I'd intended to do a bit of research and writing on the candidate's economic policies and then, ever so conveniently, John McCain announced his economic plans today.  I love serendipity.

Unfortunately, there are a number of things not to like about his plan.  It's a bit too convoluted (as are all economic plans) to go into thoroughly on a blog, so today I'll be touching on the plan in general and a few of the specific proposals.  Over the coming week, I'll delve into some of the less "sexy" portions of McCain's proposal and also into the two Dem's.

My central conclusion about McCain's proposal is that, true to his party, McCain seems to conflate the ideas of "Economic Policy" and "Tax Cuts."  Although he doesn't go as far as Dubya in making tax cuts the sum total of his economic policy, much of what he announced today had to do with feel good, short term injections of money into the economy (in the form of tax cuts and anticipated consumer expenditures of dollars saved in taxes on goods and services) rather than solving the very real problems of the deficit and the economic burden of the war.

The two areas he addessed in terms of tax cuts were corporate cuts and "family" cuts.  For corporate cuts, he proposed a 10% reduction in taxes across the board.  For a detailed and convincing summary of why a reduction of corporate tax rates is relatively ineffective as economic stimulus, read the article by the Center on Budget Priorities.  It's important to note that federal corporate tax rates are at historic lows (while many corporate profits, particularly in the energy sector are at historic highs) and corporations only foot 8% of the federal tax bill to begin with.

More appealing on the corporate front is McCain's proposal (which I've written about before) to provide a tax credit to companies for research and development.  The American economic engine has always been driven by American ingenuity.  Such a tax credit might be a jump start to revving that ingenuity engine back up again.  (Love the way engine and ingenuity have internal rhyme!)

On the "family" front, McCain proposes a number of tax cuts:

--Eliminating the Alternative Minimum Tax completely.  While it's true that the AMT (originally designed to help close loopholes for high income earners) now affects middle class families instead of the folks it was aimed at, a better solution is recalibrating the tax so that it fixes loopholes for high earners while providing relief to middle class families.

--Doubling the dependent exemption.  This idea might actually have some economic stimulus effect.  I haven't gotten into the nuts and bolts but it would be especially helpful if limited by income to middle class families.

--Gas Tax Holiday.  Mere pandering, in my opinion.  Giving us a "holiday" from the 18 - 24 cents per gallon federal tax on gasoline might inject some short term stimulus into the economy, but at what price?  First off, the tax pays for infrastructure, which is in need of assistance nationwide.  Secondly, the tax does nothing to encourage a change in gasoline consumption--something which rising gas prices might encourage and which is highly desirable. 

Overall, I'd have to guardedly agree with the Democratic Candidates' conclusions that McCain's plan is "more of the same" rather than an innovative approach to healing our economic woes. 

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