John McCain's 2008 Presidential Campaign Economic Platform

John McCain
Senator John McCain speaks at a press conference held at Local 32BJ SEIU Auditorium on February 27, 2006 in New York City. The Press conference and subsiquent town hall meeting were held to call for 'Real Immigration Reform' in the United States. Photo: Jemal Countess/WireImage/Getty Images

Plan to Reform the Financial Markets

John McCain proposed creating a Mortgage and Financial Institutions Trust (MFI) which would work with banks and regulators to identify and purchase bad loans to resell later at a profit when the market had improved. The government would take a controlling stake in the companies it helped. All profits would go to the Treasury. MFI would be managed by a board of directors consisting of the Secretary of the Treasury, Federal Reserve Chairman, Chairman of the FDIC and two public members.

(Source: JohnMcCain.com)

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:

McCain's Economic Platform included his short-term stimulus measures, and added the following:

  • 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.

(Source: JohnMcCain.com, On the Issues; IHT, McCain Proposes Economic Plan with Corporate Tax Relief, 1/17/08; WSJ, McCain's Economic Platform, March 3, 2008)

Impact on the Economy:

Although McCain stated he wanted to balance the budget by the end of his first year in office, his economic platform did not support that. In total, McCain tax cuts would have totaled $400 billion, while his spending cuts only came to $133 billion. For example, extending the Bush tax cuts and repealing the Alternative Minimum Tax would have added $160 billion to the deficit. Providing tax cuts to businesses would have cost another $100 billion. These cuts were intended to stimulate business investment. They wouldn't have worked because businesses hoarded any extra cash in case the credit markets froze up again.

They used any extra funds to pay out dividends or buy back their own stock. They didn't lower prices, which would have helped stimulate consumer spending. Lower business taxes would not have led to increased consumer demand.

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 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. For more, see McCain and Trade.

Overall, the McCain economic platform would reduce budget revenues and raise costs, increasing the deficit and weakening the U.S. economy.

Trade

McCain is a staunch proponent of free trade. Here are his three main proposals.

Lower Barriers to Trade - McCain would engage in more Free Trade Agreements (FTA's) to level the global playing field and increase enforcement of existing trade agreements. He supports both FTA's with Colombia and South Korea. He wants to enforce an existing agreement within NAFTA to open up the U.S. to the Mexican trucking industry. (Source: On the Issues)

Make American Workers More Competitive - McCain admits that free trade leads to a loss of American jobs. His response is to retrain workers so they will be more competitive in the global marketplace. He proposes an overhaul of the unemployment insurance program to achieve this purpose. He also emphasizes increased education and a school voucher program. (Source: JohnMcCain.com)

McCain Opposes Subsidies- Although not officially part of his trade platform, McCain has vowed to fight one of the key obstacles to the Doha round of the World Trade Organization agreement - U.S. farm subsidies. These programs, originally designed to help Depression-era families keep their farms, now subsidize corporations who have, in turn, put U.S. family farms out of business.

Developing countries are afraid that, under an agreement, low-cost, subsidized U.S. farm products will flood their markets, and put them out of business. Until the U.S. significantly reduces these subsidies, further progress on this important multi-lateral trade agreement is effectively dead in its tracks. (Source: USA Today, "Bill includes billions in farm subsidies," May 15, 2008; Gourmet, "Betting the Farm," April 2008)

Passage of the FTA with Colombia would support President Uribe, whose war against drug cartels has lifted 10 million Colombians out of poverty in the last five years and resulted in 2007GDP growth of 6.6%. Colombia is on the border with Venezuela, whose President Chavez is a critic of the U.S. and an important supplier of oil. The Colombia FTA would remove tariffs for U.S. goods exported into Colombia, currently at 35%. This would assist 8,000 small businesses, and level the playing field, since the U.S. lifted tariffs on Colombian imports in 1991. (Source: USTR, Colombia Free Trade Agreement.)

Passage of the FTA with South Korea would be the largest since NAFTA. It would support this long-time ally in our efforts to end North Korea's nuclear program. Trade with South Korea in 2006 was $75 billion, and could increase to $100 billion within a few years. It would eliminate 94% of tariffs between the two countries, especially benefiting the auto, textile and service industries. It would immediately eliminate tariffs on $1 billion worth of agriculture exports to South Korea. (Source: USTR, "KORUS FTA Briefing Book")

Opening the borders to Mexican trucks could cost some Teamsters jobs, since Mexican truck-drivers typically earn a third less ($7 an hour). However, this competition would also lower the price of food and other transported items. (Source: NYTimes, "Court Bars Mexican Trucks," January 17, 2003)

Elimination of farm subsidies would save taxpayers $307 billion a year, and substantially help lower the $500 billion a year budget deficit. It would also remove the key obstacle to the Doha WTO trade agreement, which would add $500 billion a year to the U.S. economy in exports. (Source: USA Today, Bill Includes Billions in Farm Subsidies, , January 17, 2008; Foreign Affairs,The Stakes of ​Doha,December 2005)

McCain and Palin

McCain chose  Governor of Alaska Sarah Palin as his Vice-Presidential nominee. As Governor of Alaska, she demonstrated her position on energy and oil prices, a balanced budget, cutting taxes, and spurring economic growth. However, this position didn't give her experience on many important national topics, such as free trade, military spending and any stimulus to the financial crisis. 

As Governor, Palin sought to spur economic growth and increase energy supplies by supporting drilling in the Alaska National Wildlife Refuge She signed a contract for a $26 billion natural gas pipeline with TransCanada Corp. To help Alaskans with high gas prices, she gave a one-time $1,200 tax rebate and repealed the state’s 8-cents-a-gallon gasoline tax for a year. The funds for these consumer rebates came from a windfall profits tax she imposed on oil companies last year.

However, these measures didn't address oil market speculation, which is the true cause of high gas prices. Palin's stance on ANWR was the opposite of  McCain's energy platform, who supported increased exploration of alternative energy sources. (Source: WSJ, "Palin Shores Up Some Economic Credentials for McCain," August 29, 2008)

Palin's commitment to fiscal responsibility would be good for the economy. Before becoming Governor, Palin was Mayor of Wasilla, where she cut property taxes 60% while spurring economic growth. She sold a $2.1 million corporate jet bought by her predecessor, and cut $231 million from Alaska's $550 million capital budget. She would try to cut the federal debt. (Source: WSJ, "Jet That Helped Defeat an Alaska Governor Is Sold," August 25, 2007; Alaska Journal of Commerce, "Lawmakers cringe over governor's deep budget cuts," July 8, 2007)

Before she became Governor in December 2006, Palin was Mayor for only two terms, and served on the city council before that.

Governor Palin supports free trade and minimal government intervention. That was consistent with Senator McCain's support of free trade agreements to spur economic growth. (See John McCain and Trade)

In 2016, Palin endorsed Donald Trump for President. However, her economic positions are different in some important areas. She could provide a good balance for Trump as a running mate, just as she did for Presidential Candidate John McCain. However, neither have experience in national politics or working with Congress. That's critical for getting things done in Washington. See 2016 Presidential Candidates Economic PlatformsHowever, Trump does not support free trade. He would return to protectionist policies by raising taxes on imports. 

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