Election 2008

Matt Rourke/AP

McCain Economic Plan Proposes Homeowner, Retiree Relief

October 15, 2008 02:30 PM
by Emily Coakley
Sen. John McCain’s economic plan, which focuses on foreclosure prevention, growing the economy and controlling spending, has received mixed reviews.

Billions in Tax Cuts Proposed

McCain’s economic plan, unveiled Tuesday, calls for $52.5 billion in tax cuts, mostly to older Americans, the Wall Street Journal reported. A big chunk of the plan calls for dropping the rate at which money withdrawn from 401(k) retirement plans or individual retirement accounts is taxed. That tax reduction would only apply to senior citizens, and only for the first $50,000 taken from such accounts in 2009 and 2010.

“Retirees have suffered enough and need relief, and the surest relief is to let them keep more of their own savings,” McCain told supporters at a Tuesday rally outside Philadelphia, according to the Journal.

Another part of the plan is to tax capital gains at 7.5 percent instead of the current 15 percent next year and in 2010, the Journal said.

According to Politico, some economists praised the capital gains cut proposal. Ryan Ellis, Director of Policy at Americans for Tax Reform, told Politico that McCain’s plan would be an incentive for people to keep their money in the stock market, at least until 2010. 

Others said that the capital gains cut would only affect wealthier people, and not the middle class.

McCain also pledges to balance the budget by 2013 by controlling spending and encouraging growth. Specifically, he wants to freeze anything in the federal budget except spending related to defense or veterans for a year, and put those savings toward the deficit. He also wants to “reclaim billions of add-on spending from earmarks and add-ons in [fiscal year] 2007 and 2008,” according to his proposal.

To encourage growth, he wants lower tax rates for corporations, and says, “Small business is the key to job growth.”

Opinion & Analysis: Debating McCain's plan

James Pethokoukis of U.S. News & World Report said he hasn’t heard positive responses to McCain’s economic plan from other unnamed conservatives.

“The feedback I am getting from pro-growth types on the right is not good. Many had hoped McCain would unveil some sort of new middle-class tax cuts on income or investments, perhaps a zero capital gains tax rate to appeal to all those hurting 401k investors.”

He asks, “Why not a broad tax cut like we had in 1981?”

The Boston Herald, comparing McCain’s economic plan to Obama’s economic plan, said that of the two proposals to help stem foreclosures, “McCain’s plan is more expensive, but Obama’s plan represents little more than a delay. What possible good would that do?”

Obama suggested a 90-day foreclosure moratorium; McCain has proposed allowing certain homeowners with sub-prime mortgages who were “credit-worthy at the time of the original loan” to renegotiate for fixed-rate, government-backed loans.

McCain’s plan says it will keep “200,000 to 400,000 families from losing their homes.” Pethokoukis called McCain’s mortgage plan “a big idea” and says, “[S]ome conservative economists favor such a plan as a way of breaking the falling home price-foreclosure cycle.”

The Herald editorial concludes that it isn’t the plan’s details that are important, it is “who can rebuild and grow the U.S. economy, not redistribute an ever-shrinking pie.” The editorial calls Obama and his tax policy “redistributionist.”

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