McCain: Cutting taxes more important than balanced budget

[WoodysGirl]

By HOPE YEN, Associated Press Writer
1 hour, 40 minutes ago



WASHINGTON - Republican John McCain said Sunday that cutting taxes and stimulating the economy are more important than balancing the budget, and accused both Hillary Rodham Clinton and Barack Obama of supporting tax hikes that would worsen the impact of a recession.

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"The goal right now is to get the economy going again," the GOP presidential nominee-in-waiting said on ABC's "This Week," adding that he would put the country "on a path to a balanced budget" by attacking wasteful spending.

McCain conceded it was probably a mistake to seek and accept the endorsement of televangelist John Hagee, who has referred to the Roman Catholic Church as "the great whore" and called it a "false cult system."

The Arizona senator said he had condemned Hagee's remarks about Catholics, and said it was different than the way Obama has responded to questions about his own relationship with William Ayers, a 1960s-era radical who in an interview published on Sept. 11, 2001, said he didn't regret bombing government buildings.

"How can you countenance someone who was engaged in bombings which could have or did kill innocent people?" McCain asked, calling Ayers an "unrepentant terrorist."

Obama campaign spokesman Bill Burton, in response, said McCain had "stooped to the same smear politics and low road that he denounced in 2000" by commenting on Ayers.

McCain appeared on the talk show as the Democratic National Committee announced it would begin running an ad Tuesday on national cable networks tweaking McCain on the economy. The ad, released to reporters Sunday, shows McCain saying the country overall is "better off" than it was eight years ago, and ends by asking viewers, "Do you feel better off?"

The Republican National Committee said the ad is misleading.

Responding Sunday, McCain brushed off Democratic assertions that he is out of touch on the economy and reiterated a pledge to cut taxes even if it means running up deficits. Turning the tables on Clinton and Obama, he said they are the misguided ones for proposing tax increases during a recession.

Both Clinton and Obama support higher taxes for people earning more than $200,000 a year. Obama also has said he wants a capital gains tax higher than the current 15 percent.

"They are out of touch when they want to raise taxes at the worst possible time when we're in a recession," said McCain, who has been under constant criticism from Democrats for saying the economy isn't his best subject.

McCain said he has a solid economic plan, centered on extending Bush administration tax cuts he once opposed. Clinton and Obama would reverse those tax cuts.

Blaming federal spending for the economic troubles, McCain pledged to "scrub every agency of government" of wasteful expenditures and close loopholes.

"Is there any American that doesn't believe that there's tens if not hundreds of billions of dollars that can be saved?" he said. "Americans know that. That's why they're fed up."

McCain also said he would not hold off on tax cuts if Congress didn't approve his spending cuts and declined to make a pledge to balance the budget by the end of his first term in office. "When economies are rough, then you've got to reduce the tax burden on people," McCain said.

[zrinkill]

I agree

[BrAinPaiNt]

I agree

If we were not in the middle of the Iraq war, if we were not in the middle of war in Afghan, if were not in the build up of attacking Iranian targets, if we were not spending money hand over fist, if we were not borrowing money from china like a crack addict...I would agree. But since we are doing all of that stuff..I don't.

So much for responsibility when you are doing all of that and don't want to pay the debt.

[DFWJC]

I would not want to cut more...but I would not want to raise them either. Kennedy, Reagan, and even Clinton (to some degree) knew that at some level, favorable tax rates ultimatley increase tax revenues and are WAY more American. It aways works that way...high taxes..especially skewed way higher to folks that actually employ others, reduces total tax revenue.

But we MUST get our spending under control...it is unforgivable. This administration has been the worst Republican admin...maybe ever...as far as spending. Part of it was the direct war costs and the indirect costs--which mean that if you agree to my war spending I will look the other way on your special interest spending. Why do you think think that now that the terms are coming to an end, the administration wants to try to tighten it up? Too late though...it's a mess.

[BrAinPaiNt]

McCain's $3.3 Trillion Tax Cut, Budget Pledge at Odds

LINK (http://news.yahoo.com/s/bloomberg/20080418/pl_bloomberg/a72l7_aj5p9c)



Ryan J. Donmoyer and Indira Lakshmanan Fri Apr 18, 6:28 PM ET

April 18 (Bloomberg) -- John McCain's plan to cut taxes and balance the budget wins praise from fellow Republicans. Economists and nonpartisan analysts say his numbers don't add up.

McCain's proposal, outlined April 15, would extend President George W. Bush's tax cuts, reduce the top corporate rate, repeal the alternative minimum tax and double exemptions for dependents. Price: $3.3 trillion by the end of a President McCain's second term in 2017, according to figures from his campaign and the Treasury.

The Arizona senator said that would be offset by eliminating pork-barrel spending, freezing a portion of the budget, and saving from Medicare spending. He could cut the budget by $100 billion a year ``in a New York minute,'' he said in a Bloomberg Television interview yesterday.

Robert Bixby, executive director of the Washington-based Concord Coalition, a nonpartisan group that advocates budget restraint, said ``the huge imbalance'' in McCain's plan ``is that the tax cuts are specific and large and the spending cuts are small and vague.''

Once, McCain was a deficit hawk, Bixby said, but ``strange things happen when people run for president.''

Tax Cuts

Extending Bush's tax cuts would cost $1.5 trillion through the end of a hypothetical second McCain term, according to Treasury Department figures. His proposal to reduce the corporate tax rate to 25 percent would cost $100 billion a year, McCain's campaign estimates. Doubling the exemption for dependents to $7,000 a year would cost another $65 billion annually and the AMT repeal adds another $60 billion a year, his campaign said.

