Jim Watson/AFP/Getty Images
Sen. John McCain reaches out to supporters during a rally in Blue Bell, Pa., on Oct. 14, 2008, where he sought to retake the election initiative with his latest economic plan.
Sen. John McCain reaches out to supporters during a rally in Blue Bell, Pa., on Oct. 14, 2008, where he sought to retake the election initiative with his latest economic plan. Jim Watson/AFP/Getty Images
John McCain has been struggling to find his footing on the shifting sands of the United States economy. With just three weeks left before the election, McCain is trailing Barack Obama — who is more trusted on economic issues.
But as McCain told supporters in Blue Bell, Pa., today, a lot can happen in 21 days, in politics and in business.
"Over the last 21 days, we have seen once-sturdy Wall Street institutions vanish, we have seen huge swings in the market both down and up, and we have seen new federal commitments in the hundreds of billions of dollars," McCain said. "We have seen how suddenly a crisis can unfold these last several weeks, and how great the costs can be in jobs, savings, lost opportunities and taxpayer dollars."
McCain added several new wrinkles today to his basic economic platform of low taxes and reduced government spending. They're aimed primarily at investors with substantial assets and designed to build confidence in the nation's financial system. Together the proposals would cost the government about $50 billion.
The bulk of that cost would be in the form of a tax break to seniors in higher tax brackets who withdraw money from retirement accounts. McCain wants to tax those withdrawals at the lowest rate of 10 percent to help offset the pain of recent stock market declines.
"Retirees have suffered enough and need relief," he said.
McCain also proposed a temporary cut in the capital-gains-tax rate, which he says would prompt more people to buy stocks. He contrasted his plan with one that would let cash-strapped workers tap their retirement plans without a penalty — an idea that was floated yesterday by Obama.
"This is an invitation to capital flight, and therefore to continued instability in the market, at a moment when exactly the opposite is needed," McCain said.
While McCain's plan is designed to encourage investment, it could backfire with a wave of stock sales two years from now, unless the temporary tax cut is made permanent. That would substantially increase the cost of the plan to the government.
Obama's allies complain that McCain's proposals are tilted toward the wealthiest Americans and offer little help for working-class families and those who don't own stock.
Under McCain's plan, wealthy savers with more than a quarter-million dollars in the bank would enjoy a six-month government guarantee on their deposits. At the other end of the spectrum, McCain agrees with Obama that workers who have lost jobs shouldn't have to pay taxes on their unemployment benefits.