Bush Made Permanent
By Paul Krugman
As the designated political heir of a deeply unpopular president - according to Gallup, President Bush has the highest disapproval rating recorded in 70 years of polling - John McCain should have little hope of winning in November. In fact, however, current polls show him roughly tied with either Democrat.
In part this may reflect the Democrats' problems. For the most part, however, it probably reflects the perception, eagerly propagated by Mr. McCain's many admirers in the news media, that he's very different from Mr. Bush - a responsible guy, a straight talker.
But is this perception at all true? During the 2000 campaign people said much the same thing about Mr. Bush; those of us who looked hard at his policy proposals, especially on taxes, saw the shape of things to come.
And a look at what Mr. McCain says about taxes shows the same combination of irresponsibility and double-talk that, back in 2000, foreshadowed the character of the Bush administration.
The McCain tax plan contains three main elements.
First, Mr. McCain proposes making almost all of the Bush tax cuts, which are currently scheduled to expire at the end of 2010, permanent. (He proposes reinstating the inheritance tax, albeit at a very low rate.)
Second, he wants to eliminate the alternative minimum tax, which was originally created to prevent the wealthy from exploiting tax loopholes, but has begun to hit the upper middle class.
Third, he wants to sharply reduce tax rates on corporate profits.
According to the nonpartisan Tax Policy Center, the overall effect of the McCain tax plan would be to reduce federal revenue by more than $5 trillion over 10 years. That's a lot of revenue loss - enough to pose big problems for the government's solvency.
But before I get to that, let's look at what I found truly revealing: the McCain campaign's response to the Tax Policy Center's assessment. The response, written by Douglas Holtz-Eakin, the former head of the Congressional Budget Office, criticizes the center for adopting "unrealistic Congressional budgeting conventions." What's that about?
Well, Congress "scores" tax legislation by comparing estimates of the revenue that would be collected if the legislation passed with estimates of the revenue that would be collected under current law. In this case that means comparing the McCain plan with what would happen if the Bush tax cuts expired on schedule.
Mr. Holtz-Eakin wants the McCain plan compared, instead, with "current policy" - which he says means maintaining tax rates at today's levels.
But here's the thing: the reason the Bush tax cuts are set to expire is that the Bush administration engaged in a game of deception. It put an expiration date on the tax cuts, which it never intended to honor, as a way to hide those tax cuts' true cost.
The McCain campaign wants us to accept the success of that deception as a fact of life. Mr. Holtz-Eakin is saying, in effect, "We're not engaged in any new irresponsibility - we're just perpetuating the Bush administration's irresponsibility. That doesn't count."
It's the sort of fiscal double-talk that has been a Bush administration hallmark. In any case, it offers no answer to the principal point raised by the Tax Policy Center analysis, which has nothing to do with scoring: the McCain tax plan would leave the federal government with far too little revenue to cover its expenses, leading to huge budget deficits unless there were deep cuts in spending.
And Mr. McCain has said nothing realistic about how he would close the giant budget gap his tax cuts would produce - a gap so large that eliminating it would require cutting Social Security benefits by three-quarters, eliminating Medicare, or something equivalently drastic. Talking, as Mr. Holtz-Eakin does, about fighting waste and reforming procurement doesn't cut it.
Now, Mr. McCain isn't unique in making promises he has no way to pay for - the same can be said, to some extent, of the Democratic candidates. But Mr. McCain's plan is far more irresponsible than anything the Democrats are proposing, and the difference in degree is so large as to be a difference in kind. Mr. McCain's budget talk simply doesn't make sense.
So what are Mr. McCain's real intentions?
If truth be told, the McCain tax plan doesn't seem to embody any coherent policy agenda. Instead, it looks like a giant exercise in pandering - an attempt to mollify the GOP's right wing, and never mind if it makes any sense.
The impression that Mr. McCain's tax talk is all about pandering is reinforced by his proposal for a summer gas tax holiday - a measure that would, in fact, do little to help consumers, although it would boost oil industry profits.
More and more, Mr. McCain sounds like a man who will say anything to become president.