McCain's Tax Plans

Yesterday I received a fundraising mailing from John McCain's presidential campaign.  I found it quite interesting, as much for what it didn't say as for what it did say.  It presumed that McCain supporters would care about a very select subset of issues:  1) making the Bush tax cuts permanent, 2) making sure health care stays in the control of the insurance companies and 3) making a commitment to keeping troops in Iraq for the indefinite future (til "victory").

If you put the three issues together, you come up with some interesting analyses.  A near-permanent commitment to Iraq is not costless.  In fact, our long-term spending commitments--for disabled soldiers, equipment replacement, recruitment, and the daily costs of war at the inflated prices paid by the Pentagon for private mercenary forces--are staggeringly high.  (Recall the Stiglitz-Bilmes estimate of $3 trillion and counting as of about 6 months ago, with a $6 trillion figure not unrealistic.)   At the same time, making the Bush tax cuts permanent, and thus benefiting primarily those who have considerable capital income and are otherwise in the very tip top of the income distribution making multiple millions annually, is enormously costly.  Remember that the cost of the original package of 2001 tax cuts was around $1.6 trillion.  Project that out permanently (i.e., without the sunset gimmick used to make it come within budget estimates) and we are talking about billions of cuts annually that amount to trillions of lost revenues for each decade.  Put trillions of costs for an endless war together with trillions of lost revenues for welfare for multinational corporations and the elite owners of capital in this country, and you have put this country on a train ride to fiscal disaster.

Couple that with the personal tragedies now facing so many ordinary working Americans--foreclosures on their homes, loss of their jobs, inability to maintain high-cost (and high-deductible) health insurance so that a medical emergency can leave them with nowhere to turn.  What's McCain's preferred solution? Letting the private markets handle the health care crisis.  Folks, we've been there and done that.  In fact, we are there right now and it isn't working.  Even with all the tax code provisions that encourage provision of health insurance through work, we have more than 40 million Americans, many of them children, without adequate health care.   The private market can't do what needs to be done, because the insurers' goal is, by definition, to avoid spending by preventing people from getting benefit coverage so that their profits will be bigger.  That's why the people who need the most care are the least likely to be insured.   Only the people working together--through a single payer, single provider system-- have a chance of reaching everyone. 

Now add in the high price of oil.  Having reached or neared peak oil, the price isn't going down, not even if we drilled offshore and in every natural habitat McCain could think about opening.  Global demand will eat up whatever oil resources there are, and the price will continue to rise.  Americans need to develop technologies to switch away from oil pronto--bikes in cities, solar water heating in homes and factories, wind power, etc.   And our tax policy should be pushing us in that direction, not continuing to give Big Oil the kinds of tax breaks that have made in the business that makes men wealthy since the turn of the last century.

I can't say that I saw anything in the campaign letter that made me think the campaign has come up with a viable strategy for dealing with these long-term fiscal problems.  And this recent study from the Center for American Progress Action Fund provides an even more worrisome look at the McCain tax plans for huge tax breaks to the biggest multinational corporations.  The largest 200 corporations would get breaks of about $45 billion a year.  These are not corporations that need largesse from the federal government in order to be competitive (which they often allude to, even while claiming that they are for private market processes):  this is Wal-Mart and Exxon and other huge companies that are enormously profitable.  These huge multinationals have already captured a significant share of the power that should belong to the people and they seldom create jobs that in any way compensate for the tax breaks they get.   The country would be much better off using the revenues that would be lost in tax giveaways for corporations to create education and job training program and other infrastructure that really helps people--or even just give it away to people in poverty whose spending would be an enormous stimulus to the economy, instead of to corporations.

Comments

[Joe Reisman]

Being a committed Democrat, it is easy for you to put your hand in the pocket of those who have been successful. Sure, the health care system isn't perfect. We do however, have emergency room service. It seems that you would cut the pay of the doctors who have enormous medical school debt to pay off. Where is the incentive for those to become a doctor? The present system of taxation is progressive. As it is the top percentage of the wealthy already pay for the country. The solution is more in what JFK has to say - 'It's not what the Country can do for you, it's what you can do for your Country.' Work is not just another four letter word.

[LindaMBeale]

Joe, your comment is interesting, but misses the boat on almost every level.

First, I have reported on various parties' tax platforms, and I will continue to do so, because informed citizens are the most important ingredient in overcoming the lobbying stranglehold on tax policies that primarily benefit big corporations and the wealthy. Many campaign mailings are filled with what campaigns think supporters want to hear. This one was particularly vapid and yet particularly interesting, since it pushed making the Bush tax cuts permanent (though McCain had acknowledged when they were passed that they were ill-advised because they primarily benefit the rich) at the same time that it pushed a failed policy of perpetual war in Iraq (which will cost trillions that will have to be borrowed from Asian economic powers and from America's future generations).

Second, right now its the insurance companies--and a few medical specialities--that make the most money out of medical care, not the regular everyday family providers. Having a single provider system doesn't take the incentive away from being a doctor--in fact, it relieves doctors of the mounting paperwork and drudgery that is currently required in a system that essentially makes them minions to the insurance industry. Your repeating the Bush slogan of ER service as the answer is ludicrous--that is one of the reasons our health care is so expensive: ER service when you are in a crisis is much more expensive than decent care when you are first ill; it doesn't adequately care for the uninsured or poorly insured anyway; and it is an inefficient use of health care dollars.

Third, the present federal tax system is BARELY progressive and perhaps turning regressive, when you consider all of the federal taxes and when you count all economic income and not just that that is included in computing taxes. The wealthiest will always pay the bulk of the taxes, because that's where the bulk of the money is. But the tax cuts that have relieved the wealthy have been enormously costly in infrastructure investments and human capital investments that this country didn't make but should have made, instead of giving an unneeded tax boon to the already well-off.

Fourth, your last line is just plain insulting. Many of those who work at insecure jobs earning the piddling minimum wages that are paid simply cannot afford the outsize premiums for health coverage that are required today.

[John Freeland]

Joe:

You might be interested in this: The Minnesota Medical Association conducted a poll among its members asking what type of medical system they preferred. 64% supported single payer. Women physicians supported single payer at a higher rate than men. More here:

MMA Physicians Poll