It really is psychological for John McCain.
Asked to defend his admittedly paltry gas plan in April, he touted the "psychological boost" of shaving a few cents off the gallon. Asked last month to explain the purpose of an offshore drilling plan that does not even purport to alter the current energy supply, McCain argued that while it "may take some years" to kick in, drilling promises a beneficial "psychological impact." So when Phil Gramm chastised Americans for whining about a "mental recession," he was actually channeling McCain's psychological view of our economic problems. The media lapped up the gaffe but missed the point.
Gramm was not "off message." McCain's economic platform rests on the premise that the nation's economic challenges are minor and primarily psychological. How else can you explain his policies? McCain has not even proposed a short-term stimulus. His tax cuts ignore middle-class workers -- about 100 million households, including 37 million seniors, would get no relief. Only 1 million seniors see rebates under his proposal, which brazenly prioritizes wealthy households over elderly Americans living on fixed incomes.
Then there's that McCain penchant for scheduling economic help a few years down the road. (Although perhaps the psychological boost is instantaneous.) The only plank of McCain's tax agenda that is not tailored for the superrich -- boosting the exemption for dependents -- would not even start until 2010. And it would not take full effect until 2016, according to the nonpartisan Tax Policy Center, which recently issued a 39-page report on both candidates' tax plans.
And McCain's tax plan is so regressive that some liken it to a third term for President Bush. But that's just not fair to Bush.
Bush's signature tax cuts were skewed toward the richest Americans; roughly 31 percent of the money went to the top 1 percent of taxpayers. Yet under McCain's two proposed tax cuts, a staggering 58 percent of the benefits go to the top 1 percent of taxpayers. That finding is from a report by James Kvaal and Robert Gordon, policy experts at the Center for American Progress, about the "Bush-McCain-Norquist Tax Agenda." Tax activist Grover Norquist, a Republican insider, has crowed that McCain adopted his organization's "entire agenda" of slashing the corporate tax rate, vetoing all tax hikes, extending the Bush tax cuts and abolishing the alternative minimum tax.
But you don't have to rely on the nonpartisan policy experts. (Objective analysis is apparently passé, anyway.) McCain's plan is so narrowly focused on the demands of elite activists, even conservative stalwarts are blanching. In a recent editorial, National Review shared its "worries" that McCain's plan ditched middle-class Americans: "It offers very little in the way of direct benefits to Americans in the middle of the income scale." And that's from a magazine enthralled with tax cuts for the rich.
While McCain tries to sell an elitist agenda for its psychological value, Barack Obama is running on a rather concrete agenda for the general public. His tax benefits are spread across 95 percent of households, including a $1,000 cut to offset payroll taxes for working families. It starts "in the very first year" of the plan, an Obama economist recently noted, in contrast to McCain's delayed gratification. And Obama's $50 billion stimulus prioritizes an economic rebound, including $10 billion to address foreclosures. And it's $50 billion more than McCain has proposed for a stimulus.
A rocky economy will likely consume the next administration. The president will face the twin challenges of stimulating overall growth while reining in a plutocratic era of surging inequality, predatory lending and corporate scandals. Tax policy reveals the values a candidate brings to these challenges, and today's nominees could not be more different.
At bottom, diverting 60 percent of tax cuts to very wealthiest Americans is not only bad policy for a contracting economy -- it is regressive class warfare:
"I don't believe the wealthiest 10 percent of Americans should get 60 percent of the tax breaks," says one candidate. "It's clear that there's a growing gap between rich and poor in America, the haves and the have-nots. And many studies have indicated that -- and I think that the people who need it most and need the relief most are working middle-income Americans, and that's what I want to give to them."
It's a sound critique of McCain's current plan. And it came directly from McCain, back in 2000. That was also the McCain who voted against the Bush tax cuts in 2001, proclaiming:
"I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us, at the expense of middle-class Americans who most need tax relief."
McCain's own record reveals that his tax plan is not only bad policy, obviously, but also craven. It reflects the sellout of a man who used to know better. Some chide McCain for saying he does not fully "understand" the economy. The real problem, however, is that he does not understand that leadership demands courage and consistency.
Why did McCain go from populist to plutocrat? Why has he failed to explain his massive reversals on this key election issue? Is his heart in this fight? Could he really deliver on a promise to out-Bush Bush in regressive taxes he once deplored?
Those are some "psychological" challenges Americans can live without.-- This post is adapted from my Politico column. For more on McCain's economic problems, here's a discussion where even Pat Buchanan agrees that McCain is part of Bush's failed policies: