McCain’s misguided role model on deficit reduction

April 10, 2008

Just a couple of months ago, John McCain acknowledged, “The issue of economics is not something I’ve understood as well as I should.” For some reason, he’s been trying to prove this point ever since.

Yesterday, for example, McCain made a campaign stop at an investment firm in Westport, Conn., where a voter asked how McCain plans to balance the federal budget. (McCain has vowed, repeatedly, to eliminate the deficit by the end of his first term in office.)

“Basically, which is it?” the man asked Mr. McCain. “Straight talk: Do you want to raise taxes, cut entitlement spending, cut defense spending, or have a deficit?”

Mr. McCain did not explain how he plans to balance the budget, but spoke generally about hoping to stimulate the economy — and cited President Reagan.

“I don’t believe in a static economy,” Mr. McCain said. “I believe that when there’s stimulus for growth, when there’s opportunity, when people keep more of their money — and the government is the least efficient way to spend your money — that economies improve.”

“When Ronald Reagan came to office,” he said, noting that few in the audience were old enough to remember, “we had 10 percent unemployment, 20 percent interest rates, and 10 percent inflation, if I’ve got those numbers right. That was when Ronald Reagan came to office in 1980. And so what did we do? We didn’t raise taxes, and we didn’t cut entitlements. What we did was we cut taxes and we put in governmental reductions in regulations, stimulus to the economy….”

There’s so much wrong with this, it’s hard to know where to start.

First, citing Reagan as a model for deficit reduction is remarkably foolish. The deficit tripled under Reagan, and at the time, his deficits were the largest in American history. If he’s McCain’s standard for responsible budgeting, we’re in trouble.

Second, McCain hails Reagan’s example for not raising taxes, but this overlooks a key detail — Reagan did raise taxes, several times, to prevent his budget deficits from spiraling out of control and making the national debt even worse. Is McCain prepared to follow Reagan’s lead on this or not? (McCain did take a no-new-taxes pledge on national television a few weeks ago, though he has since said he may not have meant it.)

Third, McCain’s tax plan costs more than $2 trillion, on top of the $400 billion deficits he would inherit from Bush, and yet he still claims he will balance the budget in four years.

And fourth, McCain concluded, “I believe we can grow this economy, and reduce this deficit.” This is so utterly foolish, it’s hard to believe a serious presidential candidate would be willing to say it out loud.

In just the past couple of months, McCain has been confused about the relationship between taxes and revenues, confused about whether he thinks our current economy is strong or not, confused about why interest rates even exist, confused about his own no-new-taxes pledge, confused about his own Social Security policy, and confused about how he’d pay for yet another round of reckless tax cuts.

After a quarter-century in Congress, when it comes to the economy, the poor guy sounds like he has no idea what he’s talking about.

Maybe the senator could take a few weeks off, read a book or two, and get back to us?

McCain seems to think the average voter is as stupid as he is.

If his buddies in the media keep up the cheerleading, he might be right.

  • I am sure everyone saw Lieberman next John McCann in Iraq. Lieberman was whispering information into McCain;s ear. Lieberman is a direct connection to the neo-cons . Of courseMcCain is lost and confused . McCain was a maverick and now he is trying to shape himself into far right conservative so he can tap into the $$$$$.

    It is pathetic

  • Maybe the senator could take a few weeks off, read a book or two, and get back to us?

    Maybe he’s done just that?

    The full “issue of economics” quote reads:

    “The issue of economics is not something I’ve understood as well as I should,” McCain said. “I’ve got Greenspan’s book.”

    That was back in December 2007. And then there was McCain last Thursday, reporting back:

    “I know economics very well, certainly better than Senator Clinton and Senator Obama.” McCain told CNN in an interview.

  • The deficit tripled under Reagan, and at the time, his deficits were the largest in American history

    This is a common confusion. A deficit means we spent more in one year than we received in revenue. The National Debt is the accumulation of deficits and surpluses over the years. Reagan tripled the debt (from .91 to 2.6 trillion), because his deficits were huge. Clinton had both deficits and surpluses, but under him the debt rose from 4.06 to 5.67 trillion, a small increase compared to either of the Bushes.

