We’re not better off today
Sen. John McCain has made a good start showing he understands economics, but he still has to cope with the killer question: “Are you better off now than you were eight years ago?”
In a debate at George Washington University on Feb. 25, a team of four Democratic Congressmen led by Rep. Rahm Emanuel (Ill.) demolished a team of Republicans led by Rep. Adam Putnam (Fla.) by citing all the evidence that Americans are not better off than they were when George W. Bush became president.
Such as: Median household income in the United States rose $6,000 in the eight years of Bill Clinton’s administration, to $49,163, but fell to $48,023 during Bush’s first six years in office. Certainly, it’s still falling.
Also, the economy grew by an average of 4 percent during the Clinton years and created an average 1.8 million jobs a year. Under Bush, gross domestic product has grown just 2.7 percent a year and created 369,000 jobs a year — and a recession is probably under way to cut even those numbers.
The price of gasoline in 2001 was $1.39 per gallon. Now, it’s $4. The number of Americans lacking health insurance was 38 million; now, it’s 47 million. The national debt was $5.7 trillion in 2001; now, it’s $9.2 trillion. The dollar was worth 1.07 euro; now, it’s .68.
And so on: The poverty rate, college costs, take-home pay, personal indebtedness, foreign oil dependency and the trade deficit all are worse than they were when Bush took office.
Although polls now show McCain running virtually even with both of his Democratic rivals, Democrats think that the 2008 update on Ronald Reagan’s famous question from 1980 — when he trounced Jimmy Carter — eventually will prove devastating to McCain, too.
McCain has given two good economic speeches lately, including one Tuesday at Carnegie Mellon University in Pittsburgh, that implicitly distinguished him from Bush and cast him as an activist economic reformer, but that won’t be enough to beat back the Democrats, particularly as the economy worsens.
McCain has promised regulatory reform to bring “transparency, accountability and personal and corporate responsibility” to the activities of investment banks and mortgage lenders and pledged “no more subsidies for special pleaders — no more corporate welfare.”
McCain proposes to reform unemployment insurance and retraining programs and create income-loss “buffer accounts” to tide workers over but encourage them to get new jobs.
He also favors doubling the dependent tax exemption that will put more money in the hands of parents and called for emergency measures to lower gasoline prices and make sure student loans are available this fall.
But to counter the numbers Democrats will throw at him, McCain is going to have to explain — clearly, so that ordinary Americans can understand it — why low taxes and free trade did not make Americans worse off than they were eight years ago.
It’s a harder case with Bush’s tax cuts. According to the Brookings Institution Tax Policy Center, two-thirds of Bush’s tax cuts went to those in the top 20 percent of income and left those making less than $100,000 a year paying more of the total tax burden.
McCain’s proposals to cut the corporate tax rate from 35 percent to 25 percent, allow immediate write-offs of new manufacturing equipment and retain the capital gains tax rate at 15 percent are all defensible as job-creators, but McCain is going to have to explain why — and make it clear why his opponents’ tax-raising back to Clinton levels will hurt.
McCain will have to be clear why he originally opposed Bush’s tax cuts as gifts to the rich but now favors making them permanent.
Sen. Barack Obama hits McCain constantly on this, charging that “somewhere along the way to the Republican nomination, I guess he had to stop speaking his mind and start towing the line.”
For a candidate who has said economics isn’t his strong suit, McCain has proved a quick study. But he doesn’t just have to learn economics — he’s got to teach it. The task has barely begun.
Morton Kondracke is executive editor of Roll Call, the newspaper of Capitol Hill.