The Wonk Room

Education: A Good Investment in a Bear Market»

Skeptics argue that the United States’ mounting budget deficits are a reason to put off public investments and reign in ambitious reforms. They’re wrong.

It is more imperative than ever to make targeted public investments that will yield high returns and lay the foundation for 21st century growth.

One set of savvy investments is in education, which recent research suggests would grow the economy and earn the government significant positive returns.

With investors around the world scrambling for a safe haven for their money, U.S. treasury bills are in high demand, meaning low yields for investors, but cheap money for the U.S. government.

At the same time, too many of America’s students are stuck in failing schools without quality teachers, test scores in key subject areas are woefully behind the rest of the world, huge gaps persist between students of different races and incomes, and more and more high schoolers are finding college out of reach.

This isn’t just a tragedy for young people and their families, it represents a huge missed opportunity.

High quality universal pre-school, improved efficiency, accountability and funding for grades K-12, and broader access to college, would address these festering educational problems and earn dividends on the taxpayer’s dime.

The fiscal benefits of these reforms aren’t abstract or aspirational. Conservative projections on the real fiscal rate of return on public educational investments are high: 10% for high quality preschool programs, 15% for innovative K-12 reforms like First Things First, and 10.3% for investments to encourage college access and graduation.

By contrast, the CBO’s projected real 10-year treasury bond yield (the cost of borrowing by the United States government) over the next decade is just 3.2% (after inflation).

The source of these potential returns isn’t complicated: better educated people are more productive, get sick less often, are less likely to require public assistance, commit fewer crimes, make more money, and pay more in taxes. Creating more of them is a good idea.

Of course, as a group of researchers at Columbia Teachers College write, “a society that provides fairer access to opportunities, that is more productive and with higher employment, and that has better health and less crime is a better society in itself. It is simply an added incentive that the attainment of such a society is also profoundly good economics.”

Read CAP’s education plans here.

IRS: Loopholes Let Corporations Pay 25% Tax Rate, Not 35%»

John McCain and other conservatives spent the last year railing against the United States’ 35 percent corporate tax rate.

What they never mentioned is that this 35 percent corporate rate is so riddled with loopholes and shelters that the United States collects less in corporate taxes as a percentage of GDP than most other industrialized countries.

Now, new IRS data shows typical American companies paid only 25.3 percent of their U.S. book income in federal corporate taxes in 2005, despite a statutory corporate tax rate of 35 percent, by using loopholes and shelters.

U.S. companies “reported about $1.35 trillion in pretax U.S. book income to their investors in 2005, but about $1.03 trillion to the IRS — a difference of about 23%.”

A quick back of the envelope calculation shows that the difference between paying 35 percent on $1.03 trillion in income and $1.35 trillion in income is approximately $112 billion — enough to finance more than half of CAP’s ambitious “Green Recovery” plan to jumpstart a clean energy economy.

Some differences between book and reported income are legal and legitimate, but they can also be a sign of sheltering and abuse. Effective tax reform would first broaden the tax base by closing loopholes and eliminating shelters, before considering a lower statutory corporate rate.

China’s Stimulus In Perspective: Comparable U.S. Package Would Be $2.4 Trillion»

Over the weekend China unveiled a “massive” $568 billion stimulus plan to “loosen credit conditions, cut taxes and embark on a massive infrastructure spending program in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand.”

The announcement sent markets around the world soaring as it eased fears of a huge dropoff in Chinese demand.

This emergency spending by the Chinese government will invest “the equivalent of almost a fifth of its gross domestic product last year on infrastructure.” The $568 billion is approximately 18% of China’s $3.3 trillion 2007 GDP.

An equivalent investment by the United States government in infrastructure and emergency spending would cost over $2.4 trillion, or 18% of the United States’ $13.8 trillion 2007 GDP.

This is 15 times the size of Speaker Pelosi’s proposed two-part $160 billion stimulus, and 12 times the size of Center for American Progress’ “Green Recovery” proposal that would invest $200 billion in green infrastructure and alternative energy priorities over two years.

In a column today, Nobel Prize winning economist Paul Krugman points out that much of the failure of FDR’s New Deal stimulus was that it was not large enough.

He writes, “My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little.”

