McCain Calls for Economic Surge
By Staff News & Analysis - August 07, 2008

John McCain called for an "economic surge" Wednesday, putting extra heft behind his domestic agenda as both he and Barack Obama stress energy and the economy in battleground states. Speaking in front of about two dozen employees of the Merillat cabinet company in Jackson, Ohio, the presumptive GOP presidential nominee repeated his call for an "all of the above" plan to lower energy costs using alternative energy, expanded oil drilling and nuclear power. He said that needs to be complemented by business tax cuts and other economic incentives. "What we need today is an economic surge. Our surge has succeeded in Iraq militarily, now we need an economic surge to keep jobs here at home and create new ones," McCain said, essentially repackaging his economic proposals. "We need to reduce the tax burden on businesses that choose to make their home in the United States of America. "We need to open new markets to U.S. products and we need to reduce the cost of health care and we need to end the out-of-control spending in Washington that is putting our debt on the backs of our children." Meanwhile, Obama told an audience one state over in Elkhart, Ind., that McCain's claim in an ad the day before that Washington is broken is a belated declaration. "John McCain started running an ad yesterday saying that Washington is broken. No kidding," Obama said. "It's taken him 26 years to figure it out." And he said McCain has traded in his maverick stripes to embrace the policies of President Bush. "You can't be a maverick when politically it's working for you and then not a maverick when it doesn't work for you, when you're seeking your parties' nomination," Obama said. Indiana Sen. Evan Bayh, who is talked about as a potential running mate for Obama, also criticized McCain at the town hall meeting for aligning himself with Bush. "John McCain is not a bad man, but he is badly mistaken when he has embraced the Bush and Cheney economic policies and he is badly mistaken when he has embraced their energy policies. Someone was telling me this morning that … his solution to the American energy challenge was to drill, drill, drill. Well it sounded a lot like my dentist to me," Bayh said. – Fox News

Dominant Social Theme: Let's all roll up our sleeves and work at this together. If we pass the proper legislation, America will bounce back.

Free-Market Analysis: We don't mean to slam John McCain here as Barack Obama is no better when it comes to the "economic stuff" – at least not if you believe even a smidgen in free markets. But to be fair, McCain is running from the Republican Right, from the "conservative" and free-market side of the political spectrum. And this is the best he has to offer!

Let's break down the parts of his suggestion into its critical elements:

"We need to reduce the tax burden on businesses that choose to make their home in the United States of America. "We need to open new markets to U.S. products and we need to reduce the cost of health care and we need to end the out-of-control spending in Washington that is putting our debt on the backs of our children."

Reduce tax burden … open new markets … reduce cost of health care … end out of control spending …

OK, all sounds good. But exactly how will this take place? And with what tools? When things are looking up, this sort of conversation sounds hopeful and positive. But when things are bad and getting worse, people will want to lift up the covers and peer under the sheets. They will want details. They will want the "nitty gritty."

Remember, please, the Internet has re-educated many people about the economy, including its booms and busts. While not everybody has read everything on the ‘Net, and there is more and more each day, even if only 10 percent of the US or European population is informed about the way the world really works, the current paradigm will have a hard time withstanding questions. It will likely have to change, at least somewhat.

So, one at a time …

Reduce Tax Burden: This is interesting. US corporations are taxed at a rate higher than almost any other country in the world. And US "wealthy" are now shouldering the tax burden for almost everyone else (though more and more are wealthy according to the US government for purposes of the tax code).

The reality is, however, in a fiat-money central banking environment, you don't need taxation at all. You can print as much money as you want, and spend it freely as you want. Sure, there will be inflation unless you can find someone to buy your notes and thus "export" some of that inflation. But big countries like the United States have not had a great deal of trouble doing that. Anyway, it sounds like a good idea, and in fact must be since every Republican in the world constantly trots it out without any substantive progress. Will McCain be different? (Maybe because he is more sincere?)

Open New Markets: This is a great statement. Where? Overseas? Or are we speaking metaphorically and suggesting that the federal government pioneer whole new industries? Since the federal government in America, like governments everywhere, can't make the trains run on time, or clear the streets properly of snow, we're not so hopeful about that "new industries" thing. Let's stick to basics. In fact, let's try to leave the government out of markets entirely. Now that would be a novel idea.

Reduce the Cost of Health Care: Is he speaking of nationalizing it? That's about the only thing that hasn't been tried in America yet. In fact, they've got a kind of nationalized system, except they've done it through HMOs and big insurers. The next step, one assumes, is outright nationalization. And the US is well on its way to that, anyhow. Good on ‘em! The US will then join the likes of Britain and Canada in bringing long lines of people to wait like penitents at the doors of its medical establishments. It may be a long wait, too. In England, these days, they close the hospitals early and shut off the lights. Canada currently sends the ones who can afford it to America for treatment – if they're still alive.

End Out of Control Spending: This is a biggie. McCain has said all the right things when it comes to controlling spending, and let's give him the benefit of the doubt. He wants to cut back. The trouble is he's a proponent of American wars that have cost ONE HALF TRILLION DOLLARS and rising. He is also in favor of a pre-emptive strike against Iran that would probably double that amount even if it went well. It is a good idea to cut spending. But McCain might want to deal with that pesky war problem first.

After Thoughts

OK, again apologies to you McCain fans. Remember, we could be just as critical of Barak Obama here – from a free-market standpoint – and make the case that Obama was just as un-serious as we think McCain is.

But McCain's point in his comments is especially irritating in that he seems to imply you can build an economy the way you fight a war – and with a similar, successful result. In fact, it sounds like what McCain is suggesting is very close to a "command" economy. Last we looked, something called the USSR had one of those, and it's not around anymore.

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