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Marketing 101

There's a way to sell John McCain's economic plan. The campaign hasn't found it.

5:30 PM, Jul 7, 2008 • By RAMESH PONNURU and YUVAL LEVIN
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JOHN MCCAIN'S CAMPAIGN has begun to roll out his newly repackaged economic program, and the early headlines have been all about federal spending. "McCain Reverts to Balanced Budget Pledge," the New York Times reported, and the quote most often pulled out of McCain's remarks had to do with his "stem to stern review" of government excess and waste.

The plan itself is largely unchanged from prior iterations: veto earmarks, freeze discretionary spending, cut corporate tax rates, phase out the alternative minimum tax, increase the dependent exemption, create an optional simplified tax structure, promote free trade, and reform health care and entitlements. But the emphasis on spending, which was the campaign's own doing as much as that of the press, misses the key to voters' concerns about the economy, and to the way McCain's economic message can address those concerns.

As important as control over federal spending surely is, voters make no connection between budget debates and their own livelihoods. In a center-right country that is skeptical of government, many or even most people will in principle prefer lower federal spending. But neither federal overspending nor the deficit is what most concerns voters today, and so putting them front and center is not the best way to advance the larger conservative economic agenda.

With gas prices more than a dollar per gallon higher than they were last summer, and the prices of food and other essential commodities climbing, voters across the income scale, and especially those in the middle and lower middle class, are increasingly worried about the cost of living. Concerns about prices and costs have quickly come to overtake concerns about national security and the war, and are beginning to dwarf health-care and housing worries too. This development offers an opportunity for Republicans that the McCain campaign would be wise to seize.

Simply put, rising costs of living make the tax issue newly salient. Many conservatives have, quite reasonably, begun to conclude in recent years that tax cuts would no longer have the political pull they once did, since fewer Americans consider themselves overtaxed. But the question of taxes has finally to do with how much of their money people are able to spend on their families' needs. As the cost of meeting those needs rises, the promise of more money to spend grows more appealing as well. Tax cuts, especially those directed to families who are increasingly feeling the pinch, would speak to what is quickly becoming the core economic concern of this election year.

McCain's economic plan includes one such cut in particular: doubling the personal exemption for dependents from $3,500 to $7,000. Such a reform would help parents most of all, and would speak to the pressures and needs of the moment. It is, however, a very modest move, worth only an additional $350 per child to parents in the 10 percent tax bracket. McCain would be wise to build on it, for instance by also significantly expanding the child tax credit, and making it refundable against payroll as well as income taxes. McCain should, indeed, make such an idea the centerpiece of his vision of American economic concerns and solutions. It has become an op-ed truism that Washington cannot do much about the high cost of gas and food, at least in the short run. But tax breaks for families can help people pay for those costs. And unlike other methods of delivering immediate relief-such as the tax rebates for everyone distributed earlier this year-there is a solid economic rationale for pro-family tax cuts: that investments in children are overtaxed.

But whether he goes beyond his current proposal or not, McCain should at least emphasize it more than he has done. The key to McCain's economic-policy message should to grasp the moment we are in: the challenges and opportunities, the trends and probabilities, especially as they look from the perspective of a middle or lower middle class family. By seeing things through their eyes, McCain could provide some much-needed coherence to his assorted proposals and plans, and could build a broader platform of reforming our institutions-including the tax code and financial system-for the benefit of America's families.

Properly presented, McCain's plan has a lot to offer voters, and a lot to offer conservatives as a means of advancing their longstanding aims in altered circumstances. But a proper presentation would begin with voter concerns, and explain why fiscal conservatism joined to social conservatism offers an answer.

Yuval Levin is the Hertog fellow at the Ethics and Public Policy Center. Ramesh Ponnuru is a senior editor at National Review.