WATCH: McCain Dances With The Far-Right And The Super-Rich On Economic Policy»

When it comes to taxes and the economy, John McCain has got his dancing shoes on.

In the early 2000s, John McCain eschewed his reputation as a radical tax cutter by opposing the Bush tax cuts because they “came at the expense of middle class Americans.”

But now he’s waltzed all the way back to the far right, proposing not only to extend the Bush tax cuts, but double them by giving away another $300 billion in budget-busting tax breaks for corporations and the wealthy while leaving out 100 million Americans.

In the last month, he’s made overtures to the middle class, promising mortgage relief and a new set of tax cuts for the middle class. But when the details were revealed, they turned out to be just more giveaways to corporations and the wealthy.

Watch him go:

Dancing shoes? Maybe he’ll just add taps to his $520 loafers.

Digg It!

UPDATE: Embeddable code after the jump.

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Exxon-Mobil Profits Up 250% Since 2000, American Worker Wages Stagnant»

The winners and losers of the Bush years are now clear.

Today, Exxon-Mobil announced third quarter profits of $14.83 billion, the most profitable three months of any U.S. company in history.

These profits represent annual profits over 250% of the levels at the beginning of the Bush years. Over the same period, real average wages for the American worker have stayed essentially flat, growing only 2% over eight years.

Real median household income was lower in 2007 (last data available) than it was in 2000, after growing 13% from 1992 to 2008.

These huge oil company profits come even as the American economy has shrunk 0.3% and slides into recession.

John McCain’s plan to solve this crisis? A budget busting tax plan that would give a $1.2 billion tax break to Exxon-Mobile ($4 billion for America’s largest oil companies) and give nothing to over 100 million Americans.

Digg It!

6 Villains Of The Economic Crisis»

Conservatives have been desperately trying to shift responsibility for the spiraling economic crisis away from its root cause: a bankrupt governing philosophy that shreds regulations and neglects vital supervision.

But there are a few individuals more responsible than most. A new site, How Did This Happen, a joint product of the Center for American Progress Action Fund and Media Matters Action Network, has identified six villains of the crisis.

Here are two:

Former Sen. Phil Gramm (R-TX)

Gramm is a former Republican senator from Texas who now serves a vice chairman of the UBS investment bank. He served as a senior economic advisor to Sen. John McCain (R-AZ) until October when he stepped down after calling America a “nation of whiners” experiencing a “mental recession.”
While still in the Senate, Gramm shielded derivatives from financial regulatory oversight, slipping a rule into an unrelated budget bill in 2000. The unregulated credit default swap market reached a peak of $62 trillion and contributed to the collapses of Bear Stearns Cos., Lehman Brothers Holding Inc., and the American International Group Inc. in recent months.

Alan Greenspan, Federal Reserve System

As chairman of the board of governors of the Federal Reserve System, Greenspan allowed the markets to run wild without proper supervision, a radical free-market ideology exemplified by a 2005 speech when he said “private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.” He resisted the farsighted recommendation of fellow Fed governor Ned Gramlich that the Fed act to prevent some abuses predatory and risky practices in subprime mortgages, such as mortgages issued without verifying the borrower’s income or ability to repay the mortgage once the introductory rate expired.

Greenspan also opposed a voluntary code of conduct for mortgage lenders. Greenspan also led efforts to exempt derivatives legislation from the oversight BY the Commodity Futures Trading Commission, despite the clear threat to the financial system posed by the near-collapse of the hedge fund Long Term Capital Management due partly to disastrous bets on derivatives.

He now regrets his deregulatory stance. Testifying before the House Government Oversight Committee on October 23rd he explained that he “made a mistake” and had “found a flaw” in his free market ideology.

Read about all six here.

McCain: Advisers’ Companies Had ‘No Evasions Or Escapes’ From Their Taxes»

Yesterday on the Situation Room, McCain defended the tax practices of the companies of his economic advisers:

…[I]f you talk to the CEO of FedEx, Fred Smith, if you talk to the CEO of Cisco, John Chambers, you talk to Meg Whitman, former CEO of eBay, you know what they’ll tell you? They’ll tell you they pay their full 35 percent…they’re paying 35 percent full freight, no evasions or escapes from the taxes. They’re paying full freight, and they’ll show you their tax returns.

