John McCain unveiled several new economic ideas today to help the struggling economy. The feedback I am getting from pro-growth types on the right is not good. Many had hoped McCain would unveil some sort of new middle-class tax cuts on income or investments, perhaps a zero capital gains tax rate to appeal to all those hurting 401k investors. The logic is this: What's really going to hurt homeowners is the loss of a job. We may be facing the worse downturn in a generation. Why not a broad tax cut like we had in 1981?
I asked McCain economic adviser Douglas Holtz-Eakin that very question today during a conference call. He didn't answer it. He said something about how McCain is going to take steps that are "in the best interests of the American people," particularly seniors and homeowners, and how these new steps will show Americans that they have "a government that is responding" to their needs. Hoo boy. I can already predict the E-mails I'm going to get: "None of what McCain is proposing will help return the economy to prosperity. They just make the downturn a bit less painful."
Now certainly his $300 billion idea to give new mortgages to underwater homeowners is a big idea. And some conservative economists favor such a plan as a way of breaking the falling home price-foreclosure cycle. But as my friend Larry Kudlow likes to say, when it comes to domestic policy, "Republicans are good at one thing: cutting taxes."