

The disgruntled prosecutors in Los Angeles say they are now spending an exorbitant amount of time working on less significant cases — mail theft, smaller drug offenses and illegal immigration — to reach quotas. They cited the recent disbanding of the office’s public integrity and environmental crimes section, a unit with a history of working on complex police corruption and political corruption cases, as evidence of a shift toward high-volume, low-quality prosecutions.

The corruption unit, which O’Brien disbanded last month, was handling the ongoing investigation into Rep. Jerry Lewis’s (R-CA) ties to a lobbying firm and earmarks its clients have received. Sen. Dianne Feinstein (D-CA) has asked Attorney General Michael Mukasey for a detailed explanation as to why the unit was disbanded.

Politics

McCain campaign changes its ‘definition’ of earmarks.

As ThinkProgress has previously noted, Sen. John McCain’s (R-AZ) campaign promise to “veto every bill that has a pork-barrel project on it” if elected president would result in $65 billion of cuts to programs, including U.S. funding assistance to Israel and funding for military housing. Now, McCain’s top economic adviser, Douglas Holtz-Eakin, says that McCain is changing the definition of earmarks. Under the new definition, “there are between $16 billion and $18 billion” of earmarks in the current budget. Holtz-Eakin “declined to say whether McCain would ever begin to name programs he’ll cut.”

Politics

Mrs. McCain’s Taxes

John McCain’s campaign released the Senators tax returns, but with a catch — we don’t get to see Mrs. McCain’s taxes, even though she’s an extremely wealthy heiress who actually has the bulk of the family’s money. That’s a preposterous dodge, but it’s actually somewhat less preposterous than the official rationale for the dodge: “In the interest of protecting the privacy of her children, Mrs. McCain will not be releasing her personal tax returns.”

What could that possibly mean? Suppose the Clintons tried to use Chelsea’s privacy as an excuse not to release their financial information — people would have laughed. Then screamed.

Yglesias

Is WalMart Embittering?

I feel like this article on how WalMart and other big box retailers are really what’s making small town America bitter were it not written by someone who “teaches history and international relations at the Institut d’études politiques in Paris.”

My understanding, meanwhile, is that small proprietors are just about the most hard-core rightwingers in America in terms of their political allegiances (really big companies need to hedge their bets politically) so it’s hard to believe that the (alleged) decline of local ownership in small towns is responsible for any political shifts to the right that may or may not have occurred.

Economy

Douglas Holtz-Eakin Vs. Douglas Holtz-Eakin On Corporate Expensing

Our guest bloggers are Robert Gordon and James Kvaal, fellows at the Center for American Progress Action Fund.

John McCain has proposed to let corporations immediately deduct (or “expense”) the full cost of equipment and technology purchases, rather than deducting the costs over time. We analyzed this proposal several weeks ago and concluded that it would cost $745 billion over the next 10 years.

The McCain campaign and its top economic advisor, Dr. Douglas Holtz-Eakin, are now saying that this central provision of his corporate tax cut will cost taxpayers nothing. But the Congressional Budget Office, when led by Dr. Douglas Holtz-Eakin, reached the opposite conclusion.

The McCain campaign is claiming this measure is free because Treasury will lose money at first, then recoup it over time.

On its face, this doesn’t make a lot of sense. We all know $100 today is worth more than $10 a year for 10 years. And McCain is saying his plan will increase investment — how could that be if his plan has no cost to the Treasury?

In the past, Holtz-Eakin has recognized that expensing costs money. He signed a cost estimate for making permanent a provision of the 2002 stimulus package that allowed companies to expense 50% of their costs. The estimate is the last line on page 92 here, reproduced below:

kvaal.gif

This estimate shows that allowing companies to expense 50 percent of new investments would cost $440 billion over 10 years. And the costs are still very high, nearly $30 billion, 10 years after the provision is made permanent. McCain’s proposal for 100 percent expensing would be even more expensive.

If Holtz-Eakin was right then, how can he be right now?

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