    I think the biggest crime of Republican economics, however, is that under Reagan, they raised the payroll taxes, creating a surplus in the Social Security budget. However, they spent the surplus on other things. Bush now talks about the problem of Social Security as though there is no obligation to repay that debt. And yet, the Reagan increase came with an implied promise that contributors would have this money available when they retired.

  • Greenspan for McCain VP!
    – Lends much needed economic gravitas
    – Makes McCain look young and vigorous by comparison
    – His ‘gift of gab’ should make him uniquely capable of explaining McCain’s policies and flip-flops to the general public.

    (/snark)

  • What better sign that the old geezer has no clue what he’s talking about [or that Republicans don’t care one way or the other as long as they don’t have to pay more damned taxes*] than to invoke Reagan. He’s using Ronald Reagan the way Giuliani used 9/11. It sounds better than “I haven’t the vaguest idea.” Which is what he meant to say.

    * Speaking of taxes, why does it always seem that the war mongers who remind us that “freedom isn’t free!” never want to pay their freaking taxes?

  • First, the most obvious mistake McCain made: Reagan was elected in 1980, he actually came to office in 1981.

  • Thanks Chrenson. I won’t call this a correction, then. 🙂 Reagan’s average deficit was about .212 trillion. Carter’s were about .072 trillion. So you can say that Reagan’s were three times Carter’s. By the way, Bush 43’s are about .476 trillion, well over twice Reagan’s.

  • Stupid WHITE Warmongers for McCain. Their motto is “He’s one of us!”

    As McSame is running for Bush’s 3rd term, he has the right to inherit his “We create our own reality” belief. After all, belief is ‘straight talk’ compared to those annoying facts.

  • Well, just in case someone comes here who doesn’t know, you COULD start by noting that Reagan increased taxes.

    Make the wingnuts heads blow up by saying, “Be like Reagan OR cut taxes, your choice.”

  • I think McCain’s concern for the economy is equal to his desire to end the war(s). I can hardly wait until the democrats stop ripping into each other so they can tear this old geezer apart.

  • Republicans keep using the word “believe” (as when McCain says “I believe we can grow this economy, and reduce this deficit”). I think that they really mean that they have faith, which is belief without proof. Whenever one of them says “I believe”, what they are really saying is that I hope this is true but I have no proof of it.

    This seems to be a common thread and seems to explain why they can spout all sorts of nonsense: It’s because they “believe”.

  • The difference between Liberal and Conservative:

    Liberals believe in the truth. As a liberal I have to accept that Jeremiah Wright was Barak Obama’s pastor and spiritual guide.

    Conservatives make stuff up to fit their world view. John McCain believes Reagan performed miracles with tax cuts and deregulation which resulted in a reduced deficit.

    Can’t blame him though, Conservative Facts Suck.

  • Methinks John McCain shares the same articles of faith as one Grover Norquist, who has called for

    …reducing the government to the point where we can drown it in the bathtub.

    Yeah, right–and then play the Andrea Yates card (i.e., claim that G-d told her to drown her children as being “Satanically posessed,” and plead insanity if and when pressed).

    As if that weren’t enough:

    G-d isn’t looking too kindly upon Oklahoma in the wake of Rep. Sally Kern’s “homosexual conspiracy” remarks, and the ensuing claims of “wholehearted popular support” across The Sooner State.

  • Let’s break this down for the Kool-Aid drinkers.

    Lower taxes do enhance growth, but you can only reduce them to 0 and the growth rate is limited by human capability and time. Taxes are not the only brake on the runaway train you seem to think of the US economy as representing.

    To cite one example, one of the biggest obstacles to growth in India has been its lack of infrastructure. Road networks, so far have been funded by taxes. Zero taxes would inevitably mean zero road maintenance. This would produce a drag on national growth. Private financing of roads MIGHT be possible, but you guys aren’t “idea men” are you? If it takes longer than 30 seconds to say, you pass it off to Democrats and boo from the sidelines when we liberals “throw money at the problem.”