McCain released tax returns today that showed he paid $5,413 in AMT in 2007 and $6,979 in 2006.

McCain's spending cuts, combined with increased revenue from economic growth, total $1.5 trillion over eight years, leaving a $1.8 trillion net increase to the national debt.

``This is really a massive increase in the deficit,'' said Joel Slemrod, an economist specializing in tax policy at the University of Michigan.

Two Washington research groups said McCain's plan would cost more. The Center on Budget and Policy Priorities estimated his tax cuts would total $5 trillion over a two-term presidency. The Tax Policy Center, run jointly by the Brookings Institution and Urban Institute, said they would cost at least $5.7 trillion.

McCain senior economic adviser Douglas Holtz-Eakin dismissed such estimates as ``fantasy-land budgeting.'' McCain's proposals, Holtz-Eakin said, would balance tax and spending cuts to meet his balanced-budget goals.

Romney's Reaction

``The numbers add up,'' former Republican presidential candidate Mitt Romney said in an interview.

In an interview today on Bloomberg Television's ``Political Capital with Al Hunt,'' McCain said budget slashing is essential because ``we Republicans presided over the largest increase in the size of government since the Great Society,'' referring to a series of government entitlements, including Medicare, that were enacted in the 1960s.

To help pay for the tax cuts, Holtz-Eakin said he would save $30 billion a year by eliminating so-called ``rifle shot'' provisions. Those include items such as tax breaks for small insurance companies.

A Treasury Department report Holtz-Eakin cited as the source of his estimate states $27 billion could be raised by eliminating narrowly used tax preferences spread over a decade, not a single year.

The Discrepancy

When asked about the discrepancy, Holtz-Eakin replied that McCain would start with those provisions and target others like them to recover $30 billion annually.

Len Burman, director of the Tax Policy Center and a former Clinton administration Treasury official, said that is unrealistic. ``We looked for loopholes when I was there and couldn't even come up with $10 billion a year,'' he said.

McCain, 71, said he would offset the costs of lower corporate tax rates by freezing spending growth for a year on items unrelated to defense, veterans or entitlement programs like Medicare. So-called discretionary spending, which includes programs such as medical research and space exploration, makes up 18 percent of the budget. McCain said the freeze would save $15 billion.

There's a precedent. Former President Jimmy Carter attempted to implement ``zero-based budgeting'' that would have forced each agency to undergo an annual review and start from scratch. The idea ``didn't really work,'' Bixby said.

Tax Reduction

To balance the rest of the cost of the corporate tax reduction, McCain would eliminate spending on lawmakers' pet projects, known as earmarks, added in the last two years. That would save $35 billion. McCain also assumes $20 billion in additional tax revenue stemming from stronger growth.

The senator said he would also eliminate $65 billion worth of federal programs, including $2 billion in savings by charging affluent Americans more to participate in Medicare's prescription drug program.

McCain's campaign said a 10 percent tax credit for research for businesses and a provision that would allow companies to expense equipment purchases in the first year of use would come at no added expense.

Treasury Report

A Treasury Department report said those come with a cost. Extending a permanent research credit would cost the government about $13 billion a year, and a less generous form of his expensing provision would cost more than $34 billion annually, according to the report.

And McCain's AMT repeal estimate falls short of an analysis prepared last year by the nonpartisan congressional Joint Committee on Taxation, which put the cost of repeal at $100 billion a year. The AMT was created in 1969 to prevent 155 wealthy Americans from avoiding federal income tax and now ensnares about 4 million people.

McCain's plan doesn't address the cost of the wars in Iraq and Afghanistan, which now total more than $12 billion a month.

He also said he'd back a permanent overhaul of the estate tax that exempts the first $10 million from any tax and subjects the rest to a 15 percent rate. Such a policy would cause the government to forgo $278 billion during an 8-year presidency, according to the Tax Policy Center.

The estate tax is being temporarily phased out. It will impose a top rate of 45 percent on estates valued at more than $7 million a year for couples in 2009, will disappear in 2010, and return in 2011 with a top rate of 55 percent on estates valued at more than $1 million.

Ultimately, said Stan Collender, a former analyst for the House and Senate budget committees, it would take substantial cuts to Medicare and Social Security to balance the budget with the tax cuts McCain is proposing.

Even then, ``there's no way McCain could balance it by the time he leaves, unless he doesn't leave for 25 years,'' Collender said.

[AtlCB]

If we were not in the middle of the Iraq war, if we were not in the middle of war in Afghan, if were not in the build up of attacking Iranian targets, if we were not spending money hand over fist, if we were not borrowing money from china like a crack addict...I would agree. But since we are doing all of that stuff..I don't.

So much for responsibility when you are doing all of that and don't want to pay the debt.

You will not see a balanced budget for a while. McCain wants huge tax cuts, and Obama wants enormous spending increases.

[Cajuncowboy]

Cut taxes = more money in private enterprises.

More money in private enterprise = more jobs.

More jobs = more tax payers.

More tax payers = more tax dollars.

It really is that simple.

[theogt]

Interesting title. I wonder if he actually said that because they quote him as saying something totally different.

[theogt]

http://abcnews.go.com/Video/playerIndex?id=4689908 (http://abcnews.go.com/Video/playerIndex?id=4689960)

The tax/economy discussion starts at about 3 minutes in. He never says that cutting taxes is more important than balancing the budget. He says that cutting taxes puts us on the course toward balancing the budget.

He then goes on to talk about all the ways he wants to cut spending. Says he wants to "cut hundreds of billions of dollars" in spending.

[WoodysGirl]

Interesting title. I wonder if he actually said that because they quote him as saying something totally different.
Just FYI, that was the headline as it was shown on Yahoo. Just copy/paste for me.