February 22, 2008

Bush 41 Redux: McCain Says "No New Taxes"

Under the best of circumstances, this year's presidential candidates have been a little bit vague when discussing their plans for tax reform. There are, of course, politically sensible reasons for the candidates' caginess: presidents don't get to unilaterally make fiscal policy, and specific tax promises can blow up in your face. To make matters worse, tax policy topic #1 this year is a real hot potato: whether each candidate would repeal all (or some of) the Bush tax cuts. So it was a bit of a shock to hear likely Republican nominee John McCain take a page out of the George H.W. Bush playbook in an interview with George Stephanopoulos last weekend:

Stephanopoulos: The number one issue right now, the economy. Senator Obama went at that on Tuesday night as well.
(Plays clip of Obama speech) I admired Senator McCain when he stood up and said that it offended his conscience to support the Bush tax cuts for the wealthy in a time of war. But somewhere along the road to the Republican nomination, the straight talk express lost its wheels because now he's all for those same tax cuts. (End of Obama clip)
Stephanopoulos: He says basically you've sacrificed your principles for the sake of the nomination.
McCain: Well, for a long time, I have said that I thought the tax cuts ought to be made permanent. For a long time back, I said, look, we're going to have spending restraint the way that Reagan did when he restored our economy when it was in the tank, thanks to then President Carter's mismanagement of the economy. And we entered into a great period of prosperity in America. Spending restraint is why our base is not energized. Spending restraint is why we are having to borrow money from China. And we've got to have spending restraints in my view. But to impose on the American people what essentially would be a tax increase of thousands of dollars per family in America is not something I think - well, I'm sure would be bad for the economy of this country.
Stephanopoulos: So on taxes, are you a "read my lips" candidate, no new taxes, no matter what?
McCain: No new taxes. I do not - in fact, I could see an argument, if our economy continues to deteriorate, for lower interest rates, lower tax rates, and certainly decreasing corporate tax rates, which are the second highest in the world. Giving people the ability to write off depreciation in a year. Elimination of the AMT. There's a lot of things that I would think we should do to relieve that burden, including, obviously, as we all know, simplification of the tax code.
Stephanopoulos: But under no circumstances would you increase taxes?
McCain: No.

Whether he intended to or not, McCain went well beyond the scope of the original question here. He won't repeal the Bush tax cuts-- but he also said that he won't increase any other taxes.

Given the breadth of this extraordinary promise, a few follow-up questions are in order: did he really mean to issue a blanket "no new taxes" pledge, or was he still referring just to the Bush tax cuts? Does "loophole closing" count as a tax hike? What if loophole closers are combined with other tax cuts in a revenue neutral package?

Under any interpretation, though, McCain's pledge brings up an important question for his potential supporters: what good is "straight talk" if you can't back it up? The Fort Worth Star-Telegram's Jack Smith explains why McCain's pledge probably isn't worth the paper it was probably written on here.


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