Watch it:

What McCain didn’t mention is that at least two of the companies of his advisers, Fred Smith’s FedEx and Hewlett Packard under former CEO Carly Firoina, have a history of massive tax evasion.

A 2007 investigation by the IRS found that FedEx owed $319 million in back taxes from 2002 by misreporting its employees as independent contractors. Just yesterday this full penalty was withdrawn on appeal, but an investigation is continuing into their tax returns for 2003-2006. Lawyers for the drivers insist that FedEx could owe up to $1 billion in back taxes.

Similarly, as CEO of Hewlett Packard, McCain adviser Carly Fiorina deferred taxation on $14.4 billion by keeping it offshore. This lowered Hewlett-Packard’s effective tax rate from 35 percent to 12 percent.

America collects only 2.2% of its GDP in corporate taxes because of loopholes, shelters and giveaways, compared to 4% in Ireland (which McCain frequently touts for its 11% corporate tax rate).

Rather than closing the loopholes that let his economic advisers’ companies dodge millions in taxes, McCain’s tax plan would have let them to pay even less: saving FedEx $260 million in taxes and HP $250 million had his tax plan been effect in 2007.

UPDATED REPORT: McCain’s Tax Plan Would Have Saved The McCains $730,000»

An updated analysis of the Obama and McCain tax plans by the Center for American Progress Action Fund finds that John and Cindy McCain would have saved $730,000 over 2006 and 2007 under McCain’s tax plan.

Under Obama’s proposed plan, the McCains would have saved $62,000 over the same two years.

Read the full analysis here.

Barack and Michelle Obama would have saved $270,000 under McCain’s plan and $14,000 under Obama’s.

This analysis incorporates the effects of John McCain’s new controversial proposal to temporarily cut the capital gains tax to 7.5% from 15%, a cut whose benefits go overwhelmingly to those making over $600,000/year, as well as other recent modifications to the McCain and Obama proposals.

John McCain’s $300 billion tax plan is heavily skewed towards corporations and the wealthy and does nothing for over 100 million Americans.

It sure wouldn’t do nothing for John and Cindy McCain, though.

Better Job Growth Under ‘Tax and Spend Liberals’»

John McCain has been attacking Barack Obama as a “tax-and-spend liberal” for his plan to roll back the Bush tax cuts for people making over $250,000 in order to pay for middle class tax cuts and investments in alternative energy, health care, and education.

McCain, for his part, has proposed doubling the Bush tax cuts by adding an additional $300 billion in budget busting tax breaks for corporations and the wealthy.

Both these approaches have been tried, and only one created real job growth and widespread prosperity.

Under President Bush, whose economic agenda consisted almost entirely of massive tax cuts heavily skewed to the wealthy, job growth was sluggish, creating only 4.8 million jobs over the course of his entire presidency.

By contrast, in the first months of his administration, President Clinton proposed a budget that raised income tax rates slightly on the very rich and “new ‘investment’ spending for education, job training, social services, health, science and technology and community and regional development.” The resulting budget lay the groundwork for a balanced budget and stunning economic growth that created 23 million jobs over the course of his presidency.

At the time, the Washington Post reported that conservatives “blasted [the Clinton plan] as more of their old ‘tax and spend’ policies.”

2008 Retiree Would Have Lost $26,000 In Bush/McCain Style Private Social Security Account»

The wild stock market fluctuations have wiped out $2 trillion in private retirement accounts in the last 15 months.

If John McCain and George W. Bush had had their way, millions of worker’s Social Security benefits would have been at risk.

To illustrate this risk, a new analysis from the Center for American Progress Action Fund finds that a retiree with a private Social Security account invested in stocks, along the lines of those proposed by President Bush and supported by John McCain in 2005, would have lost approximately $26,000 if they had retired on October 1, 2008 after 35 years of contributions to such an account.

Read the full analysis here.

But it could have been even worse. If the U.S. economy had undergone a decades long slump and performed like the Japanese economy over the past 35 years, the account would created a loss of almost $70,000.

In a rosier scenario, if the U.S. market had performed like the German market, a worker would have made almost $40,000 in their account. But this radical unpredictability is precisely the reason why draining trillions from Social Security to pay for these accounts is a very bad idea.

