Quick Links to Posts By Category

, , , , , , , , , , , , , ,
, , , , , ,
, , , , , , , , , , , , ,
, , , , , , , , , , , , , , , , , , , , , , , , ,

Sunday, February 17, 2008

McCain's Economic "Thinking"

Andrew Ferguson writes an article addressing Senator McCain’s approach to economics over at the Weekly Standard website that is, for that publication, very balanced in its content. Ferguson covers a lot of ground, from the membership of McCain’s presidential campaign economic advisory group, to his record on taxes and budgets from 1983 forward, through his involvement in various regulatory schemes. This line goes to the heart of McCain’s thinking:
McCain's economics aren't ideological but improvisational--a campaign with shifting fronts, running on indignation.
The improvisational part is reflected in the makeup of that dvisory group, which contains “Big Rock Candy Mountain*” Republican and supply-side tax cutter Jack Kemp alongside “root canal” Republican Pete Peterson and Concord Coalition founder Warren Rudman. Ferguson states:
A couple of them, if you put them in the same room, would set off an intergalactic explosion like the collision of matter and antimatter.
No doubt. Ferguson teased the following quotes out these three men:
As for his team of economic advisers, they continue to see in McCain a picture of their own aspiration. "He's a deficit hawk above all," Rudman told me. "Has been since the day I met him."

"He understands that the solution to our long-term problems will involve some shared sacrifice," Pete Peterson says. "And I think his leadership skills will be very effective in putting this idea of shared sacrifice across."

"I tell him: 'Stop mentioning Pete Peterson!'" Kemp says. "And he gets that. You look at Reagan. He ran a conventional Republican campaign in '76: limit spending, balanced budgets. Then [supply-side economist] Art Laffer and I and some others managed to talk to him. And in 1980 he ran as a growth candidate. I see something similar happening with John.”
It’s not hard to see why modern, non-Rockefeller Republicans view McCain with distrust on economic matters. He’s likely to take his economic policies from the last person to talk to him, and he has a rather eclectic (to be kind) and troubling cast of characters whispering in his ear.

As for regulation, Ferguson identifies the McCain approach:
He surveys a set of facts, identifies a villain, fixes him with his steely gaze, and then goes after him.
And the problem with that approach:
What's unsettling is that you can never predict who the next bad guy will be.
It’s also troubling that McCain seems to have a populist, demagogic streak when it comes to regulation, pursuing industries in direct relation to their disfavor among the public, such as pharaceutical and cigarette companies. He does, in fact, appear to be a genuine man of the people in this respect, reflecting their ignorance and resulting prejudices about the free market, but with one inevitable downside:
When President McCain finds his villain and pursues him however he can, they [voters] will likely cheer their president and egg him on--unless, of course, he fixes his steely gaze on them.
You can take away from this article what you want about McCain’s economic thinking. It shows on one hand that he once was a tax cutter and supporter of Reaganomics. But it also demonstrates that those positions were most probably situational rather than foundational, and that a President McCain is apt to swing in unpredictable ways on economic matters, depending on the direction and force of current forces. One shouldn’t take at face value claims by old Reagan hands that McCain is a Reaganaut – they really don’t know any more than McCain himself does about the direction McCain will go on any given issue. On economic matters, a vote for McCain will truly be a leap into the dark.

* Big Rock Candy Republicans have an almost mythical belief in the ability of tax cuts to solve society's problems - there's nothing that can't be fixed with a good marginal rate cut. It's about as far away from balanced budget Republicanism as you can get.


Blogger Right Hook said...

Liberty not only entails being able to do and say as you please, but also being able to keep the proverbial fruits of your labor.

Beware of politicians that advocate a balanced budget as Nirvana. After all, budgets can be balanced if taxes (regardless of what they are called) are raised sufficiently.

Tax cuts are always good in that the people who earn the money get to keep more of it, but tax cuts alone are not the silver bullet for fiscally responsible government.

Reagan's tax cuts resulted in nearly a doubling of revenue to the government, but out-of-control spending by the Democrat congress more than consumed the extra funds. There are some tax cut advocates who are in it for the revenue they raise for government rather than a moral obligation.

Too many politicians see increased revenue, regardless of the source, as their license to spend it. We need to elect people who understand that government needs to be limited in both scope and size and with a minimal confiscation of individual wealth.

2/17/2008 12:55 PM  
Blogger G-Man said...

If Big Rock Candy Republicans think that tax cuts can always help society's problems, I find myself more in agreement with them.

This is a broad brush, but we are over-taxed to the point that taxes stifle productivity. Further, income taxation is a form of servitude – government mandated service. By definition, taxing income is taxing freedom.

I know this is tangential to the post, but I do think that tax cuts are always a benefit to societal problems for they give citizens more freedom to solve that which ails us with the fruits of our own labor. Take schools, for example, tax cuts may not fix government run schools, but they make it easier for free citizens to use the fruits of their labor to send their kids to private schools.

Closer to the post, the implication that tax cuts alone do not lead to balanced budgets is not true. Tax cuts make productivity more rewarding thus leading to a bigger economic pie. Government's take may be a smaller percentage, but a smaller percentage of a bigger pie equates to more revenues.

Under Reagan, tax cuts resulted in DOUBLING tax revenues. The only reason that deficits prevailed is because spending quadrupled. Reagan often said that he regretted not being able to cut spending, but this was a price to pay for fixing the Carter mess (both economic and military). Reagan also knew that, in time, the economic growth of his cuts would eventually overcome the spending growth. He was right.

For all the criticism about increased spending under President Bush, even our current deficit is shrinking faster than expected. The Bush tax cuts are growing the economy faster than spending in Washington.

This is not to say that cutting spending is overrated, but that cutting spending for the sake of balancing the budget should not be the primary motivation. (Don't get me wrong. A government that spends its citizens' income faster that its citizens can earn it is a government destined to consume itself to ruins.) Still, spending is the fuel that feeds government growth and government encroachment over personal freedom. All too often government spending increases are for big government programs that ultimately lead to more dependency on government than self.

2/17/2008 1:14 PM  
Blogger G-Man said...

Looks like Right Hook beat me to the publish button.

2/17/2008 1:17 PM  
Blogger Thrifty Scot said...

Kemp would probably suggest that teen pregnancy could be eliminated with tax cuts - that's the kind of silliness that he eventually lapsed into.

Probably more useful is Milton Friedman's observation that he never met a tax cut he didn't like.

Making unsupportable claims about the miracles that can be performed by cutting taxes only serves to undermine the case for them. Kemp has always had his heart in the right place, but has been known to get carried away.

2/17/2008 7:50 PM  
Blogger G-Man said...

Although I understand and agree with Thrifty Scott's larger point about making "silly" claims about tax cuts, I would suggest that they could reduce teenage pregnancy. Cut taxes enough to foster growth in private schools then, indeed, teenage pregnancy could drop. Fewer students would be fed the "you cannot control your sexual urges so here's how to do it" enticement in sex ed.

2/18/2008 11:04 AM  
Blogger Mark said...

This article goes a long way towards explaining why supporting McCain is going to be a bumpy ride. The only thing I know is that, even at his worst, McCain will be better than the two unapologetic socialists who are running for the other party's nomination.

And by the way, hasn't Warren Rudman done enough damage? Remember, he's the moron who convinced Bush 41 that David Souter would be a good addition to the Supreme Court. Feh.

2/18/2008 6:02 PM  

Post a Comment

Links to this post:

Create a Link

<< Home


MOB Logo

Powered by Blogger