The Real McCain

There is another side to John McCain. (And no, it's not the volcanically unstable side alleged by GOP whispering campaigns.) Although best known for his heroism as a POW in North Vietnam and for his forthright stands on foreign and military policy—and rightly celebrated for backing campaign finance reform and anti-tobacco legislation—since December 1996, McCain has also been chairman of the powerful Senate Commerce, Science, and Transportation Committee. The committee is an important one, overseeing, among other things, telecommunications; television and radio; the Internet; aviation; railroad and highway transportation; manufacturing and competitiveness; and science, technology, and space.



And on Commerce Committee legislative matters, McCain has not always shown the courage and insight he has demonstrated in standing up to big tobacco and opposing GOP isolationism. In fact, in his role as chairman, he has revealed an economic conservatism as doctrinaire and illogical as anything exhibited by fellow flat-taxer Steve Forbes.



In his personal dealings on the committee, McCain has been charac-teristically impressive. Indeed McCain is perhaps more highly regarded as a chairman by Democrats on the committee than by Republicans. Senators Fritz Hollings, John Kerry, and Byron Dorgan have wonderful things to say about McCain, who, they say, has treated them fairly and honorably even though they often disagree on legislation. McCain also gets similar high marks from consumer lobbyists. He will listen to representa-tives from Consumers Union, the Consumer Federation of America, and Public Citizen, and he regularly asks them to testify before his committee. Says Gene Kimmelman, the co-director of Consumers Union's Washington office, "McCain is one of the few chairs that puts me on the same panel with CEOs, much to their dismay. He likes panels that mix it up. I don't recall a Democratic chairman being so inclusive."



But McCain's actual legislative record on the committee is much more problematic. He is, like former Congressman Jack Kemp, a mixture of good intentions and bad ideas. He seems genuinely concerned about how his policies will affect the average American, but he is committed to a highly conservative and doctrinaire economics. McCain holds government regulation responsible for almost every ill that befalls businesses or consumers. Accordingly, McCain, the champion of campaign finance reform, has also sponsored some of the worst legislation in Congress, from a bill eliminating public interest considerations in evaluating mergers to a bill permanently banning sales taxes on Internet purchases.



One of McCain's chief responsibilities on the Commerce Committee has been overseeing the Telecommunications Act of 1996, probably the most far-reaching piece of legislation passed in Bill Clinton's two terms. The act removed or set conditions for the removal of the walls that had separated different parts of telecommunications. Its sponsors claimed that the act would encourage competition in the telephone, cable, and broadcast industries and lead to lower prices for consumers. It has not proven altogether a failure, but it hasn't lived up to these promises. It has encouraged a spate of gigantic mergers. SBC Communications and Bell Atlantic, having gobbled up their competitors, now control two-thirds of local telephone lines. AT&T and TCI own 60 percent of cable lines. Cable rates, which were deregulated, have gone up 23 percent since 1996, three times faster than inflation. Hourly rates for phone users have declined, but access charges and other fees have skyrocketed. While large businesses are paying less for phone service, most consumers are paying more—about $2 billion more annually than three years ago.



McCain's attitude toward the telecom bill bears out his strengths and weaknesses as a legislator. In February 1996, he was one of only five senators and the only Republican to vote against the bill, which was supported enthusiastically by the Clinton administration and the House and Senate leadership. The Democrats who opposed it—Paul Wellstone, Pat Leahy, Russ Feingold, and Paul Simon—did so from the left. McCain objected to some of the special interest subsidies in the bill, but the heart of his dissent was that it "reregulated" rather than deregulated telecommunications. As an alternative, McCain promoted the disastrous solutions advanced by the Heritage Foundation and by the Progress & Freedom Foundation, which Newt Gingrich helped to establish. He called for eliminating rate regulation and doing away with the Federal Communications Commission. "The Progress & Freedom Foundation is right on the mark when it calls for the abolishment of the FCC," McCain declared in a floor debate on the bill.



McCain became chairman of the Commerce Committee after South Dakota Senator Larry Pressler was defeated for re-election in November 1996. As chairman, McCain continued to condemn the Telecommunications Act, speaking now on behalf of consumers as well as businesses. He would lament each new giant merger. "Companies consolidate when they can't compete, and consolidation without competition can hurt consumers," McCain declared after the announcement in May 1998 of the merger between Bell companies SBC and Ameritech. But McCain's bizarre response was to make mergers easier. He assailed the FCC, which is responsible for evaluating whether mergers are in the "public interest," and which had sought to impose conditions on the SBC-Ameritech merger to protect competition. McCain introduced a bill last May that would have prevented the FCC from overseeing mergers at all. McCain also seemed oblivious to the dangers of broadcast monopolies. The 1996 act had raised from 25 to 35 percent the amount of the national audience that one network could control through owning television stations. McCain called this year for raising the limit to 50 percent.



When regulations on cable rates were eliminated earlier this year, McCain rejected imposing a freeze on them. He claimed that regulations had been "largely ineffective in constraining rates." McCain's alternative in this case was not unreasonable and was consistent with his philosophy. He introduced a bill that would have allowed satellite television companies to compete equally with cable companies by revoking a rule that had prevented satellite companies like DIRECTV from offering local network channels. But McCain's Republican colleagues sabotaged the bill, and McCain had to vote against the final product.