Check out a review of what the research from the 2005 Social Security privatization debate can tell us about John McCain’s plan to put retirement security on the stock market here.

To oppose the privatization of Social Security, sign the “Golden Pledge” here.

McCain’s Social Security Privatization: Bad Idea When Bush Proposed It, Bad Idea Now»

The events of the last two weeks have illustrated the volatility of America’s financial markets. Today, the Dow closed below where it was on George W. Bush’s first day in office.

And yet, John McCain still supports a Bush-style Social Security privatization plan that would encourage Americans to risk their retirement benefits on the stock market.

Social Security provides the majority of income for most seniors and is a vital insurance system for disabled workers and dependent spouses. Income provided by Social Security keeps 13 million seniors from living in poverty.

McCain’s proposal, which would allow workers to divert their social security payments into private accounts, is risky, expensive, a financial boon to Wall Street, and would undermine, not shore up, the long-term solvency of Social Security.

This is a debate that’s been had before. When Bush proposed a similar plan in 2005, analysts were able to assess its impact and debunk its myths. Here’s what they concluded:

Private accounts are risky: Bush and McCain tout the potential for higher returns as a reason to shift Social Security payments into the stock market. But an analysis by Robert Shiller of Yale University of a standard “lifetime” personal account, as envisioned by Bush and McCain, show they actually lose money one-third of the time. Furthermore, projections of rosy growth used to justify personal accounts stand in stark contrast to the projections of slower growth that indicate there may be an eventual shortfall in Social Security.

Private accounts are expensive: Bush’s 2005 plan, supported by John McCain, to divert Social Security payments to private accounts, would have unnecessarily added an additional $17.7 trillion to the national debt by 2050, according to an analysis by James Horney and Richard Kogan. This borrowing was needed entirely to fund the creation of private accounts, not to shore up Social Security solvency.

Private accounts provide a boon for Wall Street: Wall Street firms advocate Social Security privatization for a reason: they’ve got a lot to gain. A 1997 estimate by actuary David Langer for the Washington Post projected that Wall Street firms would make $240 billion in fees during the first 12 years of a privatization scheme– this number is undoubtedly much higher now.

Private accounts won’t fix Social Security: The CBO recently projected that Social Security will continue to pay full benefits for the next 30 years. After 2041, the system will pay out 78% of benefits. Private accounts wouldn’t address this shortfall, they would cause more damage by requiring benefit cuts and shortening Social Security’s long-term outlook.

What McCain won’t tell you: The cost of closing the long-term shortfall in Social Security is less than the cost of extending Bush’s tax breaks for the richest 1% of Americans, as John McCain has proposed.

But McCain seems less interested in saving Social Security than gambling it away.

Since McCain Proposed Social Security Privatization In 2000, Stock Market Has Swung Wildly, Dropped 8%»

While running for the Republican party’s nomination in 2000, John McCain supported a partial privatization of Social Security that would have encouraged workers to shift their Social Security contributions into the stock market.

Since then, the stock market has plunged, bubbled, and plunged again, with the Dow Jones Industrial Average closing 8% lower yesterday than it was on January 11th, 2000 when John McCain unveiled “a program to shore up Social Security through the establishment of individual investment accounts.”

This means the stocks in a private account would have seen their value drop over almost a decade, with their investment further eroded by the rate of inflation (a dollar invested in 1999 is worth only 78 cents in 2008 dollars, even if the stock market had stayed exactly flat).

Despite these wild fluctuations, John McCain has consistently supported privatizing social security, supporting the Bush plan in 2005, and telling the Wall Street Journal as recently as March of this year that he “backs a system of private retirement accounts that President Bush pushed unsuccessfully.”

On September 6th, McCain finally clarified his campaign’s stance on private accounts, confirming to the AARP Life@50 conference that he was, in fact, in favor of them. Since September 6th, the Dow has plunged over 5%.

The radical Bush-McCain plan to privatize social security is unnecessary, would shorten the programs life, and would put retirement security at the mercy of the “casino” on Wall Street.

Actually, Yes, McCain Will Leave Michigan Workers ‘Out To Dry’ While Giving ‘Billions To Wall Street’»

Today in Michigan, Sen. John McCain (R-AZ) said:

It’s great to be here today with the assembly workers of this GM plant. I’m here to send a message to Washington and Wall Street: We are not going to leave the workers here in Michigan hung out to dry while we give billions in taxpayer dollars to Wall Street.

