McCain's Economic Plan: Um, Where's the Rest of It?

You know those times when the printer runs out of paper midway through a job, but you don't realize it? You pick up the document and start reading, then wonder where the rest of it went.

That's what John McCain's economic plan feels like. The Republican presidential nominee has outlined plenty of principles and a few specific ideas, like cutting the corporate tax rate, reducing energy costs, and balancing the federal budget. But in his acceptance speech, McCain also pledged to help Americans who "struggle to buy groceries, fill your gas tank, and make your mortgage payment." How? Your guess is as good as mine. Some of the biggest gaps in McCain's plan:

Cheaper energy. McCain's biggest energy proposals are building more nuclear power plants and opening more offshore fields to oil and natural-gas drilling. But it's well known that it could take a decade for such efforts to alter the balance of energy we use and cut back on oil we import from "countries that don't like us very much," as McCain said in Minneapolis. More nuclear plants and offshore drilling won't do anything for the strapped consumers and small-business owners McCain wants to help immediately. Earlier this year, McCain pleaded for relief over the summer months by suspending the 18.4-cent federal gas tax—but he hasn't said if he'll pursue that in 2009, or if it's just for election-year summers. If there ever were a gas-tax holiday, it would leave a vast hole in the Highway Trust Fund and other programs and bleed more, not less, red ink in Washington.

Straight talk: Transforming our energy infrastructure is a huge challenge that could end up costing more than the Iraq war. And take longer. More drilling and nuclear plants could be part of a long-term solution, but until then, the best way for Americans to spend less on energy is to consume less energy.

Cheaper food. McCain's only specific proposals on this are strengthening the dollar, to give Americans more purchasing power, and cutting back on ethanol mandates, which tend to raise prices for corn that might otherwise go toward food. Uh, OK. But a stronger dollar will make only imported food cheaper. Lower corn prices would help a lot in developing countries but would be a marginal improvement in a country like the United States, where corn is already abundant.

Straight talk: American food prices are likely to fall on their own, as the cost of oil (used for manufacturing and transportation) comes down and agribusiness cranks out new products to meet demand. But a smart politician would take credit for it anyway.

More affordable homes. McCain has a plan to rescue at least 200,000 families at risk of losing their homes to foreclosure. But it's similar to a bailout plan already passed by Congress over the summer, so there may not be much more for him to do if he arrives in Washington in January. Whoever is president, however, will inherit a collapsing housing market that's the single biggest problem in the economy. And the only real fix is a painful one: Prices have to fall until the bubble of the last five years is thoroughly deflated.

Straight talk: On the margins, the government can help some homeowners. But most of us have little choice except to ride out the market turmoil.

Falling income. McCain has barely addressed one of the biggest strains on workers: Stagnant real income. (Barack Obama hasn't really, either.) Since 2000, incomes have barely risen after inflation. That's a very thorny problem that can only be fixed by making sure American workers are the most competitive in the world. McCain favors that, needless to say, but making it happen is a huge task, and he hasn't explained how he'd tackle it.

Straight talk: The rich are getting richer. The rest of us aren't.

Worker retraining. In his acceptance speech, McCain acknowledged a troubling subplot of globalization: "Some of you have been left behind in the changing economy." Those feeling the crunch worst are workers whose jobs can be outsourced to India, China, or other low-cost countries. McCain has mentioned a vague plan to make unemployment insurance more practical, and in his speech he pitched a convoluted-sounding idea to pay displaced workers a stipend equal to the difference between what they earned in their last job, and a "potential" new job. Huh? Boy, I'd hate to be the federal official who had to administer that program.

What McCain hasn't addressed is relocation: Workers in manufacturing or textiles or other dying industries often can't get to better jobs, because they can't afford to move. In parts of Michigan, for instance, the economy is so depressed that even upstanding homeowners owe more on their mortgages than their house is worth. To move somewhere else, where the economy is better, they'd have to come up with a big check just to sell their house. Federal and state governments already run lots of retraining programs, most marginally effective.

Straight talk: A competitive economy produces winners and losers, and taking care of the losers is a tough problem that's getting worse because comparable jobs are often far away. Finding a widespread fix is expensive, and there are probably more efficient ways to spend the money.

Balanced budget. McCain is a bona fide fiscal hawk. When it comes to outing pork-barrel practitioners in Congress, McCain has more credibility than anybody else in government. Still, while he promised that "you will know their names," that doesn't mean the pork will stop flowing, because the president still doesn't have line-item veto power to excise the fat from bills, while keeping the meat. If McCain's bully pulpit sends the pork-rats scurrying beyond the Beltway, it will be a novel development.

McCain's plan, meanwhile, calls for lots of additional spending, on things like a $5,000 health-insurance credit for every family, housing subsidies, and tax cuts. To help pay for that, he wants a one-year spending freeze while he scours the federal budget for the legendary—and ever-elusive—waste, fraud, and abuse. Let's hope he finds it.

