McCain's economic plan: Look long-term

Douglas Holtz-Eakin

TEXT OF INTERVIEW

RYSSDAL: The campaign for the Republican presidential nomination comes to Southern California today. The remaining hopefuls will debate each other this evening at the Ronald Reagan Presidential Library. There'll be four men on the stage, but most of the attention will be focused on Mitt Romney and John McCain. Each is trying to convince voters he's the best choice in difficult economic times. To find out how Senator McCain might do that, we've got his senior economic adviser Douglas Holtz-Eakin with us. Thanks for being here.

HOLTZ-EAKIN: My pleasure.

RYSSDAL: What's the senator's thoughts on the stimulus package that's bouncing its way through Congress?

HOLTZ-EAKIN: Well the senator, I guess, is disappointed that the political environment and the moment has taken off the table any attempt at permanent measures. He's had proposals for permanent reductions in the corporate income tax rate, for first-year business expensing of all equipment investment. Those kinds of permanent measures might be quite valuable, but they don't look to be part of the debate in Congress.

RYSSDAL: Let's be clear though, that the matter at hand is the short-term package, not a long-term package. What is the senator proposing for the short-term?

HOLTZ-EAKIN: The senator is going to support packages that are consistent with the president's initiative for the short-term. He, as I said, has made proposals that would be permanent proposals, but it's important to recognize that if those are policies which are desirable in the long-run, they would also have short-term benefit: powerful business investment, money in the hands of middle-class families. You can do things which are both beneficial in the short-run, and help you over the long-term.

RYSSDAL: On that longer-term economic plan, a centerpiece of his proposal is to make President Bush's tax cuts permanent. He voted against those tax cuts twice. How is he now for them?

HOLTZ-EAKIN: He is a foot soldier in the Reagan Revolution. He saw President Reagan cut taxes within the context of budget discipline and controls on spending. Senator McCain did not see that same discipline accompanying the 2001, 2003 tax cuts, and did not support them as a result. I think the evidence is in on what the failure to control spending has wrought in Washington, and it is imperative in the future that the Bush tax cuts be made permanent, but that they be accompanied by controls on spending so as not to overly burden the American economy with a government that has grown too large.

RYSSDAL: John McCain staked a good part of his early campaign on the national security threat to this country. How does he now transition from the national security threat to a fading economy, and keep paying for the national security infrastructure in this country?

HOLTZ-EAKIN: Having a strong military is not the same thing as saying, well, you write a blank check to the defense department. We've seen that kind of an approach. It doesn't work. We need to make sure that we're only buying those systems which will enhance our capability, so we can control the cost within the defense department, to a great extent, by being smart about what's bought, by being smart about how it's bought, and as a result be able to better finance those boots on the ground, the Army and Marines necessary for the operations in which we're engaged.

RYSSDAL: Can't talk to the senior economic policy adviser to John McCain without asking him about the quote that's been making the rounds, where he says, in essence "I don't really know as much as I should about economics, but hey I've got Allen Greenspan's book." How is he now the guy to get us through a recession?

HOLTZ-EAKIN: He can be self-deprecating, and, you know, his self-deprecation has now been floated around every possible outlet to be held against him, but that's the nature of negative campaigning. He understands the power of the American economy. He will make the decisions necessary to power us to greater prosperity in the future.

RYSSDAL: Douglas Holtz-Eakin is a senior economic policy adviser to John McCain. Mr. Holtz-Eakin thanks a lot for your time.

HOLTZ-EAKIN: It's been a great pleasure. Thank you.

RYSSDAL: Our interviews with campaign economic advisers continue tomorrow morning on the Marketplace Morning Report.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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