I just got back from a think-tank debate on taxes between McCain economic adviser Douglas Holtz-Eakin and Obama economic adviser Austan Goolsbee. (I would say Goolsbee won if for no reason other than he came armed with an effective PowerPoint presentation while Holtz-Eakin decided to kick it old school. He just talked.) Here are a few observations and notes:
1) Goolsbee said McCainomics "not just repeats the [Bush economic mistakes] but magnifies them. [John] McCain's tax cuts are twice as big and twice as regressive."
2) Goolsbee argued that the so-called middle-class squeeze is not just the result of our economic woes but the cause of them. Thus, greater income equality will create more economic growth.
3) Goolsbee said that anyone who does not have a kid or pay income taxes gets no benefits from the McCain tax plan.
4) Goolsbee said that Barack Obama would "not increase, and very likely" cut, the budget deficit. In response to a question, he said that at the end of Obama's first term, the budget deficit-to-GDP ratio would be less than 2.5 percent. (I think he was ballparking that, though.)
5) Holtz-Eakin said that Obama's $1,000 tax credit won't help a person who doesn't have a job. That is why the campaign is focusing on corporate tax cuts and reducing healthcare costs for business. That would free up money for hiring and wage growth.
6) Holtz-Eakin said "there will be no real wage growth until we get healthcare costs under control."
7) Holtz-Eakin noted that workers bear 70 percent of the brunt of our high corporate taxes.
8) Holtz-Eakin thinks the McCain tax cuts will recoup 20 percent of lost revenue through higher economic growth.
9) Holtz-Eakin said there has never been a successful effort to reduce the budget deficit without also generating stronger economic growth.
My final take: The media are going to interpret the data from the Tax Policy Center, the folks who ran the debate, as meaning that neither McCain nor Obama can balance the budget, with McCain's plan about a third more profligate. But I also sense that neither campaign thinks the deficit is a big issue compared with concerns about economic growth and help to people struggling financially from high gas prices, flat wages, and falling home prices.