The McCain Economic 'Team'

...By the time McCain announced for president in 1999, he had built a consistent roll call of conservative votes on fi scal issues—a record that was, however, largely indistinguishable from those of his Republican colleagues...

...But in 2001 and 2003, McCain scarcely mentioned the budget defi cit in interviews explaining his votes...

...When President McCain fi nds his villain and pursues him however he can, they will likely cheer their president and egg him on—unless, of course, he fi xes his steely gaze on them...

...He and Rudman run the Concord Coalition, an advocacy group that regards the federal government’s budget defi cit as the country’s foundational economic problem...

...Bush’s 1990 budget because it contained multiple tax increases that violated Bush’s famous read-my-lips campaign pledge...

...There’s good reason to think that in economic matters, John McCain doesn’t know his own mind...

...Like many Republican senators, he voted against President George H.W...

...The McCain Economic ‘Team’ Intellectual diversity, for better and for worse BY ANDREW FERGUSON You probably have your own favorite, which is fi ne, but for my money the most revealing moment of the presidential campaign (so far...

...I have a process of leadership, Ron, that is sort of an inclusive one that I have developed, a circle of acquaintances and people that are supporters and friends of mine who I have worked with for many, many years...

...He gets it...

...At fi rst it was a reaction against the accusations of impropriety that dogged him in the Keating Five scandal of 1989, and then, after 2000, against the attack ads, paid for by Bush allies, that damaged his presidential campaign...

...McCain didn’t answer Paul’s question, but on the more general matter of how he would make economic policy, he did say this: But I as president, as every other president, rely primarily on my secretary of the Treasury, on my Council of Economic Advisers, on the head of that...

...And McCain’s list may very well reveal a refreshingly nonideological approach to policy making that will prove popular in our post-partisan era of change, the future, causes-greaterthanyour-self-interest, hope, and so on...

...Three years later, he joined in his party’s unanimous rejection of President Clinton’s 1993 proposed increase in marginal tax rates on capital gains and income...

...From this revised position it was a short hop to what free marketers and tax cutters consider his most unforgivable act of deviationism: his vote against President George W. Bush’s tax-rate cuts on capital and income in 2001 and 2003...

...I read a lot about it, but it depends on who you read...

...What’s unsettling is that you can never predict who the next bad guy will be...

...And he gets that...

...He’s the world’s bubbliest advocate of tax cuts, dismissing the traditional Republican fi xation on balanced budgets as “root canal” economics...

...I don’t have the expertise really to be very knowledgeable about it...

...That doesn’t make the cut unfair, unless of course you consider it unfair that rich people have more money than poor people...

...Has been since the day I met him...

...If the American people thought we were serious about cleaning up the tax code, then we’d get a lot of expert advice...

...Pharmaceutical companies should be reined in, he’s said, because they’re the “bad guys...

...Today McCain explains those votes in terms that would please Pete Peterson’s school of balanced-budgetsfi rst...

...I tell him: ‘Stop mentioning Pete Peterson!’” Kemp says...

...Notice that phrase “people like...

...Especially before the September 11 attacks, says one, “he couldn’t stomach the idea of helping Bush...

...Then [supplyside economist] Art Laffer and I and some others managed to talk to him...

...It was also a classic bill of attainder, designed to push the tobacco companies to the brink of bankruptcy without driving them out of business altogether...

...Like a lot of rich people who’ve come into money rather than earned it—the heirs to the Kennedy and Rockefeller fortunes are the most famous examples— McCain seems less interested in how wealth is created than how it can be used, wherever it comes from...

...He was one of two Republican senators to defy Bush in 2001, and one of three in 2003...

...Some of McCain’s advisers offer another reason for his rejection of the Bush tax cuts: his festering resentment over the campaign Bush had run against him in 2000...

...In an interview at the time, he said that “tax reform—i.e., a fl at tax,” would be one of his signal issues during his coming presidential campaign...

...It’s true he doesn’t have the same historical interest in economics that Reagan had...

...But when I talk about the Bush tax cuts and John says, ‘I don’t think we should give money back to people who don’t need it,’ I say, ‘John...

...He just couldn’t stand their lying that way,” an aide said at the time...

...McCain’s method in domestic matters no less than in foreign affairs is military: He surveys a set of facts, identifi es a villain, fi xes him with his steely gaze, and then goes after him...

