The Heretical Mr. McCain

"I'm deeply concerned with a kind of class warfare going on now. It's a growing gap between the haves and the have-nots in America, and unfortunately it's building along ethnic lines. I'm not sure we need to give two-thirds of the tax cuts to the wealthiest in America. I believe we must save Social Security and Medicare. We must pay down the debt."

Bill Clinton? Not likely. No self-respecting New Democrat would ever use the language of class warfare. This is Republican presidential candidate, Senator John McCain, countering GOP complaints that he's using class warfare in criticizing George Bush, Jr.'s, tax giveaway to the rich. Heroic, unvarnished, off the hip, irreverent John McCain is tearing up the Republican catechism in his "Straight Talk Express." And in doing so, he is exposing the frauds, little and big, of the current political consensus.

This week, McCain detailed his own tax cut plan, calling for cuts totaling about $497 billion over 10 years. Like all such campaign pledges, the proposal was sculpted with an eye for political advantage, not good tax policy. The centerpiece would be to extend the lowest 15 percent tax bracket to 17 million more taxpayers -- taxpayers who currently pay 28 percent. By definition, this gives no tax relief to the three-fourths of Americans already within the lowest bracket under current law and no assistance to those so poor they do not pay taxes at all. And it gives a break to all above the lowest bracket -- with most of the benefits going to the affluent with incomes between $65,000 and $130,000 a year.

Compared to Bush, however, McCain is a virtual Bolshevik. His tax cut plan is less than half the size of the Bush plan. Citizens for Tax Justice figures show that Junior's plan gives about 37 percent of its cuts to the top one percent of Americans who already earn more than $319,000 a year, while McCain's gives only 1.8 percent of its benefits to these plutocrats. And McCain pays for part of his plan by closing corporate tax loopholes that even Democrats won't touch. No wonder Republican operatives think McCain is subversive.

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McCain defends his plan with conservative arguments that evoke the Republican Party of Calvin Coolidge, Dwight Eisenhower, Gerald Ford and, even, George Bush, Sr. He advertises himself as part of the party of fiscal rectitude, balance the budget, pay down the debt conservatives -- the ones that were trampled by the supply-side, Katie-bar-the-door tax cutters of the Reagan-Gingrich years. McCain says Bush is reckless in promising a $1.7 trillion 10-year tax cut that would consume much, if not all, of the supposed surplus. Instead, McCain argues for a smaller cut, aimed at affluent Americans (read: Republican suburbanites), with more money used to pay down the debt, either in the name of saving Social Security or bolstering Medicare. "The voters will have a clear choice on Election Day," says McCain. Bush's economics are "fiscally irresponsible," because he isn't saving money for paying down the debt and "shoring up the Social Security system."

Sound familiar? These are the same arguments that Bill Clinton made while vetoing the Republican Congress tax cut plan last year -- a plan similar to that proposed by Bush. No wonder Bush chides McCain for echoing Al Gore, calling them the only "two voices" criticizing his plan as too big. Bush is right, but McCain's "echo" reveals not how liberal McCain is, but how conservative the White House is. McCain and Clinton are arguing from the same gospel. It's one drawn, as the president said about his first budget, from the teachings of Eisenhower Republicans.
Consider the consensus formed in the last years of the Clinton administration. With prosperity erasing deficits, the lid on imagination has been lifted. Once again there are resources available to address national needs, without having to raise taxes significantly. This takes place even as the richest nation in the world allows one in five children to be raised in poverty, leaves 44 million Americans without health insurance, and abides a public school system facing an alarming shortage of good teachers and adequate classrooms.

So what are the priorities for the surplus? The President, the Republican Congress, and the leading presidential nominees all agree. The first priority is to raise military spending, adding over $100 billion to the $1.5 trillion dollars we are already slated to spend on the world's finest military over the next five years. The second priority is to pay down the debt in the name of defending Social Security. All tacitly assume severe cuts in domestic spending on everything from education to Head Start in order to conjure up the non-Social Security surplus. The largest part of that surplus is to be devoted to tax cuts. Only at this point does the argument begin.
Bush and the Republican leaders in Congress believe that virtually all of the non-Social Security surplus should be devoted to tax cuts, mostly for the already rich. Otherwise, as Bush argues, the "unspent money" will be "spent on big government." McCain and Clinton/Gore argue for a smaller tax cut, reserving some of the putative surplus to pay down more debt -- this time in the name of Medicare. The president would target his tax cuts to lower-income working people, particularly with his proposal (announced this week) to raise and extend to more people the Earned Income Tax Credit refunds. He would also raise resources -- from cigarette taxes and closing corporate loopholes -- to limit the cuts in domestic programs, with a particular emphasis on children.

Bradley, as is his wont, positions himself a shade to the left. He too assumes a surplus based on deep cuts in spending that aren't likely to get made. He also offers a small tax break, paid for in part by closing loopholes. But Bradley murmurs reservations about the need to raise military spending and would devote far more resources to providing health insurance for those who don't have it.

This bipartisan consensus is remarkably disingenuous. The argument is about a surplus projection that is based on deep cuts in spending that neither the Democratic President nor the Republican Congress has any intention of making. Tax cuts would pump money into the economy, even as Federal Reserve Chair Alan Greenspan is hiking interest rates to slow it down. Since Greenspan won't let them stimulate growth, they can only add to already glaring inequality. The military spending will go to a bloated Pentagon in desperate need not of more money, but of better management. Paying down the debt will have little effect on the future solvency of Social Security. If the economy keeps growing normally, there is no Social Security problem, and the debt payments will decline as a percentage of the budget, even without paying down the debt.
The first casualty of this consensus is any serious debate about the real investment needs of America. There is no discussion of what it would take to lift children out of poverty, to provide adequate childcare and health care for working families, to rebuild dilapidated schools, and raise teacher salaries to attract and retain the best. To his credit, Bradley has forced a debate about comprehensive health care; Gore has proposed greater investment in pre-school education. But at a time of immense possibility, each chides the other for violating the fraudulent limits of the consensus.

McCain's heresy thus reveals the real contours of the debate. He exposes the callousness of Bush's compassionate conservatism. At the end of the day, Bush, for all his rhetorical flourish, is unwilling to summon up the courage to stray from the Reagan-Gingrich supply-side, tax cut zealotry. And McCain exposes by comparison the limits of Al Gore's new found liberalism, for his fiscal policy is so conservative that it might make even Eisenhower a tad uncomfortable.