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STRAIGHT TALK.
I just saw Doug Holtz-Eakin lay out the John McCain economic agenda at an Urban Institute event. Needless to say, he didn't really answer any of these questions. But one bit footwork struck me as particularly impressive. Most estimates of McCain's tax agenda suggest that making permanent the tax cuts, adding two new corporate cuts, and repealing the Alternative Minimum Tax would cost around $2-$3 trillion over 10 years. He disagreed. McCain's tax plan, he said, will only add $20 or $30 billion to the deficit.
On first listen, I assumed Holtz-Eakin was just using wildly different numbers than everyone else. Not so. As I reconstructed my notes, here's the magic: First, Doug Holtz-Eakin lambasted the "fantasy baseline" that assumes the Bush tax cuts will end, as they're currently set to do. This knocks a couple trillion off the total, particularly if you assume that it also means the repeal of the Alternative Minimum Tax. Then he moves us to a year-by-year time frame, rather than the more traditional 10-year window. Then, he assumes this stuff will partially pay for itself down the line. Then he assumes some closed earmarks and eliminated waste. And so we end up with $20-$30 billion a year. The actual hole in the deficit doesn't change -- that's still in the trillions -- but the amount McCain takes responsibility for is now in the low billions.
That, my friends, is straight talk.
COMMENTS (6)
Wow. That's hiilarious.
Posted by: Nicholas Beaudrot | April 7, 2008 2:23 PM
Basically, what Holtz-eakin is saying is that Bush's major mistake was not making his tax cuts permanent. But of course, as everyone who was paying attention knows, Voinovich said he wouldn't vote for the second round of tax cuts unless he was promised they wouldn't increase the deficit by more than $X billion (I think the figure was either 400 or 550). And so the Bush administration fiddled with the times when the cuts would phase back in to get to 400 million. If Bush hadn't set the tax cuts to expire, there wouldn't be any tax cuts at all!
I can't decide if this is better or worse than Bush's bamboozlement during Social Security, or during the 2000 campaign on his tax cuts (where sometimes he included the cost of AMT reform, and others where he didn't). But it's terrible either way.
Posted by: Nicholas Beaudrot | April 7, 2008 2:28 PM
Funniest. Screengrab. Evah.
Posted by: Tithonia | April 7, 2008 2:40 PM
So the position of the McCain campaign is that a President shouldn't be concerned with problems that already exist when he takes office - that as long as he doesn't make things worse, everyone should be happy with the job he's doing?
Good thing FDR didn't buy that logic. Or Bill Clinton, for that matter.
Posted by: low-tech cyclist | April 7, 2008 4:14 PM
How exactly do you make any kind of taxes "permanent"? I mean, I know there are sunset provisions, etc., but can't Congress pretty much change the tax scheme (theoretically) at any time? Hell, the Bill of Rights isn't "permanent" since any of the amendments could be rescinded.
Posted by: Seitz | April 7, 2008 5:06 PM
Well Seitz at some level the question of permanent vs sunset is just semantic given the paper powers of Congressional action. Which is why people get away with arguing that the SS Trust Fund is just 'phony IOUs'. Which doesn't mean we can just discount inertia and the power of 'Nothing' to zero.
The Republicans consciously gamed tax cuts to reduce their putative future impact by sunsetting themwith the implicit understanding that they would be in a position to take positive action to prolong them. Instead they are now in a position where Democrats can deploy the power of inertia, and selectively at that.
A big part of the Republican strategy was to throw just enough of a bone to the middle class and working families to get them on board, and it worked. But it also works in reverse, Democrats are perfectly free to cherry pick among those tax cuts and simply slice away at the demographics. It is relatively simple to structure the estate tax and capital gains tax in ways that shelter even larger majorities without substantially effecting revenue totals, and given the royal screwing the ultra-wealthy have given us over the last couple of years combined with their whining demands for bailouts the old Republican message of "No poor man ever gave me a job" is losing its steam.
To get back to my point on issues from Social Security to taxes 'Nothing' is not a bad plan at all. You don't have to exert a whole bunch of political capital to just leave Soc Sec alone or to let certain taxes on the wealthy expire, you just sit back and let it happen. Certainly the rich will try to raise the issue of dire electoral consequences for the future, but given the way 2008 is shaping up I suspect few Democrats are shaking in their boots at the fear of Steve Forbes leading a crowd of peasants with torches all in defense of cutting taxes on his estate.
Republicans are in a tight spot here. Because in the end you can't filibuster 'Nothing'.
Posted by: Bruce Webb | April 20, 2008 1:52 PM