McCain seeks costly tax cuts, but vague on paying for them

[Saguaro]

WASHINGTON - Republican John McCain is making promises that would cost billions of taxpayer dollars, yet he is vague about how he would pay for them.

McCain is handing around a campaign grab bag of goodies. There are little treats like a summer gas-tax holiday and new mortgages for struggling homeowners, and there are big plums like tax breaks for corporations and families with children.

The expected GOP presidential nominee has nothing on the Democrats. Hillary Rodham Clinton and Barack Obama would spend billions of dollars themselves on things like paid family leave, universal health insurance and preschool for kids.

The difference? Unlike the Democrats, McCain has made a career of trying to cut spending. He rails against spending in nearly every speech. He gets laughs by singling out silly sounding projects like a federal DNA study of bears in Montana: "I don't know if that was a paternity issue or a criminal issue."

And McCain gets attention when he says it was spending, not the war in Iraq, that cost Republicans their control of Congress in 2006.

"The reason why we lost that election, my dear friends, was because we let spending get out of control," he said recently. "We came to power in 1994 to change government, and government changed us."

Now McCain is promising ambitious cuts in spending to pay for his ideas. The cuts would not pay for all his promises, but McCain says they needn't.

"I strongly disagree with the view that just because you reduce the tax burden, just because you let people save and invest more of their money, that therefore there's less money that goes into government," he told reporters last week in Alabama.

McCain said he is not exactly a supply-sider ? someone who subscribes to the idea that some tax cuts can pay for themselves by encouraging economic growth. But he certainly leans that way.

"I believe there's more money, because of the increase in economic activity and growth," he said.

Regardless of who wins the November election, it is vital to find a way to pay for new spending or tax cuts, because the next president will face a budget deficit of more than $400 billion. And the deficit will keep mounting as baby boomer retirements swell Social Security and Medicare.

McCain has pledged to balance the federal budget, although he has backed off an earlier promise to do so in his first term and now says he would do it within eight years.

McCain's tax cuts would be double the size of President Bush's:

_First, he wants to extend Bush's tax cuts, which cost an estimated $228 billion annually and are set to expire after next year, according to congressional analysts.

_On top of that, he seeks new tax cuts of about $225 billion a year, according to his own estimate. He would slash the corporate tax rate, eliminate the alternative minimum tax and double the tax exemption for dependent children.

_And the cost of his tax breaks could rise even higher. McCain has proposed two business tax breaks, a credit for research and first-year expensing of equipment; his campaign says they essentially would cost nothing, but the Treasury Department has estimated they could cost more than $140 billion annually.

Those are just the tax cuts. McCain also proposed a new mortgage refinancing program for struggling homeowners that could cost the government $3 billion to $10 billion. He proposed to suspend federal gas taxes for the summer months at a cost of $8 billion to $10 billion.

And McCain has several proposals whose costs are unknown, such as his pledge to give all veterans a plastic card to get medical treatment anywhere they choose, a new student loan program and tax write-offs for companies that provide Internet service to rural areas.

How would he pay for it? New user fees could pay for the gas-tax holiday, McCain adviser Doug Holtz-Eakin said.

Ironically, McCain said those kinds of fees were essentially tax increases when former rival Mitt Romney imposed them on businesses as governor of Massachusetts. Yet McCain has said he doesn't want to raise taxes.

McCain also has sketched out ideas for covering the costs of his $225 billion in new tax cuts, saying he would cut spending, eliminate corporate tax loopholes and spark economic growth by that amount of money.

Those spending cuts include making wealthier Medicare recipients pay more for their prescription medicines, killing off congressional earmarks and a freeze on some new spending increases.

Yet for all the numbers he has provided, McCain has been reluctant to say exactly which programs he would cut.

He criticizes "earmarks," pet projects tucked into spending bills, like the bear study. He said Wednesday that the bridge collapse in Minnesota last year would not have happened if Congress had not wasted so much money on pork-barrel spending, despite the suspicion of federal investigators that the problem may have been design-related, not spending-related.

He also won't list which "earmarks" are wasteful because there are more than 9,000 of them. "How could I possibly?" he said Wednesday. "Are you crazy?"