Wrong.

John McCain’s Bush-style corporate tax cuts would give $6.3 billion every year to America’s largest banks and financial institutions, $45 billion to the Fortune 200, and almost nothing to over 100 million American families.

As for workers in Michigan, John McCain’s health care plan would raise taxes by $1,100 by 2013 for an average Michigan couple making $60,000.

In other words, McCain’s message to Washington and Wall Street is…more of the same.

McCain Will Cut Taxes For ‘Literally Everyone’…Except 100 Million Households»

On Saturday, John McCain told the New Hampshire Union Leader that he’d lower taxes for everyone:

John McCain yesterday said he will take Barack Obama’s New Hampshire pledge not to raise taxes for anyone making less than $250,000. “Not only that, I’m going to cut taxes for literally everybody,” the Republican nominee said yesterday in a telephone interview from Washington, D.C.

This isn’t true.

John McCain’s tax plan leaves out the millions of American households who do not earn enough money to pay income taxes and millions more middle class households with no dependents. This amounts to around 100 million households who’d see no tax cut under John McCain. (This corroborated by both the Obama campaign, and the right-wing conservative Tax Foundation.)

Furthermore, the millions of Americans who currently get their health care through their jobs could see their taxes increase when John McCain starts taxing their health benefits and gives them a credit that won’t offset their increased taxes. An American couple making $60,000 a year would see their taxes go up over $1,100 by 2013.

So when John McCain tells you he’ll cut taxes for “literally everyone,” he’s just not telling the truth.

Which Eight Years Did McCain Prefer?»

The Bureau of Labor Statistics has released its monthly employment data, and the picture is bleak: the American economy lost 84,000 jobs in August, and the employment rate jumped to 6.1%, the highest in five years.

While productivity is up 4.3% since last year (people are working harder with better, more efficient technology), real wages have sagged, dropping .4%.

These numbers are a continuation of trends resulting from the policies of George W. Bush: when times are good, they’re only good for corporations and the wealthy, and when times are bad, they’re mostly bad for the middle class.

Take a look at the comparison in job growth from Bush’s presidency to the eight years before George W. Bush:

Unfortunately, John McCain plans to continue George W. Bush’s failed economic policies. Today, in response to the new job numbers, McCain’s campaign said “Americans are hurting and we must act to create jobs.”

They’re right, but that’s not what John McCain’s Bush-style economic plan would do.

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Sarah Palin: Earmark Queen Of The Earmark State»

In 2000, Sarah Palin, as mayor of the Alaskan town of Wasilla, hired a Washington lobbyist to secure federal earmarks for her community.

This is not totally atypical in her state. Alaska’s government receives more money per capita in federal earmark money than any other state, despite being the only state in the union with no income tax and no sales tax. They fund their government primarily with petroleum money, and recently distributed oil profits to its citizens in the form of rebate checks.

But even in her heavily earmarked state, Sarah Palin was the earmark queen.

From 2000 to 2003, she secured over $27 million in earmarks, averaging $6.7 million in federal money every year for her town of about 6,700 people.

An analysis of the databases of Taxpayers for Common Sense by Center for American Progress Action Fund Senior Fellow Scott Lilly puts these numbers in perspective.

He notes the following amounts:

–$50: The amount the average state received in earmarked funds, per capita in 2008
–$506: The amount received by Alaska’s citizen per capita in 2008, represented by the Senate’s earmarker in chief, Ted Stevens, ten times the national average
–Over $1000: The annual amount received per capita in Wasilla between 2000 and 2003, twice the 2008 Alaska state average

Some of these earmarks drew the scorn of Senator John McCain. The LA Time reports that, “three times in recent years, McCain’s catalogs of ‘objectionable’ spending have included earmarks for this small Alaska town, requested by its mayor at the time — Sarah Palin.”

As Scott Lilly writes, “Palin has advertised herself as a reformer and a skeptic of earmarking while maneuvering to become the earmark queen of the earmark state.”

Digg It!