Straight talk: Everybody wants government to spend less and work better. And maybe McCain will finally be the Hercules who cleans out Washington. But it's been promised many times before.

Comments

[Bill Gordon...:]

When Presidents screw around with our economy it becomes skewed.

2008 Sep 09 08:54 AM

[jonreagan:]

Not everyone agrees with your assessment on lifting the offshore drilling ban:

"But it's well known that it could take a decade for such efforts to alter the balance of energy we use and cut back on oil we import from "countries that don't like us very much"

I've heard several estimates that significant results could be reached in as little as five years. But either way, I find your line of reasoning bizarre. Using such logic, we would never plant trees....or begin large infrastructure projects such as bridges and roads.

Beyond that, it's fair to say that we can't drill our way out of the energy crisis....but neither can we "wind" or "solar" our way out. Because any single measure cannot by itself solve a problem, does it need to be rejected?

In short, Senator McCain favors increasing the supply of energy: pro-drilling, pro-nuclear, pro-clean coal. Senator Obama is opposed to all of those things, and declared on PBS last month that "he wanted to have a conversation with the American people about energy". At this point, most would agree we've had enough conversations on this topic. Even the Chinese Communists understand that to lower the price of oil, you have to increase the supply.

McCain is also strongly if favor of free trade, and lower taxes. Sounds like a pretty coherent economic program to me. Just this year, Senator Obama has opposed free trade agreements with Panama, Columbia, and South Korea (gotta keep Big Labor happy, ya know!). This kind of protectionism will choke off the one thing that is really ripping right now in our economy, exports.

We've obviously reached a rough patch in our economy....but hopefully people will avoid knee jerk reactions that take them toward a candidate like Obama, who babbles mindlessly about "change" and "hope". Times like these require well thought out solutions, not slogans.

2008 Sep 09 10:54 AM

[mollytjm:]

good article. these are worrisome problems and should be discussed more. i don't think McCain has 'well thought out solutions' for the problems regular people have. unfortunately, polls show that most people respond only to 'sound bites' and image. we need to be more interested in how to deal with energy, immigration, food costs and so forth, than we are in movie stars. Americans need to be smarter and willing to really listen and ask hard questions. Will that happen...i don't think so. news departments are profit driven (they didn't use to be) and stories about movie stars, murder and mayhem sell ads. their ad revenue is down 40%. it's not likely they'll develop a conscious at this point. i hope the debates are well moderated...there might be a chance to get good answers there.

2008 Sep 09 12:26 PM

[John Lewis ...:]

I have been working on the private sector McCain Economic Energy plan and along with the McCain outline.. The plan looks pretty damn good.

McCain's acceptance speech hit fairly solid on what he expects from his new plan for America. Rather than repost it, I will attch the link both above and below...

McCain pushed this Mealer Companies plans into play and we are going national with Green Auto MFG exactly the way McCain told the auto workers he would do!

Old jobs are gone thanks to (in my opinion... ) AFL CIO demands that sent US auto mfg overseas and to Mexico and Clinton's NAFTA.

We must compete with NAFTA and as I will soon catch an earful of..the auto maker's unions must agree to work with the MFGr's who employ them.. Besides, Mealer Companies has ME as the main man CEO etc... I am not a greddy bastard as we see with other MFG, but a true American patriot like John McCain.

The Green Jobs are coming back to the auto mfg arena...
EXACTLY as McCain told them he would do.

We need to be on the same team... McCain-Palin 2008

Google me.
Google my company.
Call me.
I am 100% the real deal
and so is McCain.

2008 Sep 13 08:11 PM

[Bob Dole:]

Quoted from jonreagan

"At this point, most would agree we've had enough conversations on this topic. Even the Chinese Communists understand that to lower the price of oil, you have to increase the supply."

So what happens when we run out of oil??? The problem doesn't rely in getting more domestic oil, even if we could its only predicted to be 5% of what Americans consume over the next 10 years, it's on breaking our ties with oil ALL TOGETHER. We can spend over $400 billion on building new off-shore drilling platforms, but yet as soon as you say using the $400 billion to build new wind-power fields, or in researching more efficient solar panels and batteries for electric cars it's a "radical idea". Neither candidate says anything about any major pushes for alternative energy sources, technically not at least. Sure they want to give automotive industries breaks to "research" new electric, hydrogen, or hybrid cars but when these companies are getting paid by oil companies to resist anything that will harm big-oil it's almost futile.

Both of my parents work for Ford, and have been receiving articles about new vehicles that can get over 50-miles to the gallon, but every time it gets shut-down. No one can find out the exact reason, but have you ever wondered why your Ford fuel-cap says "BP Fuels Recommended"??

2008 Oct 14 12:25 AM