Even the earmarks he rails against include things he supports, such as aid to Israel. Last month, after McCain promised to eliminate all earmarks as part of his economic plan, his campaign said he remains committed to aid for Israel.

Thus, the reality of cutting spending may be very different from rhetoric, as McCain has found time and again.

On a swing through Alabama's rural Black Belt last week, McCain rode a ferry boat from tiny Gee's Bend, a town once cut off from ferry service to keep black residents from crossing the Alabama River to push for civil rights.

McCain rode across the river with several elderly black women, quilt makers from Gee's Bend, who sang gospel hymns and held his hands. McCain even took a turn driving the ferry just before it docked.

The ferry came into existence with $3 million in earmarks ? the kind of spending McCain says he would stop.

McCain insisted he is not trying to have it both ways. The ferry spending was worthy and would have been eligible for other federal dollars, he told reporters.

"America is supposed to help people in rural settings, people like the quilters who are direct descendants of slaves," McCain said. "It's 'give people a hand up.' That's the essence of government

http://news.yahoo.com/s/ap/20080501/ap_on_el_pr/mccain_big_spender;_ylt=Ao0V9YGy5cVeB6zGCKTRNB.s0N UE

[issac the dragon]

I think John's brain must have been in that bowl they stirred for him to draw these ideas out of. Does he believe what he is saying? Is he even listening?

If John can't think any clearer than that, these ideas should be proof he is addled.

[AYFR]

How exactly will Hillary and Obama pay for the BILLIONS of increased spending they propose?

As for paying for the cuts, McCain will cut spending and stop earmarks.

[Yellowdogtexan]

mccain is relying on the mythical and magical tax cut fairy to pay for these tax cuts. mcsame is running to give bush a third term which includes having no clue on economic issues and doing tax cuts that can not and will not be paid for. Only idiots like bush and mclame believe in the tax cut fairy. Their own economic experts are on the record as stating that the tax cut fairy is a myth and that these tax cuts will increase the federal deficit.

[AYFR]

You do like spin don't you.

Lets go through some facts shall we

During the Bush administration and with the tax cuts the unemployment rate reache its lowest in history. More people then ever bought and owned homes.
More people the ever paid to go to college.
The DOW set record highs and the NASDAQ and others did not fair badly either.

All in all the economy was at the highest it has been in a long time.

Then in 2006 the democrats took office and it all went to hell.
The housing market crashed
Gas prices soared
and people are struggling to make it.

No to be fair it is not all the Dems fault, if the Reps were not such wimps and would stand up and stand by their conservative principles that the say they have and if Bush would have had a set of ball and used his his veto pen things would have been even better and maybe not gotten so bad over the last year.

[Saguaro]

:lmao You blame the Dems

[AYFR]

Well the economy DID start going to crap AFTER the 2006 election and isn't that when gas also started to make it drastic increases?

[Saguaro]

It was bound to catch up with us after using millions of gas per day in Iraq

[Yellowdogtexan]

Well the economy DID start going to crap AFTER the 2006 election and isn't that when gas also started to make it drastic increases?So the massive deficits that we have runned due to the moronic tax cuts had no effect. The tax cut fairy is a myth and bush is responsible for the state of the US economy.

[Trueblue]

Cutting earmarks will not balance the budget.

I cannot believe you blame the Democrats, Rev.

[AYFR]

I can't believe you blame just the Republicans when it is acutally everyone's fault from the government to ours.

Cutting earmarks will help as will cutting spending.

How do you think Hillary or Obama will pay for their increased spending?
Will their increased spending balance the budget?

[Saguaro]

WASHINGTON (CNN) -- Sen. Barack Obama on Tuesday proposed overhauling the tax code to lower taxes for the poor and middle class, increase them for the rich and make it so most Americans can file their taxes in five minutes.

The tax relief plan he envisions for the middle class alone would mean $80 billion or more in tax cuts, he said.

Obama, an Illinois Democrat who is a front-runner for his party's 2008 presidential nomination, said during a speech at the Tax Policy Center that the present tax code reflects the wrong priorities because it rewards wealth instead of work.

"Instead of having all of us pay our fair share, we've got over $1 trillion worth of loopholes in the corporate tax code," he said. "This isn't the invisible hand of the market at work. It's the successful work of special interests."

