Today – after spending the weekend going back-and-forth about whether to issue new proposals – Sen. John McCain (R-AZ) formally announced his newest economic plan, entitled The Pension and Family Security Plan. Like his previous economic outline – Jobs For America – McCain’s new plan amounts to little more than a handout to the wealthy and corporations, while doing nothing for the vast majority of Americans.
Here is a breakdown of what McCain said about the plan during a speech today in Pennsylvania, and the reality behind it:
McCain: Current rules mandate that investors must begin to sell off their IRAs and 401Ks when they reach age 70 and one half years old. Those rules should be suspended to spare senior citizens from being forced to sell their stock just as the market is hurting the most.
Reality: Under current law, seniors would not be required to sell stock at a depreciated value. As Dean Baker wrote, “the reason no one will have to sell stock is that the law only requires a withdrawal of approximately 4 percent of the account. Virtually no one is going to have a retirement account that is 100 percent invested in stock when they are 70 years old. This means that they can make their withdrawal from money invested in money market funds or other assets. They will not be forced to sell their stock at depressed prices.”
McCain: I will begin by making certain that the 700 billion dollars already committed to economic recovery is not used to further enrich the very people and institutions that invited these troubles with their own reckless conduct.
Reality: In fact, McCain’s plan to have the federal government buy bad mortgages does “enrich the very people and institutions that invited these troubles.” This is because he proposes buying the toxic mortgages at original market value, instead of their depreciated current value. Thus, taxpayers absorb the loss, instead of bankers.
McCain: Retirees have suffered enough and need relief, and the surest relief is to let them keep more of their own savings. It is essential that we avoid an exodus of capital from the market.
Reality: McCain’s plan states that “withdrawals from tax-preferred accounts – IRAs And 401(k)s – should be taxed at the lowest rate – 10 percent – in 2008 and 2009.” But this will merely encourage an “exodus of capital,” as wealthy retirees withdraw from their accounts before the higher rate kicks back in after 2009.
McCain: We will reduce the federal business tax rate from 35 percent — the second-highest in the world — to 25 percent…Reducing business tax rates has the potential to stop and reverse the rise of unemployment, and could create millions of new jobs.
Reality: This proposal, as the Wonk Room has pointed out on multiple occasions, will not create new jobs. The Congressional Budget Office clearly stated that a corporate tax cut “does not create an incentive for [corporations] to spend more on labor.” In an analysis for the Center for American Progress Action Fund, Brian Levine found that McCain’s plan “would create only about 450,000 jobs in 2009, at a cost of $280 billion,” while “the United States needs to generate 1.5 million jobs a year just to keep up with the new workers entering the labor force.”
As ThinkProgress noted today, McCain’s plan also includes a temporary cut in the capital gains tax – a provision often promoted by conservatives. But as Marc Ambinder concluded, lower capital gains are “not exactly essential to getting the economy going in a year in which people do not have an awful lot of capital gains, although the McCain program calls this measure an incentive to do just that.”
McCain, once again, is trying to pass off an economic plan aimed at helping millionaires as one that would benefit a wide swath of America.