Nice to see that the New York Times agrees with my take on McCain's economic proposals saying, "But a major component of his economic plan — like those of Presidents Bush and Reagan — centered on tax cuts."

However, there were aspects to his plan that were not from the Republican "all-tax-cuts, all-the-time" playbook.  It's worth touching on a few of those ideas.

In addition to the harebrained "gas tax holiday" proposal, McCain proposed that we stop filling the Strategic Petroleum Preserve.  Makes sense since the reserve is at adequate levels and we'd be filling them at record high prices.  Of course, as my friend Bev twittered, today's horror inducing prices are today's bargains. (Says Bev, "More from my diary of 1975. I was spending $65 a week to feed a family of 7 and was appalled at the cost. Oh for the good old days!")  Still, suspending government gas purchases may be a good way to reduce demand on gas and, perhaps, slow the climb of gas prices.

In terms of the housing crisis, McCain proposes a HOME plan, essentially an idea to convert qualifying loans from the various interest-only, adjustable rate varieties into fixed-rate 30-year loans.  It's a conservative strategy designed to help individuals keep their homes if they are credit-worthy and have equity.  I certainly like this approach better than the Democrats' recent proposal to bail folks out by absorbing their lost equity.

The last bit of the plan I wanted to mention falls under the heading of "Job Security."  He has some innovative ideas about Unemployment Insurance including combining redundant programs (I'd have to see more detail about this before I say it's a good thing but it sounds reasonable); developing a portable, "lost earnings buffer" account that would allow employees to carry a portion of their unemployment contribution with them; and a "re-employment bonus" for folks who quickly re-enter the workforce.

You'll note that I am mostly positive about these details of the McCain economic plan.  In these sub-points, I think he has some good ideas and creative approaches.  Unfortunately, these are minor issues in his plan.  The majority of his economic approach does exactly what he says he doesn't want to do--simply "dusting off" the economic policies of four, eight, and 28 years ago.  Reagan and Bush, two deficit spenders who railed about fiscal discipline while buying votes with tax cuts.  Frankly, I can't see there's much of a difference between them and McCain, despite the fine print.

 


Comments

Hal

Wed, 16 Apr 2008 17:23:17

Regarding gas prices, please note that there is not a geometric relationship between the price of oil and gasoline. The price of oil has more than doubled in the past 52-weeks. Clearly, gas prices, although very high, have not even come close to doubling in the past 52-weeks. Supply/Demand and (on the supply side) refining has a far greater impact on what we pay at the pump. We (the USA) have not increased our capacity for refining since 1978. Our refineries currently run at about 97% of capacity. This is why something as small as gulf hurricane or pipeline mishap or refinery fire has such an immediate impact on the local price of gasoline. Demand for gasoline has dramatically increased since 1978. Get the picture. If we really want to reduce the price of gasoline we need to significantly increase our refining capacity and also increase competition in the marketplace. Increasing competition would involve un-doing the numerous mega-mergers that should never have been allowed (Exxon/Mobile, ARCO/BP, Phillips Petroleum, Union 76, Standard Oil, etc etc etc.

 

Laura

Tue, 22 Apr 2008 10:30:40

Hi Hal,

Gas prices and their specific economics are not my strong suit. I know oil company profits are up in the stratosphere. I know we have a dwindling supply of easily available (and relatively planet friendly) oil supplies.

I think a better goal than lower gas prices is alternative energy sources. It may make sense in the short term to increase our refining capacity, but there has to be some economic reason that hasn't been done. Any insight?

 

Hal

Tue, 22 Apr 2008 16:45:03

Two reasons: First, the "not in my backyard" problem of communities not wanting new refineries near their towns and Second, margins. Oil companies have been able to keep refining margins so incredibly high because of limited capacity and very limited competition. These mega mergers in the energy sector has been horrible for the consumers. Where's the outrage? And I'm a total free market capitalist!

 



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