The result, according to Obama? "Gaps in wealth in this country grow wider, while the costs to working people are greater."

His plan means billions in breaks by nixing income taxes for the 7 million senior citizens making less than $50,000 a year, establishing a universal credit for the 10 million homeowners who do not itemize their deductions -- most of whom make less than $50,000 annually -- and providing 150 million Americans with tax cuts of up to $1,000.

"I'd reward work by providing an income tax cut of up to $500 per person -- or $1,000 for each working family -- to offset the payroll tax that they're already paying," he said.

"Because this credit would be greater than their income tax bill, my proposal would effectively eliminate all income taxes for 10 million working Americans."

Obama also said he would repeal the Bush tax cuts for the wealthiest 1 percent of Americans.

"At a time when Americans are working harder than ever, we are taxing income from work at nearly twice the level that we're taxing gains for investors," Obama said. "We've lost the balance between work and wealth."

Obama's plan is similar in many ways to his Democratic rivals, including Sen. Hillary Clinton, D-New York, and former Sen. John Edwards, D-North Carolina.

Both Edwards and Clinton rolled out their tax plans earlier this year -- with Clinton calling for "rolling back some of President Bush's fiscally-irresponsible tax breaks for the highest income Americans," and Edwards pledging to "get rid of Bush's tax cut for people who make over two hundred thousand dollars a year."

Tuesday's announcement in Washington is part of an economic policy push by Obama. On Monday he was at the NASDAQ headquarters in New York City chastising Wall Street executives for looking out for themselves rather than helping the middle class.

Obama also said he'd simplify the tax code so that any employed American with a bank account can do their taxes in minutes if they take the standard deduction. It makes sense, he said, because the Internal Revenue Service already collects wage and bank account information.

"There's no reason the IRS can't send Americans pre-filled tax forms to verify," he said. "This means no more worry. No more wasted time. No more extra expenses for a tax preparer."

Obama proposes funding the tax cuts by closing corporate loopholes, cracking down on international tax havens and increasing the dividend-and-capital-gains tax for the wealthy, he said.

http://www.cnn.com/2007/POLITICS/09/18/obama.taxplan/index.html

[AYFR]

Still doesn't show how he is going to pay for the BILLIONS in increased spending he has proposed.

[Trueblue]

I can't believe you blame just the Republicans when it is acutally everyone's fault from the government to ours.

Cutting earmarks will help as will cutting spending.

How do you think Hillary or Obama will pay for their increased spending?
Will their increased spending balance the budget?

You said that this all happened, including the housing crisis, after the Dems were elected in 06. You can't blame the Dems for the Pub deregulation idiocy.

[Saguaro]

Still doesn't show how he is going to pay for the BILLIONS in increased spending he has proposed.

Rev, you just scanned the article, you didn't read it , because he stated how he would pay for it . Read it again

[AYFR]

Sag what he said will not cover the cost of what he plans.


What does "change" cost? About a quarter of a trillion bucks a year, according to Barack Obama (http://www.usnews.com/blogs/capital-commerce/2008/2/12/is-obama-really-the-liberal-reagan.html). But first, this: "I wish Obama would go further than that, but it's a start," was the reaction of one DailyKos poster to Barack Obama's economic plan (http://obama.3cdn.net/8f478c5e1bb07ca0b1_sh1umv2zy.pdf) unveiled yesterday in a campaign appearance in Janesville, Wis. Some hard-core liberals may be underwhelmed by the scope of Obama's agenda—after all, there's no single-payer healthcare plan or Scandinavian-style "flexicurity" worker benefits program in the mix—but my guess is that the average person would find it all pretty aggressive. Here are the priciest parts:

A $65 billion-a-year health plan
$15 billion in green energy spending
$85 billion in tax cuts and credits
A $25 billion-a-year increase in foreign aid
$18 billion a year in education spending
$3.5 billion for a national service planPut it all together, and we are talking about a $200 billon plan, $800 billion over four years. And that does not even include fixing the alternative minimum tax, a $50 billion-a-year item that will assuredly get passed. A few thoughts:
1) Let's put aside for a moment whether the Obama plan will actually increase our standard of living, enhance productivity, or encourage innovation. As a matter of accounting, I don't get how Obama will pay for his plan. Now he claims he's paid "for every element of this economic agenda—by ending a war that's costing us billions, closing tax loopholes for corporations, putting a price on carbon pollution, and ending George Bush's tax cuts for the wealthiest 2 percent of Americans."
But I don't think that adds up. Take, for instance, eliminating those Bush tax cuts on top earners. That might gain $50 billion a year, assuming no negative economic effect. But Congressional Budget Office estimates already assume that the Bush tax cuts expire at the end of 2010. So Obama gains nothing beyond, perhaps, a one-year bump in 2010 if he repeals the tax cuts a year earlier.
2) Obama clearly advocates jacking up payroll taxes as a way of creating long-term solvency for Social Security. Check out this chunk from his campaign press release:
Obama will be honest with the American people about the long-term solvency of Social Security and the ways we can address the shortfall. Obama will protect Social Security benefits for current and future beneficiaries alike. And he does not believe it is necessary or fair to hardworking seniors to raise the retirement age. Obama is strongly opposed to privatizing Social Security. Currently, the Social Security payroll tax applies to only the first $97,500 a worker makes. Obama has consistently said that we may want to include a "doughnut hole" to ensure that lifting the payroll tax cap does not ensnare any middle-class Americans. Obama supports increasing the maximum amount of earnings covered by Social Security, and he will work with Congress and the American people to choose a payroll tax reform package that will keep Social Security solvent for at least the next half century.
Taken at face value, Obama is proposing no benefit cuts at all. None. He won't cut future benefit increases by linking them to the inflation rate rather than wages, nor will he extend the retirement age even as life expectancy increases. Retirement accounts, a way to make Social Security a better deal for younger workers but not a way to directly deal with the solvency issue, are also out of the question. I will update all this after I chat with Team Obama about its candidate's ideas.

http://www.usnews.com/blogs/capital-commerce/2008/02/14/obamas-trillion-dollar-spending-plan.html?s_cid=rss:obamas-trillion-dollar-spending-plan.html

TB I can blame anyone I want, that is what you do.

Fact is it is neither the Reps or the Dems fault. It is the peoples fault.
Deregulation did not cause this.

But if you want to continue this then it does seem interesting that almost instantly after the Dems took control this all happened and if you want to blame someone for the housing prolem blame Clinton.
http://www.businessweek.com/the_thread/hotproperty/archives/2008/02/clintons_drive.html

[Trueblue]

It seems significant, like the way that somebody stepped on a crack, then their mother broke her back.

[Saguaro]

Sag what he said will not cover the cost of what he plans.


http://www.usnews.com/blogs/capital-commerce/2008/02/14/obamas-trillion-dollar-spending-plan.html?s_cid=rss:obamas-trillion-dollar-spending-plan.html

TB I can blame anyone I want, that is what you do.

Fact is it is neither the Reps or the Dems fault. It is the peoples fault.
Deregulation did not cause this.

But if you want to continue this then it does seem interesting that almost instantly after the Dems took control this all happened and if you want to blame someone for the housing prolem blame Clinton.
http://www.businessweek.com/the_thread/hotproperty/archives/2008/02/clintons_drive.html

Rev,what you used was an Opinion Piece,not all facts

[Saguaro]

WASHINGTON (CNN) -- Sen. Barack Obama on Tuesday proposed overhauling the tax code to lower taxes for the poor and middle class, increase them for the rich and make it so most Americans can file their taxes in five minutes.

The tax relief plan he envisions for the middle class alone would mean $80 billion or more in tax cuts, he said.

Obama, an Illinois Democrat who is a front-runner for his party's 2008 presidential nomination, said during a speech at the Tax Policy Center that the present tax code reflects the wrong priorities because it rewards wealth instead of work.

"Instead of having all of us pay our fair share, we've got over $1 trillion worth of loopholes in the corporate tax code," he said. "This isn't the invisible hand of the market at work. It's the successful work of special interests."

The result, according to Obama? "Gaps in wealth in this country grow wider, while the costs to working people are greater."

His plan means billions in breaks by nixing income taxes for the 7 million senior citizens making less than $50,000 a year, establishing a universal credit for the 10 million homeowners who do not itemize their deductions -- most of whom make less than $50,000 annually -- and providing 150 million Americans with tax cuts of up to $1,000.

