When McCain Was Good

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Like a spectre rising from a dimly-remembered past, Phil Gramm appears in the Wall Street Journal to argue for John McCain's presidential bid. There's the usual boilerplate about his manly approach to the war on terror, but much of the op-ed promotes the McCain tenets you never hear any more.

The success of the Reagan program taught Sen. McCain that growth requires responsible, limited government and ever-expanding freedom. As he has said, "The answer to deficits is not to raise taxes or repeal the [Bush] tax cuts but to restrain our spending habit. If the federal government can not be funded by current revenues then we must reduce its size."

Others tell us that pigs have wings and we can have it all: more spending, more government, lower taxes and more freedom. John McCain's says that "tax cuts work best when accompanied by lower spending." Yes, he understands that cutting taxes creates the incentive to work, save and invest; and that sometimes you have to cut taxes first to get the economy going and then control spending. But in his common-sense view, as in the immutable laws that govern our world, you can't let government spend it and let the taxpayer keep it for very long. Nothing endangers the Bush tax cuts today as much as the spending orgy that the very proponents of those tax cuts allowed to occur.

Another thing that would endanger the Bush tax cuts—voting against them. McCain did that while Gramm was still in the Senate, so it's funny he doesn't bring that up. He's had a couple of come-to-Jesus moments in the last few years when he declared he was done with tax increases, but it's hard to know what he believes. More Gramm:

To ask if he would really take on the spending establishment that runs Congress is to ask if water will wet, if fire will burn. If you want to end the spending spree in Washington, he is your man.

This is actually one thing I hear from Republicans that don't even like McCain, that he's great on spending and an ally of Tom Coburn when he needs to be. But he's not out front on those issues, and he could be. McCain's lameness on this, and on other issues, demonstrates what happens when spending hawks become perpetual presidential candidates.

NEXT: Paul Purged from Pajamas Poll

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  1. The success of the Reagan program taught Sen. McCain that growth requires responsible, limited government and ever-expanding freedom.

    Would that freedom include freedom of speech and of the press?

    Didn’t think so.

  2. I have zero trust in McCain. I will always respect him for what he has been through, but I think he has been in Washington too long, and has gone totally native. He’ll say (or do) any fucking thing which pops into his head if he thinks it will get him elected.

  3. I’d have voted against the Bush tax cuts as well. Now, significantly increasing the standard deduction is a tax policy I can get behind. (The fact that the working poor pay a greater percentage of their income in taxes than the upper-middle class is evil, plain and simple.) Increase gas taxes proportionately and it’s revenue neutral (and would make the climate change crowd happy, too).

    Before anyone calls me a statist, I’m just suggesting policies that are possible. If I were dictator, I’d slash the federal budget at least in half, right quick.

  4. Hear, hear, Real Bill. I’m not against tax cuts per se, but the Bush tax cuts were pretty much designed to help out Bush’s wealthy cronies more than anything else. Increasing the standard deduction would have put more money into the economy rather than into wealthy people’s pockets.

  5. Mr Weigel’s last line reminds me of John Boyd’s question: “Do you want to be somebody, or do you want to do something?” McCain does nothing because of what he wants to be.

  6. Brian24,

    Putting more money into the economy is another benefit, no doubt. And to think I came to my conclusion partially from a desire for justice for the working poor. Hmmm… What’s good for the working poor is good for the economy in general? (And for those “social justice” types: Raising taxes is not good for the working poor!)

  7. Real Bill,

    If you raise taxes on gasoline, who do you think is most hurt?

    – Josh

  8. James, kudos for the Boyd reference!

  9. WP,

    The old regressive tax argument, eh? Answer this question: How much gasoline do the working poor actually need? I suppose that it depends upon the city. In San Francisco, there is no need to own a car, so gas usage: zero. In many other urban areas, there is public transportation, as well. I haven’t owned a car since I moved to SF in 1992, and I rarely miss having one. (When I need one, I rent one.) Anyway, increasing the standard deduction would reduce the taxes of the working poor, which would offset the increase in the price of gas due to the tax. (Decreasing SS and Medicare taxes on them would help as well.)

  10. Real Bill,

    I’m with you on the social justice angle too.

