This weekend, Sen. John McCain (R-AZ) announced his “goal” of balancing the budget in his first term. “It has to be our goal, because we’re mortgaging these young people’s future,” he said.
There are two ways to lower the deficit: raise taxes or cut spending. On Sunday, McCain took taxes off the table by taking the “Read My Lips” plunge, proclaiming that as president he would not raise taxes for any reason:
MCCAIN: No new taxes. […]
Q: But under no circumstances would you increase taxes?
But it’s not just that McCain won’t raise taxes. On his campaign website, McCain trumpets a laundry list of tax cuts:
— Permanently repeal the Alternative Minimum Tax (AMT)
— Cut the corporate tax rate from 35 to 25 percent
— Provide all individuals with a $2,500 [health care] tax credit ($5,000 for families)
— Expanded health savings accounts
— Allow first-year deduction, or “expensing”, of equipment and technology investments.
— Establish permanent tax credit equal to 10 Percent of wages spent on R&D.
McCain may decry the current deficits, but his plan will only exacerbate them. The first three items on his tax cut list alone would cost more than $380 billion in 2009, far more than President Bush’s tax cuts combined.
So, how will McCain pay for his tax cuts? He touts his pledge to eliminate earmarks, but this would save roughly $20 to $30 billion a year. McCain is still left with over $350 billion in tax cuts unaccounted for, which will require massive — and unpopular — spending cuts if he is going to keep his word.
McCain has said in the past that he thinks tax cuts should be paid for. He voted against Bush’s 2001 tax cuts, for example, because the President did not provide a way to pay for them:
“All the predicates for the 2001 tax cuts and all the predictions for its results were absolutely, completely wrong,”he said. “And it will worsen the deficit before it ever helps the economy,” he added. [Newhouse News Service, 2/24/03]
Despite admitting to not understanding the economy, McCain still needs to answer a fundamental question about his tax plan: if he’s going to lower taxes and balance the budget at the same time, what programs will he cut?