Coppersmith: To McCain, all, er, most earmarks bad

Today's lesson in fiscal responsibility is, when evaluating candidates, budgets, and fiscal rhetoric, remember: A slogan is not a plan.

The latest example comes from John McCain's campaign. He gave a big speech on economic issues last week, and the reaction, even from his pals in the media, was lukewarm.

The Washington Post noted that despite the talk of helping working-class Americans in their hour of need, McCain's actual proposals instead threw buckets of tax code goodies to "corporate special pleaders:" cutting corporate tax rates, equipment purchase deductions, banning Internet and cellphone taxes, and a research and development tax credit. Only 4 million taxpayers would qualify for his so-called "middle-class tax cut," and 93 percent of them earn more than $200,000 - which means McCain's proposal would benefit only the top 3.4 percent of taxpayers.

As for the other 96 percent of American taxpayers? They get the rhetoric, while those at the top get the cash. Hope you like the rhetoric, because money is for those who already have it.

There's the problem that all these special deductions and credits make the tax code more complicated, too. Once again, they say they want to make it simpler, but what they really want is to make it more complicated - in favor of those at the top.

Then there's McCain's proposal for a gas tax "holiday" this summer. I thought McCain would avoid campaigning as the cranky old guy, but here he is recycling one of Bob Dole's less-sensible proposals from the 1996 campaign.

It's also a classic pass-the-buck GOP idea; McCain wants to cut taxes for a couple months this summer, then have the tax rate resume its original course, all well before he could possibly take office. He wants the credit; somebody else can do the work. (I suppose McCain might get somebody in the U.S. Senate to introduce his proposal and work hard to see it enacted; as blogger Ted Prezelski wondered, might McCain know anybody in that position?)

And it's a truly counterproductive idea. Dean Baker of the Center for Economic and Budget Research points out that the oil industry says that they have no spare refinery capacity; they're already producing as much gas as possible. So price is determined on the demand side; unless the oil companies are lying, there's just no way to increase supply anytime during the duration of the "holiday."

With a fixed supply, the magic of the market determines what price matches demand to that supply. Cut gas taxes, all that happens is that consumer demand keeps the price at the clearing price. There's billions less to build new roads and fix old ones; McCain's plan simply transfers money from the highway trust fund directly to the oil companies, without the need for messy campaign contributions and legislation.

Even the Arizona Republic, the house organ of the McCain campaign, called the idea a "clunker" that uses "tax policy to play with the heads of consumers."

But the best example of McCain's rhetoric colliding with reality is his claim that he could pay for his expensive menu of tax cuts by cutting wasteful spending and eliminating earmarks. McCain says he'll veto "every bill with earmarks, until the Congress stops sending bills with earmarks." Boo earmarks! Hooray cutting wasteful spending!

There's much confusion over how much earmarking is going on. McCain's campaign claims the amount is more than $60 billion, but to get to that number, you have to include most foreign aid spending, which includes $2.9 billion annual U.S. aid to Israel. So when McCain said he'd veto all earmarks, and somebody noticed that aid to Israel was an earmark, McCain's campaign quickly amended his statement to note that he certainly wouldn't veto that earmark. No sir, no way. That's a good earmark!

And so it goes, as with much so-called straight talk: Overblown statement of principle founders on the specific rocks of reality. Government spending generally: Bad, bad, bad. Government spending on a particular program: Not so fast, buddy.