Lip-Reading, Again

Monday, February 25, 2008

JOHN McCAIN didn't say "read my lips," but he might as well have. "So on taxes, are you a 'read my lips' candidate, no new taxes, no matter what?" ABC's George Stephanopoulos asked him last week. "No new taxes," pledged the Arizona senator and presumptive Republican nominee. This may be good politics when the GOP base is edgy and still smarting over Mr. McCain's votes against the Bush tax cuts, in 2001 and 2003. But it's a dangerous straitjacket into which to put your potential presidency.

Contrast this with McCain 2001, who said, quite correctly, "I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us, at the expense of middle-class Americans who most need tax relief." Or McCain 2003, who called further tax cuts "irresponsible," adding, "At a time of war, at a time of economic stagnation, at a time of rising national debt . . . one might expect our national leaders to pursue policies calling for shared sacrifice to achieve shared benefits. Regrettably, that is not the case." Or McCain 2004, who said, "I voted against the tax cuts because of the disproportionate amount that went to the wealthiest Americans. I would clearly support not extending those tax cuts in order to help address the deficit."

We sure do miss that guy. He's been gone since 2006, when he voted to extend the Bush tax cuts for capital gains and dividends, arguing that "American businesses and investors need a stable and predictable tax policy." Ever since, Mr. McCain has hewed with increasing fealty to the strict Republican Party line: All tax cuts, no matter how unaffordable or unfair at the start, must be preserved; no tax increases may be considered; further tax cuts should be on the table.

Mr. McCain's explanation of his evolution features some less than straight talk. He argues that he initially opposed tax cuts because "I said, look, we've got to have spending restraint." Mr. McCain talked about controlling spending during his first presidential campaign, but that was not his point at the time the tax cuts were being debated.

More troubling, however, is the substance of the new McCain position, which amounts to more than $4 trillion in lost revenue over the next decade; Len Burman of the nonpartisan Tax Policy Center estimates that by 2018 tax receipts would be at an unsustainable 16.6 percent of gross domestic product, down from 18.8 percent in 2007. Sens. Hillary Rodham Clinton and Barack Obama have proposed their own tax cuts, but they look modest in comparison to Mr. McCain's.

Mr. McCain would extend the Bush tax cuts, at a 10-year cost of more than $2 trillion. He would also eliminate the alternative minimum tax altogether -- an additional $1.6 trillion. He would cut the top corporate tax rate from 35 percent to 25 percent (not a bad idea if various corporate loopholes were tackled at the same time) and add other incentives for business investment. Mr. McCain talks about making up the gap by clamping down on spending -- tackling entitlements, reining in health-care costs, streamlining defense procurement, eliminating earmarks. Nice ideas, hard to pull off -- and, as the old McCain would have argued, better to show the spending restraint first.

In addition, the new McCain believes that raising taxes should require a three-fifths majority vote in Congress -- as if more gridlock were needed. And, of course, if some tax increase were to slip through, he has pledged to oppose it under any circumstances. Given the needs of government in the coming decade, this is a pledge we suspect a President McCain would soon regret.

Other editorials in the Ideas Primary series can be found here.

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