McCain Vows to Shift From Bush's Economic Policies

By MIKE GLOVER

Republican John McCain promised to pivot from President Bush's economic policies and impose strict controls on government spending that would spur investor confidence and the stock market's recovery. "I will protect your savings and retirement accounts and get this stock market rising again," said McCain, after huddling with economic advisers and pledging a break with Bush administration policies.

Aides said that McCain's call for cuts in the capital gains tax and tax breaks for seniors who invest would help the market rebound, a nod to the top issue on voters' minds little more than a week out from Election Day.

"A stronger economy with greater investor confidence would help turn the stock market around," said Tucker Bounds, a McCain spokesman. "That would help drive up stock prices and the market recover."

In his closing argument of the marathon election, McCain tread a thin line between bashing Democratic rival Barack Obama and making clear that he would steer a different course than the current GOP administration.

"We both disagree with President Bush on economic policies," McCain said. "My approach is to get spending under control. The difference between us is he thinks taxes have been too low, and I think that spending has been too high."

His most dramatic claim was a pledge to turn around a plunging stock market. Most of the progress he promised would come from the economic stimulus sparked by big tax cuts he's pushing, McCain said.

"I will create millions of jobs through tax cuts that spur economic growth," McCain said. The capital gains tax cut he's proposing would encourage investors, Bounds said.

Before he spoke, McCain met with economic advisers including former rival Mitt Romney and former Housing Secretary Jack Kemp. The event was designed to focus his message on the economic meltdown that has dominated the campaign and left him on the defensive. The downturn has helped boost Obama to a lead in the polls, both nationally and in key battleground states like Ohio.

"The difference between myself and Sen. Obama is my plan will create jobs, it's a difference of millions of jobs in America," McCain said. "My approach will lead to rising stock market prices, a stabilized housing market, economic growth and millions of new jobs."

Obama campaign spokesman Bill Burton responded, "A day after John McCain said that he agreed with George Bush's economic philosophy, he continued to parrot the same failed policies that give billions to billionaires and big corporations while providing no relief at all to more than 100 million middle-class Americans."

McCain's meeting with economic advisers came as polls show him trailing Obama, with most Americans deeply worried about the direction of the economy. For weeks McCain has been seeking to distance himself from Bush and his economic policies and he made that break complete in the nation's industrial heartland. Obama has tried equally hard to tie McCain to Bush, repeatedly citing McCain's 90 percent support for Bush in Senate votes. Yet in reality McCain has gone head to head with Bush and with his party in many instances throughout his career.  He is known within the Senate for reaching across the aisle; that is not just campaign rhetoric on McCain's side and can be verified by his record. And although the Obama campaign has made the ‘fictitious’ Bush-McCain connection their rally cry, Bush and McCain have actually had a frosty relationship ever since competing for the Republican nomination in 2000. The well presented PBS election expose on the two candidates made that very clear.

At a rally in Dayton, McCain continued to criticize Obama and his misleading rhetoric.

"That's what change means for the Obama administration, it means taking your money and giving it to someone else," said McCain. He ridiculed Obama's argument that his tax plan was based on fairness.

"There's nothing fair about driving our economy into the ground and we all suffer when that happens," said McCain. "We'll cut business taxes to help American jobs and keep American business in America."

McCain opposed another economic stimulus package and said he would instead seek to bring spending under control. He made clear the advisers he met with would be part of his administration and it would steer a far different course than Bush.

McCain described an economic stimulus plan under discussion in Congress as "another $300 billion spending spree they are calling a stimulus plan."

"I would rather give the great American middle class additional tax cuts and let you keep the money and invest it in your future," said McCain.

McCain repeated his proposals to cut taxes for those who hold stocks for at least a year, and end requirements that force people to take money out of retirement accounts during the market's downturn.

He also said he would toughen rules governing the financial markets.

"I will demand complete transparency into the accounts and activities at all banks and insurance companies so they cannot take on the kind of risk that brought down the financial system," said McCain. "We will have strict rules of conduct on Wall Street and if they are broken, executives will be severely punished."

While he voted for a $700 billion rescue package for the financial sector, McCain said "the government will get out of the banking business fast" if he's elected.

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Bar Stool Economics

Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until on day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

For those who do not understand, no explanation is possible.