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I spent about 90 minutes this afternoon interviewing John McCain's chief economic adviser, Doug Holtz-Eakin. He laid out what would be a powerfully ambitious domestic agenda for a President McCain, including big upfront initiatives on climate change and Social Security reform. But he also set the stage for what would be an existential battle between the parties over taxes and spending.
In simplest terms, McCain would cut taxes for individuals and businesses while reducing both promised Social Security benefits and government spending for Medicare and Medicaid. It would be a memorable fight.
Holtz-Eakin, a former director of the Congressional Budget Office and chief economist for President Bush, also said McCain would engage in ongoing efforts to both improve health care quality and delivery and reform the tax system. Completion of any of these initiatives would make for a massively successful first-term. McCain wants to do them all.
That said, pulling off any of it would be quite a feat. A real McCain Administration would begin with a donnybrook over Iraq. It would then segue into what to do with the soon-to-expire Bush tax cuts, which Democrats loathe and McCain wants to extend.
Only then could McCain focus on his own priorities. Take the always toxic issue of Social Security reform. Holtz-Eakin didn’t lay out details, but McCain’s basic idea is to hold annual increases in benefits to about 5 percent of Gross Domestic Product—below the 6 percent to 7 percent increases under the current system. Like so many analysts before him, Holtz-Eakin dismisses the process of agreeing to those cuts as mere politics, but the battle with Hill Democrats, who will likely be stronger than ever after November, promises to be bloody.
There is, of course, a deal to be done here. Would McCain be willing to scale back his goal of extending the Bush tax cuts in return for Democratic support for Social Security changes? Holtz-Eakin won’t say. But it isn’t beyond imagining.
McCain would also have to deal with GOP true believers, who may never forgive his early apostasy on taxes. Before he supported the Bush tax cuts, he opposed them. Even now, Holz-Eakin has little patience for conservatives who want to argue about whether refundable tax credits are really spending, or whether raising taxes for even one person qualifies as an unacceptable tax hike. McCain’s economic adviser insists his candidate is more interested in good policy outcomes than how many of these particular angels are dancing on heads of pins.
McCain has left many questions unanswered. The biggest is how he’d cut all these taxes and still balance a budget. But the sheer ambitiousness—one might even say audacity—of it all is striking, especially when compared with Hillary Clinton and Barack Obama. With the exception of health reform, it is the Democrats who prefer to travel cautiously down the road of a tax credit here, or a new spending initiative there. In many ways, even Obama—he of change—offers a far more status quo agenda than McCain.
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