McCain calls for summer-long suspension of gas tax
By LIZ SIDOTI, Associated Press Writer
48 minutes ago
PITTSBURGH - Republican Sen. John McCain on Tuesday called for a summer-long suspension of the federal gasoline tax and several tax cuts as the likely presidential nominee sought to stem the public's pain from a troubled economy.
To help people weather the downturn immediately, McCain urged Congress to institute a "gas-tax holiday" by suspending the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day. By some estimates, the government would lose about $10 billion in revenue. He also renewed his call for the United States to stop adding to the Strategic Petroleum Reserve and thus lessen to some extent the worldwide demand for oil.
Shortly before McCain's speech, the Labor Department reported another worrisome sign for the economy: Inflation at the wholesale level soared in March at nearly triple the rate that had been expected as the costs of energy and food both climbed rapidly. Oil prices hit a new high, rising over $113 a barrel.
To immediately address concerns about gas prices and the fallout from the credit crunch, McCain offered the gas-tax suspension proposal and said the Education Department should work with governors to ensure that each state's guarantee agency — nonprofits that traditionally back student loans issued by banks — is able to be the lender of last resort for student loans.
In the long-term, McCain offered plans aimed at helping the middle class and eliminating wasteful spending, saying he wants to:
_Raise the tax exemption for each dependent child from $3,500 to $7,000. Aides estimated it would cost $65 billion over one year to double the tax exemption, but argued that McCain would offset such expenses by cutting federal spending.
_Require more affluent people — couples making more than $164,000 — enrolled in Medicare to pay a higher premium for their prescription drugs than less-wealthy people.
_Offer people the option of choosing a simpler tax system with two tax rates and a standard deduction instead of sticking with the current system.
_Suspend for one year all increases in discretionary spending for agencies other than those that cover the military and veterans while launching an expansive review of the effectiveness of federal programs. Aides estimated a one-year freeze would save $15 billion.
While he touched on a wide-range of issues, McCain did not discuss the soaring federal deficit or enormous war costs. He also offered few details for his new proposals and did not include estimated price tags. Later, aides said if all of McCain's tax plans are implemented, including those previously announced, the total cost would be $195 billion as changes are phased in. They said McCain has found — or would find — the same amount of spending reductions to match.
Obama campaign spokesman Bill Burton said McCain's proposals offer "no change from George Bush's failed policies by going full speed ahead with fiscally irresponsible tax cuts for the wealthiest Americans." Clinton policy director Neera Tanden called it "a George Bush-redux of corporate windfalls and tax cuts for the wealthy that will bankrupt our government and leave working families with the bill."
Sounds reasonable to me. Less spending is the goal, and anything that will force us to examine our spending habits should be looked at in a positive light.
That being said, economics is hardly my strongsuit. Someone more knowledgable should weigh in.