A Return to ‘It’s the Economy Stupid’

The McCain campaign released a statement of support from over 300 economists that include, “Nobel Prize winners, business economists with experience in the private sector, policy economists with experience in government and academic economists from major universities and state and community colleges.”

“We enthusiastically support John McCain’s economic plan. It is a comprehensive, pro-growth, reform agenda. The reform focuses on the real economic problems Americans face today and will face in the future. And it builds on the core economic principles that have made America great.”

The McCain economic plan keeps government spending under control by vetoing pork barrel spending and pausing non-military discretionary spending. The plan opposes tax increases and would cut the corporate tax rate, taking away an incentive for companies and jobs to go overseas. There is also a focus on reforming entitlement programs such as Medicare and Social Security. The plan supports free trade agreements, and institutes worker retraining programs to assist those whose jobs have gone abroad.

Conversely, the Obama plan features dramatic spending increases, and a roll back of the Bush tax cuts. While the Obama campaign has promised not to raise taxes on the middle class that does not match his record as,

“This year, Barack Obama returned to the United States Senate twice to vote in favor of a budget resolution which raises income tax rates by three percentage points for the 25, 28 and 33 percent tax brackets. This would mean a tax increase for those earning as little as $32,000.”

Tax increases, particularly when the economy is struggling, is known to slow growth. The McCain plan of keeping taxes low and reducing the corporate tax rate is a pro-growth strategy, while the Obama strategy of increased taxes and spending is a model that has been proven unsuccessful. The Carter administration offered similar tax and spend proposals that were unsuccessful that lead to the famous line, ‘It’s the Economy Stupid.’  

A Return to ‘It’s the Economy Stupid

Tags: corporate tax rate, cut spending, economic plan, economists, mccain economics, mccain economy, reduce spending

3 comments July 7th, 2008

McCain Free Trade and Ethanol

Ethanol provides an interesting lesson in government subsidies, why they cause problems and why free trade works better. It’s understandable how in the late ’70’s ethanol subsidies started. There was an interest in finding energy alternatives, and the idea of corn based ethanol held promise. Today there is still a desire to find clean energy alternatives, and ethanol still holds promise. Yet these subsidies, even if well intentioned, create more problems than they resolve. Problem number one, subsidizing corn based ethanol creates an obvious focus on corn. However, the promise ethanol now lays in numerous sources such as switch grass, sugar, or a host of other natural products. Pushing corn slows the development of ethanol from these alternate sources. Second, subsidizing corn ethanol creates an unnatural shortage of corn. Hence food prices rise; not only corn based products, but the cost to feed farm animals increases making the price of meat and dairy products increase too. The working class and those already struggling financially are hurt the most as the price of necessities increase.

Finally, the last problem with ethanol subsidies is they are hard to illiminate. Senator McCain made a very gutsy decision to be the only candidate to go into the Iowa primary stating that he opposed ethanol subsidies. Telling farmers that it is no longer good economics to regulate and subsidize corn ethanol is hard, but necessary. Eliminating these subsidies will help with food prices. It will help allow other sources of ethanol to develop, and will even allow the US to purchase cheaper ethanol from other countries such as Brazil who has plenty. Regulation and subsidies are often well intended, but as is the case with ethanol, problems often arise when free trade isn’t practiced.

Also posted at McCain Independents

Tags: agriculture, ethanol subsidies, free trade, free trade practices, iowa ethanol, mccain economics, mccain regulation, mccain subsidies, subsidized ethanol

12 comments May 14th, 2008