"I'd reward work by providing an income tax cut of up to $500 per person -- or $1,000 for each working family -- to offset the payroll tax that they're already paying," he said.

"Because this credit would be greater than their income tax bill, my proposal would effectively eliminate all income taxes for 10 million working Americans."

Obama also said he would repeal the Bush tax cuts for the wealthiest 1 percent of Americans.

"At a time when Americans are working harder than ever, we are taxing income from work at nearly twice the level that we're taxing gains for investors," Obama said. "We've lost the balance between work and wealth."

Obama's plan is similar in many ways to his Democratic rivals, including Sen. Hillary Clinton, D-New York, and former Sen. John Edwards, D-North Carolina.

Both Edwards and Clinton rolled out their tax plans earlier this year -- with Clinton calling for "rolling back some of President Bush's fiscally-irresponsible tax breaks for the highest income Americans," and Edwards pledging to "get rid of Bush's tax cut for people who make over two hundred thousand dollars a year."

Tuesday's announcement in Washington is part of an economic policy push by Obama. On Monday he was at the NASDAQ headquarters in New York City chastising Wall Street executives for looking out for themselves rather than helping the middle class.

Obama also said he'd simplify the tax code so that any employed American with a bank account can do their taxes in minutes if they take the standard deduction. It makes sense, he said, because the Internal Revenue Service already collects wage and bank account information.

"There's no reason the IRS can't send Americans pre-filled tax forms to verify," he said. "This means no more worry. No more wasted time. No more extra expenses for a tax preparer."

Obama proposes funding the tax cuts by closing corporate loopholes, cracking down on international tax havens and increasing the dividend-and-capital-gains tax for the wealthy, he said.

http://www.cnn.com/2007/POLITICS/09/18/obama.taxplan/index.html

Fact

[AYFR]

That is not fact Sag, that is Obama opinion.

There is NO reason to believe Obama will do anything about earmarks , spending, or the special interests.

His history speaks just the opposite.

Besides his ideas on how to pay for it will further drive Businesses out of America and lead to even more people out of work and worse economic problems.

America had the second higest coorperate tax in the world and he wants to make it worse.
Well if that happens say goodbye to your jobs.

[Saguaro]

What are you talking about ? :think

You are making no sense, I showed what OBAMA SAID

[AYFR]

And it his OPINION.

The fact is that Obama is a big time earmark person and his plan WILL NOT WORK to pay for his spending increases.

[Saguaro]

In your opinion... Rev, you really aren't making any sense

[AYFR]

What am I not making sense about?

The article you put had Obama saying how he would pay for his spending increase, i sid it won't work and gave reasons why.

I said this part was his opinion
"Instead of having all of us pay our fair share, we've got over $1 trillion worth of loopholes in the corporate tax code," he said. "This isn't the invisible hand of the market at work. It's the successful work of special interests.
I also said given his history with earmarks I don't believe him anyway

[Yellowdogtexan]

In your opinion... Rev, you really aren't making any senseBelief in the tax cut fairy does that to people

[AYFR]

again :roll

[Yellowdogtexan]

mc :cane is running for a third term on bush's failed economic policies. If you do not believe me, listen to House GOP Whip Blunt. http://thinkprogress.org/2008/05/11/blunt-v-romney-on-3rd-bush-term/.... a leading McCain surrogate — Rep. Roy Blunt (R-MO) — conceded that McCain is indeed promising a third Bush term on the economy:BLITZER: So it would be in effect a third Bush term when it came to pro-growth tax policies?

BLUNT: It would be. I think it would be. And I think that’s a good thing.This sound bite will be used over and over again to link mc :cane with bush and the fact that mc :cane is running for a third term with respect to bush's failed economic policies. Only idiots and people stupid enough to believe in the tax cut fairy will think that this is a good idea.

[Yellowdogtexan]

The Washington Post really ripps into mc :cane for his so call budget cutting plans http://blog.washingtonpost.com/fact-checker/2008/05/mccains_fantasy_war_on_earmark.htmlJohn McCain boasts that he can save $100 billion a year "immediately" by eliminating the so-called earmarks that legislators attach to spending bills to finance pet projects, usually in their home state. But he has refused to say exactly which projects he would cut, and his estimates of the amount of money that is being spent on earmarks have been challenged by independent experts.