  11. John McCain 2008 = Bob Dole 1996
    http://www.minor-ripper.blogspot.com

  12. The answer is simple: decrease taxes so that the working poor pay little or nothing, and reduce the size of Behemoth to its constitutional boundaries. Of course, there are a lot of Government Cheese Addicts, so this is probably a pipe dream…

  13. Brian24,

    Yeah, I know we live in a society and I really like justice, but whenever I hear “social justice” uttered, I know that the person speaking is about to put forward an idea that is neither good for society nor just.

    The car thing bugs me, too. I know that in many if not most places in this country, a car is essential, but that’s not the case here in SF. Almost every person I know that complains about global warming owns a car and drives it more than they need to. When I mention their hypocrisy, they get a look on their faces like a child might if you take away their candy, and they whine and say things like, “But I like my car! How would I take my dogs to the beach without it?” or some such nonsense. Oh, if only the world weren’t rife with hypocrisy!

  14. It’s very heartening to hear progressive ideas about taxes getting a fair hearing and sympathetic ear among libertarians here (of which I count myself one — i.e. reducing out-of-control government spending is the most fundamental way to reduce taxes). I would add that the “repeal the estate tax” component of the Bush tax cut plan in particular highlights its evil and regressive nature. (See Andrew Carnegie’s The Gospel of Wealth for a prominent historical argument from a libertarian capitalist in favor of inheritance taxes.)

    We should indeed counter the typical liberal’s neglect of property rights in favor of civil rights by emphasizing, as libertarians readily do, that liberty is in many essential ways tied to and dependent upon property, but we should in the same breath also recognize and emphasize that this tie is closer the less property an individual has. Confiscating $3k from somebody making $30k a year infringes on his liberty (by keeping him closer to the realm of need and necessity) more than confiscating $30k from somebody making $300k a year, and a hell of a lot more than confiscating $30k from somebody’s $300k inheritance. I submit that if the government needs $30k for some legitimate purpose, it’s better for the economy and for society if that $30k comes from one person’s $300k inheritance than in $3k chunks from 10 people making $30k a year.

    A Prof. Graetz (or Gaetz) from Yale Law School is advocating something he calls “Back to the Future” (since it’s similar to how Americans were taxed prior to WWII), which includes a $50k standard deduction for individuals ($100k for married couples), combined with a reasonable VAT (value added tax) on consumption. Exempt farm products from this consumption tax and retain (and better yet expand) a reformed estate or inheritance tax, and I think we’d be well on our way to a fair federal tax system. For the vast majority of Americans, April 15th would be just another day, and that can’t not be a good thing.

  15. John Kindley,

    You’re my kind of libertarian. I’d rather the estate tax be 100% than zero. What part of “You didn’t earn it!” don’t so many people understand? How on Earth can it be better to tax someone’s labor (which costs them something quite precious: some of their finite life) than to tax their wealth after they are dead?!

    Then again, maybe I’m rare. Since I was a child, I always told my grandparents that I’d rather see them spend it all than give it to me or my parents. People are just weird, I guess. The other day I was talking to someone about the guy who won the trip into space but had to sell it to pay the tax on it. The guy I was talking to thought it was terrible, yet doesn’t think there is anything wrong with income taxes! Maybe the public schools aren’t really failing; maybe their goal has always (and really, only) been to brainwash children into loving the state?

  16. Back at you Real Bill.

    Methinks you’re a liberty-loving man of good will.

  17. Of course, the problem with the estate tax isn’t actually the tax. It’s the tremendous deadweight losses that are incurred on various schemes to AVOID the tax. In fact, if you abolished the estate tax and did nothing about marking inheritted assets to their market value at the time of inheritance, you’d end up collecting significantly more in capital gains every time inheritted assets are resold than you do from the estate tax itself.

  18. No; you’d just have to abolish trusts and the like.

  19. VATs are a libertarian disaster. Essentially, they are an “invisible” tax because, unlike, a sales tax the end consumer has no idea how much of the price they’re paying is tax. It’s an easy way for govt. to “boil the frog slowly”, so to speak.

    The ideal libertarian income tax would be a no-withholding system that forces every single fucking American to write Uncle Sugar a check every month. You want to reduce the size of gubbimint? That would be the best way to start.