When public safety or health has been at stake, McCain has sometimes put aside ideology altogether and focused on what is best for the citizen or consumer. Besides being willing to allow the Food and Drug Administration to regulate tobacco as a drug, McCain also championed new airbag legislation, a Motor Carrier Safety Administration to oversee highway safety for trucks and buses, and an air passenger bill of rights. But on issues of price, rates, taxes, regulation, and monopoly, McCain has insisted—no matter what the facts—that the answer lies in removing government regulation and eliminating taxes. A case in point is McCain's position on taxing sales made to out-of-state Internet sites.



Two years ago, mayors and governors began clamoring to find a way to tax out-of-state purchases. Local politicians rightly feared that as such sales rose, they would deprive cities and states of tax revenues. By 2003, according to the Center on Budget and Policy Priorities, states and cities could lose as much as $15 billion in tax revenues from catalogue and e-commerce sales. Retail stores complained—justifiably—that they would be operating at a disadvantage, and advocates for the poor charged that the shift to e-mail sales would place the burden of paying sales taxes disproportionately on low-income Americans, who are least likely to buy over the Internet or through catalogues. Cities and states could, of course, shift the sales tax burden to income or property taxes, but there is nothing more difficult in American politics than completely rewriting a tax code.



On the other side, computer firms—like Dell, Amazon.com, and America Online—have joined forces with mail-order firms to mount a furious campaign against any sales taxes. They argue that taxing Internet sales would hamper the fastest growing part of the economy; McCain has bought their line. In 1998, he and Oregon Senator Ron Wyden (whose state has no sales taxes) sponsored a bill, the Internet Tax Freedom Act, setting a three-year moratorium on taxes while a government-appointed commission studied what to do. Then this fall, a year before the ban expired, McCain introduced a bill to make it permanent. His new bill, McCain declared, "will ensure that Internet commerce continues to grow by keeping it free from burdensome, anti-consumer taxation." In an article in Roll Call, McCain tried to respond to the obvious charge that his plan would imperil cities and states, but his reasoning appeared contradictory. Electronic commerce, he asserted, was so insignificant that failing to tax it would not create a "revenue crisis," yet taxing it would create a "government windfall." Um, come again? McCain also trotted out the usual right-wing boiler plate—that taxing e-commerce will "inevitably create a new bureaucracy" and "new agencies and new regulations." In fact, McCain's stance amounts to exactly the kind of regulation that conservatives claim to abhor: It picks winners by subsidizing one kind of business at the expense of another.



McCain has gotten many of his donations for his presidential campaign from individuals who depend on favors from the Commerce Committee. According to the Phoenix New Times, McCain received at least $797,917 in contributions during the first months of 1999 from industry representatives who testified before the committee. Gene Kimmelman doubts that McCain's positions reflect his fundraising. "Everyone on that committee gets a lot of money from interests," he says. "I don't see him modulating his views. His philosophies are firmly implanted." But some former committee staff, speaking on the condition of anonymity, say otherwise. "He is about as craven politically as the rest of them," says one former staff member.



If one considers McCain's entire record, Kimmelman's point is probably well taken, but there are two recent examples that suggest that even if politics did not dictate what McCain believed, it dictated when he decided to make his beliefs known. Last March, McCain was actively raising funds from telecommunications executives and lobbyists. At a Washington fundraiser hosted by adviser Vin Weber, who lobbies for AT&T, McCain raised $120,000. A few days later, according to Associated Press reporter Jonathan Salant, McCain hinted that he would introduce a bill eliminating the role of the FCC in policing mergers. Then in May, after FCC Chairman William Kennard had said that AT&T's purchase of MediaOne "warrants careful scrutiny," McCain introduced this bill. Within two weeks, McCain received 10 contributions of $1,000 from AT&T executives.



McCain's position on taxing Internet sales arouses similar suspicions. This July, when asked about a permanent ban on Internet sales, McCain deferred to the decision of the commission. But in August, during a fundraising trip to California that was partly devoted to fundraising among computer executives—a group that had previously given him very little—McCain suddenly changed his position and came out for a permanent ban. By doing so, he helped his fundraising and differentiated his position on taxes from that of Bush, who had just won the Iowa straw poll handily and who—being a governor as well as a presidential candidate—has waffled on the question of Internet sales taxes.



The other question raised by McCain's performance on the Commerce Committee is how carefully he considers theissues before him. Politicians and Senate staff who have worked with McCain laud his integrity but often question whether he thinks things through. Says one government source, "He tends to take a very simple view of very complex problems." I found this to be true myself during the few times I have heard McCain try to answer successive probing questions about an issue. That's clearly a fault, but it doesn't disqualify him in the current Republican field. Bush, McCain's principal rival, is not distinguished either by high intelligence or by a concern for consumers. And McCain's other challenger Steve Forbes prides himself on his economic forecasting, but advocates atrociously bad ideas on behalf of a narrow constituency of the super-wealthy. But if McCain were to get past these men and the Democratic nominee, and become president, his lack of reflection and his commitment to deregulatory dogma would be reason to worry.

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