The Magazine

The McCain Economic "Team"

Intellectual diversity, for better and for worse.

Feb 25, 2008, Vol. 13, No. 23 • By ANDREW FERGUSON
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For that reason if no other, McCain's opposition blindsided his fellow Republicans. Bush's accountants, after all, had designed the tax cuts precisely to foreclose the fairness argument that McCain pulled off the shelf. Their reasoning was identical to the reasoning used by proponents of the flat tax. The income tax cut, they pointed out, was across the board: Most people got their income tax rates cut by the same number of percentage points. Any across-the-board cut in income tax rates means that in dollar terms rich people will get to keep more of their money than poor people will get to keep of theirs. This is because rich people have more money than poor people. Cut Bill Gates's income tax rate by two percentage points, and he gets to keep a few extra hundred million. Cut my income tax rate by two percentage points, and--peanuts.

But we got the same tax cut. That doesn't make the cut unfair, unless of course you consider it unfair that rich people have more money than poor people. And in that case your argument isn't with tax cuts but with capitalism.

There's no indication that McCain has ever thought his economic positions through this far. In economics, as in much else, he appears to operate on instinct. His professional experience--he's had a single job outside the government and military, working briefly for his father-in-law's beer distributorship in 1981--is unlikely to yield ideas about how the economy works in the way that a life spent, say, running a business or even practicing law would. He comes from money himself. His mother was heiress to an oil wildcatter, and his wife is wealthy, too. His most recent Senate financial disclosure form places his assets at between $20 million and $32 million, making him the seventh richest man in the Senate. Like a lot of rich people who've come into money rather than earned it--the heirs to the Kennedy and Rockefeller fortunes are the most famous examples--McCain seems less interested in how wealth is created than how it can be used, wherever it comes from.

Some of McCain's advisers offer another reason for his rejection of the Bush tax cuts: his festering resentment over the campaign Bush had run against him in 2000. Especially before the September 11 attacks, says one, "he couldn't stomach the idea of helping Bush." That's a more plausible explanation than the explanation McCain himself has offered--and certainly more in keeping with McCain's later Senate career, which consists of a series of regulatory crusades launched against persons and entities that have offended him. The tobacco legislation that McCain shepherded through his Commerce Committee in 1998, for example, was inspired by his revulsion at the seven tobacco executives who testified before Congress and famously refused to admit, under oath, that cigarettes caused lung cancer. "He just couldn't stand their lying that way," an aide said at the time. With its huge increase in cigarette taxes and its elaborate system of penalties, the legislation was one of the largest regulatory schemes ever cooked up on Capitol Hill. It was also a classic bill of attainder, designed to push the tobacco companies to the brink of bankruptcy without driving them out of business altogether.

McCain's method in domestic matters no less than in foreign affairs is military: He surveys a set of facts, identifies a villain, fixes him with his steely gaze, and then goes after him. McCain's longstanding efforts to tighten regulations on the campaign finance system also contain an important personal component. At first it was a reaction against the accusations of impropriety that dogged him in the Keating Five scandal of 1989, and then, after 2000, against the attack ads, paid for by Bush allies, that damaged his presidential campaign. Here the villains were PACs, lobbyists, and freelance partisans who bought political advertising during an election--and had to be stopped. More recently, he has championed a "patients' bill of rights" to tighten regulations on the HMOs, insurance companies, and employers he considers to be stingy with health benefits. Pharmaceutical companies should be reined in, he's said, because they're the "bad guys."

What's unsettling is that you can never predict who the next bad guy will be. No consistent economic principles can be extracted from McCain's grab bag of policy positions, and no amount of textbook baloney about the free market, deregulation, and limited government will deter him from bringing his malefactors to justice. McCain's economics aren't ideological but improvisational--a campaign with shifting fronts, running on indignation. And a very large number of voters, probably a majority, will find this approach appealing because they don't buy all this textbook baloney about the free market and limited government either. When President McCain finds his villain and pursues him however he can, they will likely cheer their president and egg him on--unless, of course, he fixes his steely gaze on them.

As for his team of economic advisers, they continue to see in McCain a picture of their own aspiration. "He's a deficit hawk above all," Rudman told me. "Has been since the day I met him."

"He understands that the solution to our long-term problems will involve some shared sacrifice," Pete Peterson says. "And I think his leadership skills will be very effective in putting this idea of shared sacrifice across."

"I tell him: 'Stop mentioning Pete Peterson!'" Kemp says. "And he gets that. You look at Reagan. He ran a conventional Republican campaign in '76: limit spending, balanced budgets. Then [supply-side economist] Art Laffer and I and some others managed to talk to him. And in 1980 he ran as a growth candidate. I see something similar happening with John.

"It's true he doesn't have the same historical interest in economics that Reagan had. Reagan got it instinctively. But when I talk about the Bush tax cuts and John says, 'I don't think we should give money back to people who don't need it,' I say, 'John. John. That's not why we cut tax rates. We do it to incentivize people to put their capital at risk for new investment and capital formation.' And he gets that. He gets it.
"I don't want John to be perfect. Politics is multiplication, not subtraction, and he needs support from all sides. He just has to listen to the right people."

Andrew Ferguson is a senior editor at THE WEEKLY STANDARD.