Earlier this week, Sen. John McCain (R-AZ) delivered a speech on the economy in which he outlined his ambitious plan to cut taxes and balance the budget. McCain’s plan would extend President Bush’s tax cuts, reduce corporate tax rates, repeal the alternative minimum tax (AMT), and increase exemptions for dependents.
But unfortunately for McCain, “economists and nonpartisan analysts” have dug deeper into the details of his plan and concluded that the numbers simply “don’t add up.” The offsets he proposes will not cover the estimated $3.3-$5.7 trilllion cost of the proposal and would end up ballooning the federal deficit. Bloomberg News reports:
“The huge imbalance” in McCain’s plan “is that the tax cuts are specific and large and the spending cuts are small and vague,’’ said Robert Bixby, executive director of the Washington- based Concord Coalition. […]
“This is really a massive increase in the deficit,’’ said Joel Slemrod, an economist specializing in tax policy at the University of Michigan. […]
Stan Collender, a former analyst for the House and Senate budget committees [… said] “there’s no way McCain could balance [his budget] by the time he leaves, unless he doesn’t leave for 25 years.”
Sloppy preparation may explain some of McCain’s discrepancies. Indeed, his economic adviser, Douglas Holtz-Eakin has cited different reports to back-up aspects of McCain’s economic proposals, but in reality they undermine them:
To help pay for the tax cuts, Holtz-Eakin said he would save $30 billion a year by eliminating so-called “rifle shot” provisions. Those include items such as tax breaks for small insurance companies.
A Treasury Department report Holtz-Eakin cited as the source of his estimate states $27 billion could be raised by eliminating narrowly used tax preferences spread over a decade, not a single year.
Despite the country’s sour mood on the economy, McCain said last night that Americans perhaps feel they are better off than they were when Bush took office because “millions of jobs have been created” since then. So therefore, McCain said, “You could make an argument that there’s been great progress economically over that period of time” and that “the fundamentals of America’s economy are strong.” Watch it:
[flv http://video.thinkprogress.org/2008/04/McCainstrongec.320.240.flv]
According to tax filings released today, McCain’s net worth rose by $18 million since 1999. Perhaps that increase in personal wealth makes him think that most Americans, too, are better off than they were eight years ago.