John McCain, Economist in Chief

He wants to cut corporate taxes, but energy and payroll taxes might be headed higher.

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"If this comes down to some policy wonk debate between McCain and Hillary or Obama, well, we're not going to win that one," is how a John McCain political adviser, in a recent chat with me, assessed the Republican presidential candidate. I kept that quote in mind as I read this morning's Wall Street Journal interview with McCain about his domestic platform. I wouldn't think McCain has to be the wonkier wonk to win—just be able to persuasively present compelling ideas that he believes in.

The key takeaways:

1) McCain is considering extending the retirement age or cutting the growth rate in benefits to make Social Security solvent.

2) Using "static" analysis that doesn't take into account the economic impact of tax cuts or hikes, McCain's tax plan (reducing corporate rates, extending the 2001 and 2003 cuts, fixing the alternative minimum tax) will cost some $400 billion a year, while he has so far identified some $123 billion worth of spending cuts including earmarks and corporate tax breaks and subsidies.

3) McCain's cap-and-trade plan for carbon emissions might bring in as much as $100 billion a year to the federal government as it auctions off emission permits (costs that would surely be passed along to energy users), but McCain thinks the innovation generated in response to the system would create jobs and growth.

The money quote: "The way I would fix Social Security is to sit down with Republicans and Democrats together at a table, voicing my opposition to tax increases, and sitting down and negotiating a fix to Social Security..." McCain also said he couldn't "envision a scenario" where he would raise taxes. Yet his plan to fix Social Security would almost undoubtedly lead to higher payroll taxes if he was negotiating with a Democratic majority, or even a strong minority. That's the scenario.

McCain, John
2008 presidential election

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