...He said that in choosing a vice president he’d look for a person with economic experience to compensate for his own shortcomings...

...But the zigs and zags of his 25-year career as a congressman and senator suggest that, when he said he didn’t know much about economic policy, he was giving us some of that bracing straight talk...

...After Congress approved Reagan’s plan for a government-run catastrophic-care insurance program, fi nanced by a tax increase on wealthy seniors, McCain led the successful effort to repeal the new tax a year later, in 1989...

...McCain came to the House of Representatives in 1983...

...Back then he said he opposed the cuts in marginal tax rates because they were “regressive” and “unfair,” redistributing income from the poor and middle-class to the rich...

...We’d have to sort them out through a process of examination, discussion, and debate...

...We could get the best and listen to them...

...economic growth, rather than a balanced federal budget, the chief goal of fi scal policy...

...He supported deep cuts in the marginal tax rate on income and capital gains...

...McCain’s reading evidently led him in an unexpected direction, to a position opposite the one he’d held a few months earlier...

...And I think his leadership skills will be very effective in putting this idea of shared sacrifi ce across...

...He understands that the solution to our long-term problems will involve some shared sacrifi ce,” Pete Peterson says...

...At the same time (like Reagan himself) he maintained a mostly theoretical advocacy of a balanced budget, pushing such hopeless nostrums as a balanced budget amendment to the Constitution and a presidential line-item veto...

...came during the last debate among the Republican candidates, on January 24...

...He just has to listen to the right people...

...What makes it odd is that those people aren’t like each other at all, at least when it comes to their economic views...

...That’s a more plausible explanation than the explanation McCain himself has offered—and certainly more in keeping with McCain’s later Senate career, which consists of a series of regulatory crusades launched against persons and entities that have offended him...

...McCain’s longstanding efforts to tighten regulations on the campaign fi nance system also contain an important personal component...

...Politics is multiplication, not subtraction, and he needs support from all sides...

...More recently, he has championed a “patients’ bill of rights” to tighten regulations on the HMOs, insurance companies, and employers he considers to be stingy with health benefi ts...

...His most recent Senate fi nancial disclosure form places his assets at between $20 million and $32 million, making him the seventh richest man in the Senate...

...He ran a conventional Republican campaign in ’76: limit spending, balanced budgets...

...He was a standard-issue Republican of the day—an adherent of the newly minted Republican orthodoxy of Reaganism, which made rapid Andrew Ferguson is a senior editor at THE WEEKLY STANDARD...

...For that reason if no other, McCain’s opposition blindsided his fellow Republicans...

...Reagan got it instinctively...

...McCain’s opposition was particularly perplexing from someone who only two years before had advocated a fl at tax—which entails a sharp cut in rates at the top of the income scale to encourage the fl ow of capital into private investment...

...I know a lot less about economics than I do about military and foreign policy issues...

...Ron Paul briefl y alighted on our fragile planet and challenged John McCain, if elected, to abolish something called the President’s Working Group on Financial Markets, which Paul seems to think rivals the Trilateral Commission and the Knights Templar for sinister nefariousness...

...I would rely on the circle that I have developed over many years of people like Jack Kemp, Phil Gramm, Warren Rudman, Pete Peterson and the Concord group...

...With its huge increase in cigarette taxes and its elaborate system of penalties, the legislation was one of the largest regulatory schemes ever cooked up on Capitol Hill...

...Even Kemp, the happy supply-sider who considers federal defi cits a mere annoyance, agrees that this line of reasoning has a long and honorable pedigree in traditional Republican economics...

...John...

...The tobacco legislation that McCain shepherded through his Commerce Committee in 1998, for example, was inspired by his revulsion at the seven tobacco executives who testifi ed before Congress and famously refused to admit, under oath, that cigarettes caused lung cancer...

...But we got the same tax cut...

...And a very large number of voters, probably a majority, will fi nd this approach appealing because they don’t buy all this textbook baloney about the free market and limited government either...

...That’s not why we cut tax rates...

...He’s even admitted as much, in off-thecuff statements that Democrats will be repeating from now till November...

...The income tax cut, they pointed out, was across the board: Most people got their income tax rates cut by the same number of percentage points...