The Holes In Fred Thompson’s ‘Bucket’»

Last night at the Republican National Convention, former Senator Fred Thompson gave a crack at economic analogies to attack progressives and defend John McCain’s $300 billion tax cut for corporations and the wealthy. He said:

THOMPSON: They tell you they are not going to tax your family. No, they’re just going to tax “businesses”! So unless you buy something from a “business”, like groceries or clothes or gasoline … or unless you get a paycheck from a big or a small “business”, don’t worry … it’s not going to affect you. They say they are not going to take any water out of your side of the bucket, just the “other” side of the bucket!

Sounds simple enough, right? Wrong. There are some gaping holes in Fred Thompson’s folksy but flawed “bucket” analogy.

–We’re not all in the same bucket: Over the last eight years, rising worker productivity has fueled huge corporate profits and relative economic growth. But this economic growth (the “water” in Thompson’s bucket) didn’t trickle down to American families: real wages have stagnated, rapidly eroded by inflation (the spiraling cost of the “gasoline, clothes and groceries” that Thompson mentions).

–McCain’s tax cuts won’t trickle down: McCain’s $300 billion tax cuts for corporations and the wealthy give almost half their value to the top 1% of all taxpayers. The centerpiece of the program, a $175 billion tax cut for corporations won’t create new or better jobs. As the CBO found in a recent report: “increasing the after-tax income of businesses typically does not create an incentive for them to spend more on labor or to produce more.” In other words: no new jobs, no lower prices, just bigger corporate profits.

–McCain borrows water from our kids: John McCain’s massive tax cuts for corporations and the wealthy will be paid for by either deep and draconian cuts to popular government programs, or, more likely, through borrowing. As the Tax Policy Center says, “the positive effects of lower tax rates will be offset by the costs of increased government debt…[which] eventually translates into higher interest rates, which discourage business investment and consumers’ demand for homes and such durable goods as automobiles, or into increased debt owed to foreigners, which mortgages the nation’s long-term economic future.”

There are some holes in your bucket, dear Freddy.

Digg It!

Palin, Like McCain And Bush, Doesn’t ‘Care’ About Bringing Budget ‘Under Control’»

In an interview with the Washington Post, Anchorage Daily News reporter Gregg Erickson described Governor Sarah Palin’s relationship with Alaskan lawmakers:

Washington, D.C.;: You wrote: “If you took a poll of reporters and legislators I expect her approval rating would be down in the teens or twenties.” What do they know about her that the general population does not?

Gregg Erickson: One example: The Republican chair of the Alaska State House Finance budget subcommittee on Heath and Medicaid says he can’t find anyone in Palin’s executive office who cares about helping bring that budget under control. He is furious with her about that.

John McCain has a similarly cavalier attitude about the federal budget.

He has proposed a budget-busting $300 billion tax cut for corporations and the wealthy to go on top of a continuation of the Bush tax cuts. Paying for these huge tax cuts, which leave out over 100 million American families, would require massive draconian cuts to education, scientific research, Medicare and Medicaid, and other important national investments.

More likely, however, they would just lead to massive deficits.

UPDATE: The Washington Post reports today that Palin “employed a lobbying firm to secure almost $27 million in federal earmarks for a town of 6,700 residents while she was its mayor.”

Sarah Palin’s Portfolio Managed By Smith Barney, Her Policies Would Fail Barney Smith»

Last night at the Democratic convention, a former Republican named Barney Smith spoke of the need for economic policies that “Help Barney Smith, not Smith Barney.”

Watch it here:

Ironically, according to Sarah Laskow at the Center for Public Integrity who analyzed Palin’s disclosure forms, Sarah Palin’s financial portfolio is managed by none other than Salomon Smith Barney.

Furthermore, by joining McCain on the ticket, Palin is now endorsing a radical $300 billion in tax breaks for corporations and the wealthy that would leave out millions of American families while delivering $45 billion in tax breaks for America’s 200 largest companies and at least $6.3 billion for America’s largest financial firms.

New Budget Analysis Accepts Gaping Holes In McCain’s Figures»

As we’ve known for quite some time, John McCain’s budget numbers just don’t add up.

A new analysis from the non-partisan New America Foundation’s U.S. Budget Watch should be read cautiously because it uncritically accepts many of John McCain campaign’s most egregious budget distortions.

