Tuesday, September 16, 2008

The Middle Class Wallet

The Editors of NRO have put forth an 8-point plan to reassure the middle class that their wallets will be protected.  Take a look:

1) No more bailouts: There is no good time to stick taxpayers with the liability for financial executives' mistakes, but now would be a particularly bad one. Unfortunately, too many CEOs seem to have gotten the message from the Bear Stearns and Fannie/Freddie deals that Washington will ride to their rescue. Lehman Brothers was rightly turned down. AIG should be turned down, too — and Fannie and Freddie should be reformed to limit any future taxpayer exposure. On this issue, conservatives should be unafraid to be populists.

2) Hard money: In the 1970s and 1980s, conservative politicians stood for preserving the value of the dollar against inflation. Their stance made it possible, even necessary, for the Fed to tighten money. They were so successful that inflation disappeared and the lesson was forgotten. It is time to remember it.

3) Energy production: Conservatives can and should stand for cheap energy by encouraging both increased drilling and nuclear power. Liberals cannot, because their solution to global warming is to make energy pricier. We should not, and will not, go down that path. Liberals want to obscure this choice by embracing a phony Senate "compromise." There is no reason conservatives should join them.

4) Cheaper health care: McCain's health-care plan creates an incentive for some employers to cash out their health plans and let families buy their own insurance out of higher wages. It also lets people bypass state regulations that raise premiums. The result: more people with health insurance, not because either they or taxpayers have been forced to fork over cash, but because insurance has become more affordable.

5) An end to ethanol subsidies: Some of McCain's finest hours have involved battling ethanol subsidies, which mulct Americans as taxpayers, drivers, and buyers of food. Barack Obama is on the wrong side of the issue. Fine: Cede him Iowa's electoral votes, and stand up for everyone else.

6) Encourage growth: Republicans are right to oppose any tax increases, and Obama has recently demonstrated their wisdom by saying that he would hold off on his tax increases if the economy remains weak. McCain should ask him: If he is willing to admit that his tax increases would make the economy worse, should he not delay them forever?

7) Free trade: Both candidates' advisers know that McCain has taken a more responsible position on trade than Obama has. The polls suggest Obama has taken the more expedient one. Whenever the issue is raised, McCain should point out that his policies will lead to lower prices at the checkout stand, and Obama's to higher ones.

8) The right kind of middle-class tax relief: Obama promises to cut taxes for most Americans. In truth, he is just handing out money (particularly when that money is likely to find its way to a college administration). Marginal tax rates to work, save, and invest would rise for almost everyone, largely because of the way he would phase out his new tax breaks. We understand that many voters will ignore the fine points here — extra money is always nice — but it would be better for middle-class tax cuts to achieve a policy objective. An expanded tax credit for children would deliver middle-class tax relief while lowering the marginal cost of investing in the next generation. It would also target relief where it is most needed.

This is an excellent plan that will reduce negative taxation and regulation, instead creating an environment of growth and forward progress.  So who best fits these points?

We said these eight points comprised "our" plan, but the truth is that various Republicans have embraced most of it. McCain himself is on board for at least half of it. What the Republicans have not yet achieved is a focus on middle-class wallets. But we suspect that the voters already have.

McCain needs to take command of this issue.  If he can properly explain the deficiencies of Obama's 'tax cut for 95% of Americans' and the benefits of his own plan, he'll be sitting in the Oval Office in six months.  Period.  Can he do it?  Well, he's been doing almost everything right lately, so there's hope.  But he has to do it.  Time will tell.

There's my two cents.

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