...His professional experience— he’s had a single job outside the government and military, working briefl y for his father-inlaw’s beer distributorship in 1981 — is unlikely to yield ideas about how the economy works in the way that a life spent, say, running a business or even practicing law would...

...He’s a defi cit hawk above all,” Rudman told me...

...The issue of economics is not something I’ve understood as well as I should,” McCain told the Boston Globe late last year...

...No preferences, really,” he said...

...Here the villains were PACs, lobbyists, and freelance partisans who bought political advertising during an election—and had to be stopped...

...And in that case your argument isn’t with tax cuts but with capitalism...

...Cut my income tax rate by two percentage points, and—peanuts...

...Then again, it might reveal something else...

...This is because rich people have more money than poor people...

...In fact,” he said in another interview in 2000, “the program that I have gives them [rich folk] a slight tax increase...

...This was the reason nearly all Democrats gave for opposing Bush’s tax cuts, of course, and at times it seemed as though McCain was simply reaching for the rationale nearest at hand, which happened to be the Democrats’ rationale—though in his case it was framed, in typical McCain style, as a matter of his own scrupulosity: “I cannot in good conscience support a tax cut in which so many of the benefi ts go to the most fortunate among us at the expense of middle-class Americans who need tax relief...

...The Bush tax cuts were unacceptable, he says in hindsight, because the revenue lost wasn’t matched by reductions in federal spending...

...Another adviser, Peter Peterson, is root canal economics...

...His public reasoning surprised even some of McCain’s budgetbalancing allies...

...Bush’s accountants, after all, had designed the tax cuts precisely to foreclose the fairness argument that McCain pulled off the shelf...

...I still need to be educated...

...No consistent economic principles can be extracted from McCain’s grab bag of policy positions, and no amount of textbook baloney about the free market, deregulation, and limited government will deter him from bringing his malefactors to justice...

...Let’s stipulate that a president should seek advice from a wide assortment of counselors...

...When he bucked the party’s leadership, it was on the side of a smaller government and lower taxes...

...There are a lot of experts out there, you know...

...And in 1980 he ran as a growth candidate...

...He comes from money himself...

...We do it to incentivize people to put their capital at risk for new investment and capital formation.’ And he gets that...

...His mother was heiress to an oil wildcatter, and his wife is wealthy, too...

...McCain’s economics aren’t ideological but improvisational— a campaign with shifting fronts, running on indignation...

...I’m going to be honest,” he told Stephen Moore of the Wall Street Journal three years ago...

...McCain has since tried, implausibly, to disavow all these statements, protesting that his knowledge of economics is perfectly suffi cient for a president...

...Peterson’s Concord Coalition opposed the Bush tax cuts, too, but not because they “benefited the rich...

...You can’t help but wonder: Does McCain know the unbridgeable philosophical differences among the men he mentioned, or are these simply the names that occur to him when someone asks about economic policy...

...One adviser, Jack Kemp, is the man who talked Ronald Reagan into embracing supply side economics in the 1970s, which launched the Reagan boom of the 1980s...

...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...

...By the time the 2000 campaign began in earnest, McCain had abandoned the fl at tax in favor of a “defi citreduction” plan that provided small tax breaks to middle-income taxpayers but otherwise left untouched the increases in marginal rates that had been imposed under Clinton and Bush the Elder...

...I see something similar happening with John...

...But it was clear his intellectual interests lay elsewhere, in foreign policy and military affairs...

...I don’t want John to be perfect...

...Our argument was never about the distributional aspects,” says Concord’s executive director, Robert Bixby...

...In the interview he was asked which of the various fl at tax proposals he favored...

...A lot of smart people...

...You look at Reagan...

...He’s a dour Jeremiah who called the Reagan boom a “mad, drunken bash” and thinks steep tax increases on income, gasoline, tobacco, and alcohol, on top of a 5 percent consumption tax, are necessary to put the government’s fi nances in order...

...As for his team of economic advisers, they continue to see in McCain a picture of their own aspiration...

...In economics, as in much else, he appears to operate on instinct...

...Their reasoning was identical to the reasoning used by proponents of the flat tax...

...Any across-the-board cut in income tax rates means that in dollar terms rich people will get to keep more of their money than poor people will get to keep of theirs...

...There’s no indication that McCain has ever thought his economic positions through this far...

...Cut Bill Gates’s income tax rate by two percentage points, and he gets to keep a few extra hundred million...