Today, Sen. James Inhofe (R-OK) visited the Tahlequah Daily Press in order to outline a new “six-point economic plan,” which he claims will “get our economy back on track.” Remarkably, Inhofe managed to pack into one economic outline multiple ways in which to cut taxes for the wealthy, while proposing little to aid the rest of Americans. Here is how Inhofe hopes to save the economy:

- Make the 2001 and 2003 tax cuts permanent.

The Center on Budget and Policy Priorities (CBPP) notes that permanently extending all of the Bush tax cuts would cost $3.8 trillion over ten years. 22 percent of the benefits from this would go to those making over $1 million, and 31 percent go to the top 1 percent of households. Meanwhile, the bottom 60 percent of taxpayers would see 12 percent of the benefit.

- Incentivize savings by relaxing limits on IRA contributions.

There are tax advantages to investing through an IRA because contributions “are tax-deductible, and accumulations within the accounts occur on a tax-free basis,” so investment strategists note that “it is normally best to try and make the maximum annual contribution.” But the CBPP has noted that “only about 5 percent of those eligible for IRAs contribute the maximum amount,” and raising limits on contributions would “swell deficits” while “doing little or nothing to assist low- and moderate-income households to save more for retirement.”

- Promote investment by eliminating the capital gains rate and repatriate foreign earnings.

As the Wonk Room noted when Sen. John McCain (R-AZ) proposed a temporary cut in the capital gains tax, the benefits from such a cut go overwhelmingly to millionaires. As the Tax Policy Center pointed out, “75% of the benefit of low taxes on capital gains and dividends already go to those making $600,000 or more. Half goes to those making $2.8 million or more.”

With this outline, Inhofe is proposing some of the same fixes for the economy that conservatives put forth when debating both the $700 billion economic bailout bill (before and after it initially failed to pass the House) and the economic stimulus package. For conservatives, it seems, there’s nothing that a tax cut for the rich won’t fix.

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Today, testifying before the House Budget Committee, Chairman of the Federal Reserve Board Ben Bernanke offered support for an economic stimulus package, which is something that Congress plans to consider during a lame-duck session following the Nov. 4 election. Bernanke said that a stimulus package “might be particularly effective at promoting economic growth“:

With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by Congress at this juncture seems appropriate.

Last week, Sen. Harry Reid (D-NV) unveiled a stimulus package that includes “increased spending on infrastructure, an extension of unemployment benefits and relief for struggling homeowners.” However, House conservatives are balking at some elements of the plan, particularly those aimed at infrastructure projects.

Rep. Roy Blunt (R-MO) said a stimulus bill should not be used to finance “a huge public works plan.” Conservatives have released their own stimulus proposal, which calls to “ease the uncompetitive nature of our nation’s tax rates“:

Nothing being discussed will ease the uncompetitive nature of our nation’s tax rates. Nothing being discussed will bring a single dollar of private capital into our markets, which would help stabilize and restore American families’ savings and retirement accounts.

Conservatives propose, among other things, “lowering the 35-percent tax rate on money U.S. companies make overseas, suspending the capital gains tax for individuals and businesses that purchase equity over the next two years and lowering the corporate tax rate.” If this all sounds familiar, that’s because it is. When House conservatives released their counter-proposal to the $700 economic bailout bill, it included many of the same provisions.

As Nobel Prize winning economist Paul Krugman noted, though, this is “a good time to engage in some serious infrastructure spending“:

The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let’s get those projects rolling.

The New York Times reported today that a “consensus” is emerging to “let the deficit rise” while combating the financial crisis. Indeed, an economic stimulus package should take precedence over short-term concern for the budget deficit.

Our guest blogger is Michael Ettlinger, Vice President for Economic Policy at the Center for American Progress Action Fund.

On Friday, the McCain campaign released Cindy McCain’s 2007 tax returns. Sadly for the McCains, Mrs. McCain shows over $1.8 million dollars less tax return income in 2007 than 2006. Of course, she still reported over $4 million of income ($4,197,028) which — when added to the Senator’s tax return income in 2007 ($405,409) — brought their total to over $4.5 million ($4,602,437 to be precise).

A large source of income for the McCains came in the form of capital gains. This is an example of how, though many people have capital gains income sporadically throughout their lives, the wealthy have them quite consistently and they constitute an important source of income. In 2006, the McCains reported a total of $743,476 in capital gains. In 2007 they reported $746,395.

Last week, as part of his new Pension and Family Security Plan, Sen. McCain proposed temporarily cutting the capital gains tax from 15 percent to 7.5 percent. The proposal — had it been in effect in these years — would have reduced the McCains’ taxes by $55,761 in 2006 and $55,980 in 2007 (a two-year total of $111,740).

This is on top of the more than $350,000 that they would have saved in 2006 due to McCain’s other tax proposals.

One other note: the campaign refuses to release anything but Mrs. McCain’s 1040 tax form, which provides only a fraction of the information that she is reporting to the IRS. Most of the McCains’ decline in income between 2007 and 2006 was in “Schedule E” income. Schedule E is a form where income from a wide variety of sources is reported – including trusts and a type of closely held (often family owned) business.

There is a great deal of income legally sheltered from taxation in the machinations underlying the schedule E. Without having Mrs. McCain’s complete records, it’s impossible to know for sure whether the McCains actually did better or worse in 2007 than in 2006 – their accountants may just have had more ways to legally shelter income.

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