Economic irresponsibility

Sen. John McCain is campaigning on an image of fiscal control not backed up by his policies.

John Sharkey

Somehow, Sen. John McCain has managed to assume the banner of “economic responsibility.” Perhaps it’s just because Republicans are assumed to be stingier with the federal budget, but regardless of the reason, McCain seems awfully proud of that title. His campaign Web site boasts that McCain “will restore the trust that Americans have lost in their government” over spending issues. Taking even a cursory glance at his actual proposals, however, reveals a starkly different picture. McCain is far from being economically responsible: his plan simply doesn’t add up.

One of the major stories of the past few days has been McCain’s proposal to suspend the federal gas tax over the summer. On the surface that sounds wonderful; after all, who wouldn’t love to save an extra 18.4 cents (the current tax rate) per gallon? Hillary Clinton has piggy-backed on this idea, calling for the same summer tax holiday. The major news outlets have dutifully reported the plans as designed to help out the common man, but the facts say otherwise. As Dean Baker of the Center for Economic and Policy Research has pointed out on multiple occasions, the plan to suspend the gas tax will “save consumers nothing.” Since oil refineries are currently running at close-to-full capacity, the supply of gasoline is basically fixed. The price, therefore, is set by the demand for gasoline. As such, the elimination of the gas tax will not change the price at the pump at all; it will just “allow Exxon and other oil companies to keep more profits.” The current gas price represents market demand, regardless of whether a tax is included.

Barack Obama opposes the tax holiday, as a Tuesday article in The New York Times reported. The Times article mentions that Obama’s position is “shared by environmentalists and many independent energy analysts,” but then goes on to uncritically report comments from Clinton and McCain supporting the tax cut. That should come as no surprise, since the press has a long and storied history of fawning over McCain and not bothering to see if any of his ideas actually make sense.

Indeed, another money-related event illustrates the degree to which McCain gets a free pass from the media. Remember that for months Hillary Clinton was hounded to release her tax returns and financial statements, in the interest of transparency. This is as it should be. But McCain has not been held to the same standard. He announced that his wife, Cindy, would not be releasing any of her financial information, saying that the couple wanted to protect the privacy of their children. There’s only one problem: aside from a single checking account, all of the McCain family assets are held in Cindy McCain’s name. She is worth an estimated $40 million, and every significant financial interest of the family remains hidden. Imagine the uproar that would occur if the Clintons announced that Bill would not be releasing any of his financial records; people would not stand for it, and they should not. McCain, though, has received a free pass.

Putting aside the question of what the McCains think they have to hide, this example highlights just how preferential McCain’s treatment has been and will continue to be. The media’s deferral to McCain would only be a nuisance if it did not obscure much deeper issues with McCain’s platform. Specifically, McCain’s economic proposals would wreak havoc on our budget deficit and national debt. Instead of bringing fiscal responsibility to the White House, McCain would continue writing checks our national coffers can’t cash.

An article in Sunday’s New York Times chronicled the economic policies of the three major candidates, under the headline “3 Candidates with 3 Financial Plans, but One Deficit.” The thrust of the article was that Obama, Clinton and McCain would all be adding to the federal budget deficit by enacting their ideas. Buried in the article, however, was the revelation that McCain would add, at a minimum, $5.7 trillion to the national debt over the next decade. The two Democrats, by contrast, would total perhaps one-third of that amount. McCain’s figure does not even include the extension of President Bush’s tax cuts, which would add another $2.2 trillion to his tally.

Looking at the numbers on a yearly rather than per-decade basis does nothing to help McCain’s claims of fiscal responsibility. McCain has proposed a total of $300 billion of tax cuts and incentives. If he were such a strong fiscal conservative, then surely McCain would be able to say where that $300 billion would come from. Of course, McCain does no such thing. He has focused his energy on curtailing congressional earmarks, which seems like a worthy enough cause. Unfortunately, figures for earmark spending total about $18 billion. McCain has claimed a total of $65 billion, but that number includes massive amounts of foreign aid, including all aid to Israel. McCain has since made it clear that he does not intend to actually end aid to Israel, and it seems doubtful that he would actually trim other earmarks that pay for things like military housing. Even after allowing an extremely generous accounting of the figures, at most McCain has accounted for $33 billion out of his $300 billion total. That does not include the $200 billion per year spent on the war in Iraq, either.

Since the press obviously does not intend to push McCain on this massive shortfall, the rest of us are left to wonder from where the extra 89 percent of his tax cuts will come. Perhaps he intends deep cuts in Social Security and Medicare (the only government programs big enough to make a dent in McCain’s deficit). The hawkish senator does not intend to trim our defense spending, even though our defense budget accounts for nearly half of the world’s military expenditures.

Clearly, then, McCain’s plan falls into one of two categories. Either he plans to irresponsibly inflate the national debt or he plans to take a machete to popular social programs. It would be interesting to see how the public would react if McCain were forced to account for his policies. After all, people tend to like having Social Security and Medicare. People (especially fiscal conservatives) also tend to prefer small federal deficits. We need a press core willing to get from McCain some of the straight talk for which he is so famous. Until then, the Arizona senator will coast along on an undeserved reputation for fiscal responsibility.

John Sharkey welcomes comments at [email protected]