The $2.8 Trillion Deficit Gap: Holtz-Eakin Responds

A campaign blog.
July 24 2008 5:29 PM

The $2.8 Trillion Deficit Gap: Holtz-Eakin Responds

John McCain’s tax policy has come under fire in the past, particularly for its dependence on huge revenue windfalls to balance the budget. But now a new study from the nonpartisan Tax Policy Center (a joint venture between Brookings and the Urban Institute) suggests there’s another flaw: a rhetoric gap.

According to the study, the tax plan McCain’s campaign laid out privately is different from the one he’s selling on the stump. If you include the policies he has advocated publicly—such as repealing the Alternative Minimum Tax, increasing the dependent exemption to $7,000 right away, and reducing the corporate tax rate to 25 percent immediately—then the deficit after 10 years would actually be $2.8 trillion greater than if you go by his private plan. There’s also a rhetorical gap for Obama, but in his case the public version generates more revenue than the private one, thanks to a suggested hike in payroll taxes for people who make $250,000 or more. (Read the full study here [PDF].)

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Douglas Holtz-Eakin, McCain’s chief economic adviser, says the numbers he provided to the TPC aren’t secret—they’re the same ones he provides to anyone who asks . He also disputes the way the study takes suggestions McCain has made on the stump out of context. "This is parsing words out of campaign appearances to an unreasonable degree," Holtz-Eakin said. "He has certainly I’m sure said things in town halls" that don’t jibe perfectly with his written plan. But that doesn’t mean it’s official. For example, the study compares McCain’s promises on the stump to reduce the corporate tax rate immediately to his plan’s more gradual reduction. Holtz-Eakin objects: "You don’t say, I’d like to reduce it to 28 percent, then 26 percent, then 25 percent, then —no one talks like that on the stump. [You say,] I’d like to get it down to 25 percent ."

In other cases, Holtz-Eakin says, the TPC filled in gaps where the McCain campaign didn’t provide specifics. For example, McCain’s proposed Alternative Simplified Tax , a plan that would let taxpayers opt out of the current system in favor of a simpler two-rate system: "We were honest about the fact that we don’t have a specific proposal," he said. "They didn’t have one, so they made one up."

The Tax Policy Center sent the campaign a copy of the study a day before they released it. "Had I read more carefully, I probably would have raised [objections]," Holtz-Eakin said. "But I didn’t."

Christopher Beam is a writer living in Beijing.

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