McCain Sees Obama on the Economy, Raises Stakes

Posted by: Theo Francis on October 14

In a speech today in Blue Bell, Pa., John McCain added some planks to his economic platform: more government guarantees for bank deposits, and tax cuts for the unemployed and for investors, including retirees.

Update: Douglas Holtz-Eakin, McCain’s head economic adviser, says the total price-tag of the new proposals would be $52.5 billion over two years. We’ve appended individual price-tags to several of the descriptions below.

McCain proposed cutting the long-term capital-gains tax rate for stocks in half, from 15% to 7.5%, which he called part of a plan to “revive the market by attracting new investment,” according to the text of prepared remarks. “This vital measure will promote buying, raise asset values, help companies and shore up the pension plans for workers and retirees.” Cost: $10 billion

He said investors who lose money in the recent market rout should also be able to deduct more of those losses from ordinary income for tax purposes. Current rules allow investors to deduct $3,000 of capital losses; he proposed raising that to $15,000 for 2008 and 2009, blaming “so much of this decline in our markets” on the administration and Congress for failing to “come out with a timely rescue package.”

For investors over 60, he proposed reducing the tax on on the first $50,000 of withdrawals from Individual Retirement Accounts, 401(k)s and similar vehicles to 10% this year and in 2009; currently, ordinary income taxes apply after retirement. "Retirees have suffered enough and need relief, and the surest relief is to let them keep more of their own savings," he said. Cost: $36 billion

He proposed exempting unemployment benefits from taxes for 2008 and 2009 as well. "We should relieve this burden from Americans who've been hit the hardest," he said in his prepared remarks. Cost: $6.5 billion

McCain also was to propose having the Treasury Department "guarantee one hundred percent of all savings accounts for a period of six months." In the remarks, he said, "This will calm the understandable fears of widespread bank failure."

He also reiterated several existing proposals, including a plan to buy up and modify the terms of a broad swath of mortgages, and one to temporarily suspend rules requiring retirees to withdraw a minimum amount from their accounts each year. He blasted a proposal from Barack Obama yesterday that would temporarily waive penalties for investors who make withdrawals before retirement, calling it "an invitation to capital flight."

The mix of proposals comes a day after Barack Obama offered a four-point economic plan.

McCain's proposal to run the additional savings guarantee through the Treasury extends a departure from existing U.S. deposit insurance, which has been handled for 75 years by the Federal Deposit Insurance Corp. and is primarily funded with fees from banks thrifts. The Treasury is temporarily guaranteeing investments in money-market funds as part of its efforts to address the financial crisis. It is unclear whether the new proposal would be funded with tax dollars or fees of some kind.

Blue Bell trivia bonus: The community, part of Whitpain Township, was once known as Pigeontown, named after abundant flocks of now-extinct passenger pigeons in the area.

Reader Comments

terrence

October 14, 2008 02:32 PM

He'll say anything to save his dying campaign. Nothing new about that.

Poor Investor

October 14, 2008 02:33 PM

This is the difference between John McCain and the other fellow. John McCain makes sense, where as the other guy just makes rhetoric.

sam

October 14, 2008 03:36 PM

We can see from some comments that they are hoping to revive the housing market. That is not going to happen because the market was driven by the baby boom demographic, and that is over. Going forward we need to drive it with capital goods, and the capital goods that matter the most are solar panel production lines, which you can buy turn-key these days. This will be the most important growth industry in the decades ahead.

norman ravitch

October 14, 2008 06:08 PM

The GOP when proposing various tax credits or cuts doesn't understand that Joe Sixpack won't get the result until after April 15th -- it won't do much for him until then if even then. The focus is always on investors and the upper middle class. Personally I don't give a damn about Joe SixPack but the GOP always pretends that it does -- and then does nothing for him. Joe, in turn, votes his gut and prejudice, not his economic interests. Let him take the lump of sugar: he deserves nothing more if he buys the GOP flim flam.

Rocky

October 14, 2008 07:13 PM

Sounds like more pandering to the middle class. Is no one in Washington concerned about the Federal deficit at all? But I'll take any tax reductions that are made available. Let the children of the Evangelicals worry about the national debt.

Rocky

October 14, 2008 07:14 PM

Sounds like more pandering to the middle class. Is no one in Washington concerned about the Federal deficit at all? But I'll take any tax reductions that are made available. Let the children of the Evangelicals worry about the national debt.

milo

October 14, 2008 08:43 PM

How about eliminating the capital gain tax and replacing it with a minuscule tax on each trade with huge advantages for everybody. The government would collect more; the investors would pay less taxes and the time and effort necessary to keep track and report their gains and losses. The traders may end up to have higher costs but they make so much money anyhow!!

Damian

October 14, 2008 09:57 PM

Reactive and proactive. John McCain reacting to what Barack Obama is saying. I see no leadership in that. I want a leader not a follower. Just sad, to see how this is turning out. What is wrong with so many people. John McCain does not have our interest in mind, all he wants to do is become president. The man has been around forever and in that time what has he really done to help regular people? But yea what is the fun in helping regular people whom you will never mean, right! This is must be a joke. All he has done for him self is him self. He is just talk.

bb

October 15, 2008 05:36 AM

Unfortunately Roc..all children will pay and pay HUGE!

Walter

October 15, 2008 05:25 PM

I'm sorry...Obama wants to give tax cuts to the unemployed? People who aren't paying taxes anyway? Sounds like a handout at our expense.

reyne

October 15, 2008 10:00 PM

You are deceived. Obama is a socialist/communist and he will destroy the middle class. He has already twice voted to raise taxes on anyone who makes 42,000, which is LESS than the median income. A business making $250,000 does not mean that the business owner makes $250,000. IN fact their income may be only $40,000 after they pay their employees, rent, utilities, property taxes and suppliers.

Socialism depresses achievement, thwarts the growth of business and new products and inventions. It LIMITS how far people can go. Socialism has murdered millions, recall the purges in Russia, the 50 million who starved to death in China because the government nationalized farming.

The former societ bloc ocounries all reject socialism and go free market, even China has freed its businesses so it can feed its popoulation. And idiots in America and parts of Europe want to adopt a system that has failed for over a hundred years.

It has NEVER been government's right to TAKE from your earnings before you get them. That is tyranny. US Government is supposed to be LIMITED. LIMITED.

Thank you for your interest. This blog is no longer active.

 

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