  20. Real Bill, how very generous of you to inform others as to the best disposition of their property.

  21. R.J. Lehmann

    Well, you have to have a gift tax with as many teeth as the estate tax. The common use of the A-B trust by married couples does effectively double the amount they can pass to their heirs tax free. The estate tax does need reform, and any such reform should address whether this use of A-B trusts is fair (in which case the exemptions for married couples should probably simply be doubled to reflect what people are actually doing), or whether it’s a loophole that should and can somehow be closed. The point is that the estate tax, because it treads far more lightly than the income tax on a person’s natural rights to the fruits of his own labor, should be reformed rather than repealed. I doubt that those who are most adamant about repealing the estate tax are really motivated by this alleged difficulty of enforcement, and that they would be so concerned about repealing it if it were really that easy to avoid.

    I find it hard to believe that more could be collected in capital gains taxes than from estate or inheritance taxes. And again, the point is that it makes more sense to tax inheritances (and I do think the estate tax should be reformed into an inheritance tax) than income (although it also does make more sense to tax unearned income such as capital gains etc. than to tax earned income such as wages etc., as that great supply-sider Andrew Mellon famously pointed out).

  22. ChrisO, how very kind of you to prefer to tax the labor of poor folks while protecting the wealth of the rich. Libertarians like you are why we’ll always be irrelevant.

  23. To clarify, the gift tax doesn’t have to have quite as many teeth as the inheritance tax, just enough to keep people from completely avoiding inheritance taxes if we want inheritance taxes to replace a signficant amount of income taxes.

  24. Re: VATs, the “Back to the Future” proposal that I mentioned in my earlier post would require retailers to post how much of the sales price was tax. That may offend libertarian ideas about forced speech, but no more than requirements about the nutritional value of foods, and I don’t see why retailers would object anyway. It’s good for people to know the price of government.

  25. ChrisO, how very kind of you to prefer to tax the labor of poor folks while protecting the wealth of the rich. Libertarians like you are why we’ll always be irrelevant.

    How nice of you to assume what my position on taxes is. By reducing the size of the federal government down to its constitutional limits, we could almost certainly eliminate the federal income tax altogether. The notion of ‘equitable’ income taxes is horseshit. In reality, the only ‘equitable’ tax is one that somebody else pays.

  26. Re: VATs, the “Back to the Future” proposal that I mentioned in my earlier post would require retailers to post how much of the sales price was tax.

    Geez, talk about transaction costs. Since much of a VAT is generated at the production and wholesale levels, this would require a massive amount of paper shuffling at each level for every $.40 widget sold at 7-11. Totally unworkable. A regular old sales tax would be much preferable, if such revenue is actually necessary.

  27. ChrisO

    It’s probably going to take a very long time to scale the federal government down to the size that you (and I for the most part) would like. How, if you want to be relevant, do you tax people in the meantime? And assuming that one day we do get government down to those constitutional limits (which I assume includes a necessarily expensive modern army, navy and air force), how will we pay for even that without any income taxes (or consumption taxes, which are ultimately just income taxes minus taxes on investments, or inheritance taxes, since you don’t seem to like those either)? I don’t think sky high federal highway tolls will cut it.

  28. VATs are workable, since they are in fact being used successfully in several European countries. Sales taxes, if they were raised high enough to replace a lot of the income tax, would be more susceptible to fraud than VATS (families posing as businesses rather than consumers etc.), and would require a lot of IRS resources for audits to detect and deter such fraud. But hey, I’m not staking my argument on one being better than the other, since I’m not an expert, and both are basically consumption taxes, and that’s the idea.

  29. How nice of you to assume what my position on taxes is. By reducing the size of the federal government down to its constitutional limits, we could almost certainly eliminate the federal income tax altogether. The notion of ‘equitable’ income taxes is horseshit. In reality, the only ‘equitable’ tax is one that somebody else pays.

    Well, maybe if you had read the entire thread, you would have known that we were discussing the relative merits of income tax vs inheritance tax. Some people actually discuss the possible, not just stupid shit that’ll never happen, like the elimination of all taxes.

  30. McCain’s the man who can’t be and he knows it. Rather than pick some convictions and follow them he looks for where the crowd is heading at the moment and tries to run ahead to pretend like he’s leading them there. His policy decisions are based on what will get him a cookie and the Republican part won’t nominate a man who goes where the wind takes him. I apologize for all the metaphors and analogies.

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