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Thursday, July 31, 2008

McCain's Tax Blunder

Wall Street Journal Editorial Board

One of the miracles of this Presidential election campaign is that John McCain still has a chance to win, notwithstanding his best attempts to kick it away. In his latest random policy improvisation, the Arizona Senator tried to give up the tax issue.

On ABC's "This Week" Sunday, Mr. McCain was asked to draw distinctions between his and the current Administration's economic policy. Given an easy opening, the Senator came back with his usual hodgepodge of new child-tax credits, promises to "veto every single pork barrel bill" and close wasteful government agencies, cut dependence on foreign oil and introduce a gas-tax holiday.

Then host George Stephanopoulos raised Social Security. "You're a longtime supporter of the private accounts, as President Bush called for them." Wishing to further distance himself from President Bush, when he could have drawn an equally useful contrast with Barack Obama, Mr. McCain didn't even own up to his support for private retirement accounts, simply saying, "I am a supporter of sitting down together and putting everything on the table and coming up with an answer."

Mr. Stephanopoulos pressed, "So that means payroll tax increases are on the table, as well?" Here came the words that have caused the McCain campaign well deserved grief: "There is nothing that's off the table. I have my positions, and I'll articulate them. But nothing's off the table."

So given a chance to reiterate his opposition to tax increases -- and underscore a main contrast with his opponent -- Mr. McCain punted. Democrats were quick to pounce, with the Democratic National Committee issuing a press release headlined, "McCain Tax Pledge? Not so much." It provided citations of the presumptive GOP nominee asserting that "Senator Obama will raise your taxes. I won't." Expect the "nothing's off the table" line to show up in Democratic TV spots this fall.

The wandering candidate also put his chief economic adviser, Douglas Holtz-Eakin, in an uncomfortable spot. Back in June, the McCain campaign went after Mr. Obama's proposal for a Social Security payroll tax increase on income above $250,000. A President McCain, his adviser then said, wouldn't consider a payroll tax increase "under any imaginable circumstances." So much for that.

Economics has never been Mr. McCain's strong suit, but with Iraq receding as a crisis the economy is the ground where the Senator will have to fight and win. And the tax issue provides him with a potent opening, given Mr. Obama's pledge to raise taxes on incomes, dividends and capital gains. In proposing to raise the payroll tax cap, the Democrat is to the left even of Hillary Clinton. Mr. McCain's Sunday blunder will make that issue that much harder to exploit.

Such mistakes also help explain the continued lack of enthusiasm for Mr. McCain among many conservatives. Meeting with us last December, before the primaries, he declared that "I will not agree to any tax increase," repeating the phrase for emphasis. He did not say any tax increase with the exception of Social Security. If Mr. McCain can't convince voters that he's better on taxes than is a Democrat who says matter-of-factly that he wants to raise taxes, the Republican is going to lose in a rout.

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