McCain Tax Cuts Leave Holes in Federal Budget - Political Opinion

Sen. John McCain (R-AZ) consistently fearmongers that “Democrats…want to raise your taxes…I want to lower your taxes” and threatens that under Sen. Barack Obama’s (D-IL) tax plan, “Americans of every background would see their taxes rise.” Not only is McCain’s claim that Obama will raise every American’s taxes false, but in reality, it is McCain’s economic and tax plans that Americans should fear. His plan would double President Bush’s tax cut while offering little in the way of offsetting those costs. As New York Times columnist and Princeton University economics professor Paul Krugman noted, McCain’s economic proposals are “Bush made permanent” that “would leave the federal government with far too little revenue to cover its expenses.” But while McCain tries to rebut claims that his administration would not represent a continuation of Bush’s policies, even his top surrogate, Sen. Lindsay Graham (R-SC), acknowledged reality, admitting recently that McCain’s economic policies would “absolutely” be an “enhancement” of Bush’s. Oddly though, McCain’s top economic adviser Douglas Holtz-Eakin has tried to claim Obama is a continuation of Bush, a remark even conservatives find absurd. Today, a Center for American Progress Action Fund event — dubbed “McCain University” — will educate and inform voters, reporters, and pundits about the consequences of adopting McCain’s policies.

BIG CORPORATIONS WILL CASH IN: Part of McCain’s overall economic policy is to reduce the federal corporate tax rate from 35 percent to 25 percent. What does this actually mean for America’s largest corporations? According to a new report from the Center For American Progress Action Fund, McCain’s tax plan would save corporations $175 billion per year, with $45 billion going to America’s 200 largest corporations as identified by Fortune Magazine. McCain has also said the “nation cannot reduce its dependency on oil unless we change how we power our transportation sector.” But at the same time, he is calling for increased oil exploration and production, which will not only do little to relieve energy prices here at home but also will put billions more into Big Oil’s pockets. McCain’s corporate tax rate reduction plan would save the five largest U.S. oil companies a grand total of $3.8 billion per year. Exxon Mobil, whose $11.7 billion 2007 fourth quarter profits shattered records, will see an extra $1.2 billion under McCain’s tax plan. America’s big corporations seemed to have taken notice of the potential benefits. A recent analysis by the Public Campaign Action Fund found that  McCain’s campaign has received $5.6 million from the PACs and executives of the Fortune 200, including nearly $800,000 from oil and gas industries.

THE RICH WILL GET RICHER: The largest American corporations aren’t the only ones who will cash in under McCain’s plan. Add the richest Americans to the list. In a recent study, the nonpartisan Tax Policy Center has found that McCain’s tax plan “would primarily benefit those with very high incomes, almost all of whom would receive large tax cuts that would, on average, raise their after-tax incomes by more than twice the average for all households.” Indeed, McCain offers no benefit for the poorest taxpayers; Obama’s plan increases after-tax income for the poorest taxpayers by 5.5 percent. The Tax Policy Center also found that Obama “offers three times the break for middle class families than” McCain. While Obama will raise taxes on the richest 1 percent of taxpayers, McCain will increase after-tax income of the richest 3.4 percent. In fact, another beneficiary of McCain’s plan are the McCains themselves. A recent paper by the Center for American Progress Action Fund found that John and Cindy McCain would save $373,429 under McCain’s tax plan.

INCREASED DEFICITS: McCain has not explained how he would pay for these reckless tax cuts. His plan would cost nearly $300 billion and, so far, he has accounted for just $33 billion, or 11 percent of that total. Holtz-Eakin himself said, “You have to pay for that somehow or you are George Bush III.” Indeed, a Center for American Progress Action Fund analysis released last month confirms Holtz-Eakin’s assessment. McCain’s entire economic plan, tax cuts included, would create massive deficits by the end of a two-term presidency — the highest federal budget deficit in 25 years — and would accumulate the biggest debt since the Second World War.  Under McCain, yearly deficits would increase sharply, beginning with $505 billion in FY2009 that would skyrocket to $1.2 trillion by FY2017. In 2018 these deficits would reach 6 percent of GDP, tied with the largest deficits since WWII, while McCain’s plan would leave a debt of $12.7 trillion after a two term presidency. McCain has claimed that he would eliminate earmarks (citing a constantly shifting figure of costs saved) to pay for his economic plan. The Washington Post FactChecker, however, gave McCain’s plan to pay for his doubling of the Bush tax cuts through eliminating earmarks “Four Pinocchios” (the highest rating for deceit), calling it “largely fantasy” and “voodoo economics.”

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Ali Frick, and Benjamin Armbruster

This material was created for the Progress Report, the daily e-mail publication of the Center for American Progress Action Fund.

Click here to subscribe.

Net News Publisher