    Growing the economy to reduce the deficit only work as a proportion of the GDP.
    If GDP doubles and the deficit doubles, no harm done, but when we hit a recession (it’s kind of like the current economy but with a Democratic president) the GDP goes down but the deficit doesn’t magically go down too UNLESS you raise taxes, lower spending, or both.

    I’m willing to admit I’m wrong, but no conservative has ever been able to get past the sound bytes they’re fed by talk radio and refute me.

    I’d LOVE to have zero taxes! It’s the hell I live in called “Reality” that stops me.

  • Conservatives believe in ‘truthiness’ (thanks Stephen Colbert).

    Liberals believe in empiricism.

    Bill Clinton raised the top income tax rate from 36% to 39.6% and revenue increased every year.

    Boy George II lowered the top income tax rate from 39.6% to 36% and revenue from that segment of the tax base HAS STILL NOT RECOVERED.

    Yes, there is a point on the tax curve where if you reduce the tax revenues increase but if you raise it revenues don’t. I think we’ve discovered that the point is above 36% and considering we have war and war debt to pay for, it’s time to raise taxes.

  • I cannot wait for the debates during the general election. McCain’s “make shit up as I go along” approach may not be sinking him while the Dems are still without a firm nominee, but when a single Dem candidate can take McCain on and refute all his BS the public will see right through John.

  • $311.4 billion deficit is the deficit at the mid year point, likley to be around 500-600 billion this year, if not higher, one good hurricane will probably send it much higher

  • When Reagan took office the federal debt was $900 billion.

    Now it’s $9 trillion and we paid $433 billion in interest on the national debt last year, in an era of low interest rates.

    74% of the total federal debt was run up during Reagan, Bush 41 and Bush 43.

    Under Clinton we added $1.6 billion in debt, but he inherited a deficit at $340 billion per year and brought it down with a deficit reduction plan that balanced the budget within 6-7 years.

  • The question that supporters of making the Bush tax cuts permanent is: If these tax cuts are so obviously great for the future, why was there a sunset in the first place? The answer, of course is that the OMB and GAO can only do official forecasts on existing law, which does not include permanent cuts. In other words, even the true believers in Bush’s first term didn’t believe then that the cuts would be good for the deficit. Were supposed to believe now, after the recent slowdown/recession, that this will be more likely?

  • I still love how conveniently Republican “economists” can sell the libertarian take on the economy. What the Republicans did was take the tax cut aspects of libertarian economics while ignoring that little part sometimes called “fiscal responsibility.”

    More than any other Republican ideology, their economic, err, package… is shockingly hypocritical. They’re fine with running massive debts that they use to identify Democrats, yet bitch whenever the fiscal mess they create has to been mopped up with taxes. As for benefits, they have no problem with massively expensive Medicare prescription drugs, yet complain when proposals are floated involving cutting back the programs among the rich/well off.

    Will someone please explain where the hell they get their economic “policy” from?

  • Oh, and for jhm @24, the answer is that deficit-financed tax cuts have almost zero stimulus value for the economy.
    Just look to Rubinomics, the policy that brought us Clinton’s surplus.

  • Pete asks: “Will someone please explain where the hell they get their economic “policy” from?”

    Milton Freedman and the Chicago School of Economics. They advocate the total privitazation of all Government controlled assets. The problem is, no matter how much they get, it’s not enough to actually improve the economy, so they insist you have to do more. But no one ever does. So they always claim that the reason their policies ALWAYS fail (like in Iraq) is that no one goes far enough.

  • If the news media bothers to use “the Google” they’ll find out that all of the figures cited by Mr. Straight Talk are pure bullshit. Of course they won’t fact check him because he’s a Republican.

  • “… the government is the least efficient way to spend your money…”

    As widely believed as this is — even by liberals, I think — is there a shred of economic evidence to back it up? How does one measure efficiency, anyway? I sincerely want to know.

    Seems like the calculation is simply: that $2000 you gave to the IRS means you can’t buy a plasma TV, and no amount of school lunches for poor kids will change that.

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