Matthew Yglesias has already called out the $159 billion in “unspecified budget cuts” which the group allows McCain to claim. The Washington Post called these empty promises to slash spending McCain’s “voodoo economics, based more on wishful thinking than on hard data or carefully considered policy proposals.”

But that’s not the end of it.

U.S. Budget Watch also accepts that, in 2013:

–McCain’s tax cuts are as his adviser’s describe them, not how McCain describes them: An earlier study from the Tax Policy Center found a $2.8 trillion gap between McCain’s proposals as he describes them on the stump, and what his advisers tell analysts in private. In 2013, his plan as his stump speech would suggest costs $260 billion more than the plan as detailed by his advisers.

–McCain’s ‘high risk pools’ will only cost $8 billion: McCain’s campaign insist they will put money towards “high risk pools” to cover people with chronic conditions left out of McCain’s health care plan. Douglas Holtz-Eakin says the campaign might even spend $20 billion to fill the hole, but the Tax Policy Center says it would take at least $100 billion to adequately cover everyone who would need coverage.

–McCain will cut $35 billion in earmarks: Even the conservative Heritage Foundation acknowledges that there are only about $9 billion in earmarks that could be eliminated. Even John McCain acknowledges that if the process of earmarking were eliminated, many of the same programs would still be funded, only from other parts of the budget.

–McCain’s alternative tax system will be revenue neutral: U.S. Budget Watch does acknowledges that it’s possible that “because most taxpayers will choose the system in which they pay lower taxes, significant revenue would be lost.” What they don’t mention is that the Tax Policy Center has estimated the annual cost of such a system: $115 billion in 2013. (Note: This $115 billion is included in McCain’s “rhetoric gap” described above.)

These low-ball cost estimates for McCain’s tax-cuts and spending proposals suggest that even the $159 billion in “unspecified budget cuts” that McCain needs to balance the budget is far, far too optimistic. The real cuts needed would be much more devastating.

As the Tax Policy Center says, “the promises Senator McCain makes (or implies) in his speeches could not be sustained without a radical and unprecedented downsizing of government.”

Cavuto On Holtz-Eakin’s Budget Double Talk: ‘I’m Begging You To Stop’»

On Thursday during an interview on Fox News, Neal Cavuto took McCain Senior Economic Adviser Douglas Holtz-Eakin to task for dodging simple questions on McCain’s economic plan:

CAVUTO: We have a candidate who claims that his opponent, his Democratic opponent, is a tax-hiker. Yet, we have a candidate, in your guy, John McCain, who cannot account for his spending with the aggressive tax cuts he`s planning. Which goes? Which is real?

Watch it:

Cavuto is right. On issue after issue, McCain’s campaign is trying to have it both ways:

– McCain wants “everything on the table” to fix social security, but says any slight tax increases on the rich are “out of the question.”

– McCain’s health care plan is either a budget busting expenditure or a tax hike on the middle class, but his campaign insists it’s neither.

– McCain’s tax cuts for corporations and the wealthy would blow a hole in the deficit, but McCain promises to balance the budget by 2013.

As Douglas Holtz-Eakin went on the attack instead of explaining his candidate’s plan, Cavuto shouted “I’m begging you to stop.” We know how you feel, Neal.

McCain: $39 Billion Dollars Of Tax-Payer Money To Big Oil & Gas Over 5 Years»

If elected president, Sen. John McCain (R-AZ) would provide $39 billion in federal help for oil and gas companies over the next five years, a new report from the Center for American Progress Action Fund finds.

Some of these subsidies already exist: Current subsidies for the Oil & Gas industry total $33 billion over the next five years. John McCain would repeal some of them, but preserve many of them.

He would also pass a corporate tax cut that would be worth more than $22 billion to America’s five largest oil companies over the next five years.

These same dollars could be spent investing in efficiency and alternative sources of energy, which would save American families money, create thousands of new jobs, and help power millions of homes with clean, renewable sources of energy.

Here’s what the money could do:

– Weatherize over 14 million American homes: This would save each household an average of $360 dollars every year in reduced utility bills, and dramatically reducing energy usage and carbon emissions.

–Invest in wind power: This money could be used to build enough wind power plants to power approximately 6 million ho