McCain's fiscal road winds into fantasyland

Ron Eachus
April 28, 2008

While Barack Obama and Hillary Clinton were bogged down in Pennsylvania for six weeks, John McCain was free to roam all over. And roam he did.

I'm not talking just about going to Ohio, Alabama, Arkansas, Kentucky, Louisiana, Wisconsin. … I'm talking about his positions on economic issues, where he has literally been all over the place.

First he admits to reporters and the Wall Street Journal that economics isn't really something he has understood. Then, once he realizes the economy is supplanting Iraq as the voters' top concern, he starts to make political proclamations about economic policies.

In one phase of the journey, he says he will always favor less regulation. At another he distinguishes himself from President Bush by supporting regulation of carbon dioxide and other greenhouse gases.

When the mortgage crisis, caused in part by lack of regulation, tossed the economy into turmoil, he said it wasn't the government's duty to bail out or reward either the big banks or the small borrowers. Then, faced with a "do nothing" image, he shifted and proposed a federal mortgage assistance plan for homeowners in danger of losing their homes that would cost as much as $10 billion by his own estimates.

But perhaps no trek has been as fanciful as his tour through the federal budget, where he says he can extend the Bush tax cuts, continue fighting the war in Iraq, increase military spending add even more tax cuts and still cut enough domestic spending to balance the budget.

In 2001 and 2003, McCain said he "cannot in good conscience" support the Bush tax cuts because they disproportionately benefited the wealthy and the costs of Iraq were unknown. Now he steadfastly promises to extend those same tax cuts as part of his no-new-taxes-no-matter-what pledge. And in a recent major economic policy speech, he added a bunch more.

Complete repeal of the alternative minimum tax, which combined with the Bush tax cuts reduces revenue by about $1 trillion in four years. Slashing corporate income tax rates from 35 percent to 25 percent. Cost to Treasury? About $400 billion in four years. Doubling the dependent exemption to $7,000 per child: $171 billion cost in four years.

McCain cavalierly dismisses concerns about the deficit implications of his economic plan by claiming he can find $100 billion in reduced domestic spending "in a New York minute." On "ABC News This Week," he reiterated he could do it "tomorrow."

He loves to cite elimination of earmark spending as his budget-balancing mechanism. But earmarks are only about $18 billion per year, less than 0.5 percent of the budget. And even if earmarking isn't allowed, some spending for the projects still will be included in agency budgets.

But $100 billion reduction in discretionary non-military spending is far more than any Congress has ever cut. When pressed on "This Week," McCain cited two expenditure bills, one $35 billion and and one $65 billion, as evidence of how easy it could be reached. But when pressed, he admitted he wouldn't cut everything in those bills, such as aid to Israel.

Even if he showed us tomorrow where the $100 billion from domestic spending comes from, he's using the savings to finance the corporate tax cuts he proposed. No deficit reduction there.

As the executive director of the Concord Coalition, a bipartisan group promoting a balanced budget, observed, "the tax cuts are specific and large and the spending cuts are small and vague."

Some spending and tax cuts McCain has proposed are worth supporting, but in totality, his pledge to balance the budget by financing trillions in tax cuts with reductions in domestic spending is a journey into pure fantasy.

Ron Eachus of Salem is a former legislator and a former chairman of the Oregon Public Utility Commission. His column appears on Mondays. Send e-mail to re4869@comcast.net.

Source: http://www.statesmanjournal.com/apps/pbcs.dll/article?AID=/20080428/COLUMN0703/804280307/1097/COLUMN