The Facts
The Arizona senator is promising to balance the budget by the end of his first term, while simultaneously extending the George W. Bush tax cuts, introducing billions of dollars of new tax cuts of his own, and remaining in Iraq as long as is necessary to stabilize that country. Asked how this miracle will be accomplished, McCain told George Stephanopoulos of ABC News This Week on April 20 that he could come up with $100 billion "tomorrow" by vetoing pork-barrel spending bills.

Here's $100 billion right here for you, George. Two years in a row, the last two years, the president of the United States has signed into law two big spending, pork barrel-laden bills with $35 billion (in earmarks). In the years before that, $65 billion. You do away with those, there's $100 billion right before you look at any agency.
Pouff! $100 billion in taxpayer money! Saved! Just like that! With a flick of the presidential veto pen!

There are a number of problems with this magical budgetary balancing act. First of all, the suspiciously round $100 billion figure is largely a figment of the McCain campaign's imagination. I have not been able to find a single independent budget expert to vouch for it. McCain's economics adviser, Doug Holtz-Eakin, will not say how the campaign arrived at the figure, other than that it is an extrapolation from various studies, including a 2006 study by the Congressional Research Service available here.

The CRS study breaks down earmarks by different government departments, without giving a global figure. According to Scott Lilly, a former Democratic appropriations staffer now with the Center for American Progress Action Fund, the CRS study identifies a total of $52 billion in earmarks for a single year. However, much of this money is tied to items such as foreign aid to countries like Israel, Egypt, and Jordan, that McCain says he will not touch.

By most definitions of the term, the amount of money spent on earmarks is much lower than the CRS study. The Office for Management and the Budget came up with a figure for $16.9 billion in the 2008 appropriation bills. Taxpayers for Commonsense, an independent watchdog group that focuses on wasteful spending, identified $18.3 billion worth of earmarks in the 2008 bills, a 23 per cent cut from a record $23.6 billion set in 2005.

How much of this $18.3 billion could be eliminated is a "difficult question that we have not yet figured out," said Taxpayers for Commonsense vice-president Steve Ellis. The figure includes such items as $4 billion for the U.S. Army Corps of Engineers, which could not be eliminated without halting hundreds of construction projects around the country. Another big chunk goes to military construction, including housing for servicemen and their families, which McCain has also promised not to touch.

Bruce Riedl, a budget analyst with the Heritage Foundation, says it might be possible to eliminate roughly half the expenditure on earmarks every year, i.e. around $9 billion, using the Taxpayers for Commonsense figures. He identified $5 billion in Community Development Block Grant funds, most of which goes to local governments, as a prime target for cuts. Even if earmarks were eliminated altogether, many other expenditures would have to be shifted to other parts of the budget.

Like other analysts, Riedl was mystified by McCain's argument that previous year's earmarks automatically become a "permanent part of the budget." "I don't understand how they come up with that," he told me.

Excluding those programs McCain has promised to preserve, the draconian slashing of earmark expenditures might save around $10 billion a year. But that is still a long way from the $100 billion in savings that McCain says that he can identify "immediately."

The McCain camp now says that the senator never meant to suggest that his proposed $100 billion in savings would all come from earmarks. Holtz-Eakin told me that McCain had simply promised to cut overall spending by around $100 billion. Some of these savings will come from earmarks, some from other parts of the budget. He declined to identify which specific projects would be cut.

Asked whether McCain had misspoke or whether he had been misunderstood in his focus on eliminating earmarks, Holtz-Eakin replied: "a bit of both."

The Pinocchio Test
McCain's talk about eliminating $100 billion a year in earmarks is largely fantasy. His advisers are now promoting a more realistic plan of eliminating $100 billion in overall spending. But it is difficult to take even that promise very seriously given the fact that the senator refuses to identify exactly which projects he will be cut. To use a phrase coined by George H.W. Bush, this is "voodoo economics," based more on wishful thinking than on hard data or carefully considered policy proposals. mc :cane not only believes in the magic tax cut fairy but in the magic earmark fairy that will save $100 billion that he needs to fund his tax cuts. This is truly voodoo economics based on wishful thinking. It is clear that mc :cane is clueless on economics issues and these plans are pure fantasy.