John McCain's Plan to Reform the Financial Markets:
This is very similar to the $700 billion bailout plan proposed by Treasury Secretary Henry Paulson.
McCain's Economic Stimulus Plan:
- Cut the corporate tax rate to 25% from 35%. Fund the reductions with cuts in "pork-barrel spending", such as the 10,000 local projects, totaling over $10 billion, in legislation recently signed by President Bush.
- Allow expensing of business equipment and technology investment for the first year.
- Establish a tax credit equal to 10% of wages spent on research and development.
McCain's Long-term Economic Platform:
- Repeal the Alternative Minimum Tax (AMT) which cost middle class families nearly $60 billion a year. This tax was originally designed to fall on the wealthiest but, thanks to inflation, each year it snags more middle-income taxpayers who claim a lot of deductions.
- Extend expiring tax cuts from Bush's first term, worth $100 billion a year.
- Approve the President's line item veto.
- Add personal accounts to Social Security.
- More trade agreements. For more, read McCain and Trade
- Increase troops in Iraq.
- More nuclear energy.
- Tax credit of $2,500 per person / $5,000 per family towards health care insurance.
- Reduce wasteful government spending, saving $18 billion per year.
- Reduce Congressional earmarks, saving $60 billion per year.
- Eliminate tax loopholes, saving $45 billion a year.
- Control Medicare costs, reform unemployment training.
Impact on the Economy:
Furthermore, McCain's solution to the Social Security shortfall was to cut benefits to match projected payroll tax revenues. He talked about extending the retirement age to 68 and reducing cost-of-living adjustments. He said point-blank that promises to retirees can't be kept. Although his web site said that personal savings accounts wouldn't replace Social Security payments, in an interview with the Wall Street Journal he said they they would. (Source: WSJ, McCain's Economic Platform, March 3, 2008)
He was also supported adding to the troops in Iraq, which would have further increased the budget deficit. The CBO estimates spending on the wars at about $145 billion in 2008.
More nuclear energy would have only helped relieve 1/3 of the nation's dependence on oil. Two-thirds of oil use is for transportation. Furthermore, the U.S. has become dependent on Japanese engineers to build new nuclear plants. (See U.S. has Lost Skills to Build Nuclear Plants)
More trade agreements would have certainly helped the economic recovery, which was fueled by export-driven growth. However, McCain didn't address the main impediment to any U.S. trade agreement, which is massive subsidies to agri-business. This one issue effectively halted the World Trade Organization Doha round. McCain's general calls to reduce government spending were good, but he didn't give enough details as to how to accomplish this.
Overall, the McCain economic platform would reduce budget revenues and raise costs, increasing the deficit and weakening the U.S. economy.
