John McCain’s ‘economic plan’ packs a solid one-two punch for the middle class. His first hit is in his sweeping, unprecedented tax cuts–tax cuts that that go primarily to corporations and high-income tax payers, stripping the government of $300 billion in annual revenues.
Now John McCain has made it very clear that he plans to balance the federal budget by the end of his second term.
To balance the budget, McCain would need to cut federal programs down to a level they haven’t seen since 1976–decreasing spending by programs like the Department of Education, Department of Agriculture and Department of Labor over 40% if you hold constant defense spending, which the senator has agreed not to cut. No president would propose and no Congress would pass such draconian cuts.
So how will McCain balance the budget? James Pethokoukis of U.S. News thinks he has the answer: massive cuts in Social Security benefits. The cuts Pethokoukis outlines would not only eliminate the Social Security shortfall but also generate $2.9 trillion to help pay for McCain’s tax cuts. He points to McCain aides’ suggestions that he might raise the retirement age and cut the growth in benefits over time.
Implementing those two solutions would actually result in more money going into Social Security than is needed to fund scheduled benefits. There would be money left over to help reduce taxes or increase spending on education or energy or whatever [...] Now if you did a combination of price indexing starting in 2015 and extended the retirement age to 70 by 2050, that $5 trillion deficit turns into a $2.87 trillion surplus.
If Pethokoukis is right, McCain is attempting to do something that no president has ever done before: using payroll tax revenue to fund other functions of government. The result would be huge cuts in the program that lifts 13 million seniors out of poverty and a shift of the tax burden from progressive corporate taxes onto regressive wage taxes.
The gaping whole in McCain’s budget plans has left us all to speculate. But it cannot be a good sign for the McCain campaign when even McCain sympathizers think they detect a plan for massive cuts in arguably the most popular government program in history.