Roger Lowenstein had a good op-ed in Sunday's Washington Post, "Read My Lips: We Need These Taxes."  I liked the way he started it:

Let's imagine an alternate universe. The U.S. government is running a large and growing deficit. Not far down the road it faces huge increases in Social Security and Medicare costs. Naturally, the candidates for president want to remedy this by raising revenue. They don't want us to bequeath bigger deficits to our children or stake our future on foreigners' willingness to keep lending us money.

But have you heard this speech? "My fellow Americans, I have a plan to raise taxes so that the budget will be closer to balance and future Americans won't have to worry about their retirement security." Neither have I.

That's the speech that should appeal to those on the Left.  He lists five key tax changes he would make to help close the deficit and increase equity:

This morning, Fed Chair Ben Bernanke spoke on health care at the Senate Finance Committee Health Reform Summit.  His prepared remarks cited the extraordinary growth of health care spending as unsustainable, but he cautioned against harming innovation amidst the efforts to curtail health care costs.

Okay, Stan, defender of media, explain to me how the Wall Street Journal can aspire to be a source of news if it permits this op-ed by David Ranson to appear in its pages.  It says:

Will increasing tax rates on the rich increase revenues, as Barack Obama hopes, or hold back the economy, as John McCain fears? Or both?

Mr. Hauser uncovered the means to answer these questions definitively. On this page in 1993, he stated that "No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP." What a pity that his discovery has not been more widely disseminated.

You'd better believe we pay careful attention to capital gains here. Friday, the Congressional Budget Office released an analysis of the rise and fall of federal individual income tax revenues from 1994 through 2004. It showed that capital gains accounted for half of the non-legislative changes to individual income tax revenues over the period. Ironically, capital gains revenues increased 0.7% of GDP from 1994 through 2000 under President Clinton, and they fell 0.6% of GDP from 2000 to 2004 under President Bush.

Brad DeLong would probably say that Bruce is being shrill in this piece.

Possibly... But it's hard to argue with what he's saying.

FYI...Bruce sat between Andrew and me at the Committee for a Responsible Budget dinner we talked about several weeks ago.  I think he was the one who was the first to looked extremely pained when former OMB Director Jim Miller said all tax cuts paid for themselves.  Here, here, and here is what we said.

Last week, while campaigning in Pennsylvania in anticipation of Tuesday's primaries, John McCain unveiled his economic plan with this as the objective:

Today In Pennsylvania, John McCain Outlined A Pro-Growth, Pro-Jobs Strategy To Get Our Economy Back On Track. John McCain's strategy includes taking the near-term actions needed to provide immediate help to American families while also taking the longer-term steps necessary to secure America's economic prosperity and leadership in the world.

The strategy excludes any mention of fiscal responsibility per se, confirming our earlier suspicions that is is not a top line priority. For this transgression, Pete and Stan will have a lot to say in their posts.

It may be good politics, but the plan John McCain released last week doesn't work from a budget perspective unless:

• He's also proposing a steady series of record-high nominal deficits

• He's somehow figured out how to make spending cuts acceptable when up to now Congress, whether it has been under Republican or Democratic control, has refused to reduce to the levels he's suggesting

• He's figured out a way to prevent natural disasters from occurring

• He can guarantee that no military or foreign policy issues will occur while he's president

The most glaring problem with the McCain plan is also the simplest to see: he is proposing more than $3 trillion in tax reductions (some estimates put it at $5 trillion or higher) with nothing close to offsetting spending cuts.

(In their separate posts here at Capital Gains and Games, Pete discusses the McCain tax plan and Andrew deals with the economics, so I'll leave it to them to explain in more detail what is being proposed in those areas.)

On tax policy, John McCain proposes to:

1. extend the Bush tax cuts;

2. require a 3/5 majority of Congress to raise taxes;

3. double the dependent exemption from $3,500 to $7,000;

4. repeal the Alternative Minimum Tax;

5. set up a simple, alternative tax (unspecified);

6. raise the estate tax exemption to $5 m. with a 15% top rate;

7. extend the 15% top rate on dividends and capital gains;

8. cut the top corporate tax rate from 35% to 25%, pay for it by closing loopholes;

9. expense business investment;

10. make permanent and simplify the R&D tax credit;

11. ban Internet taxes;

12. suspend the 18.4¢/gallon gas tax from Memorial Day to Labor Day;

13. establish tradable allowances to limit greenhouse gas emissions.

Senator McCain's tax policy is much more pro-business than that offered by the Democratic candidates. Lowering the corporate tax rate, expensing equipment, and making the R&D credit permanent and simpler are all good ideas that would make America more competitive around the world. Expensing would be a badly needed reform of our antiquated depreciation system, although it has a steep up front revenue cost.

Not all businesses would be winners, depending upon how aggressively Mr. McCain would close business tax loopholes. That's a catchall campaign phrase that could mean heavily tax subsidized industries are at risk, or, more likely, that he just wants to have a response when asked how he's going to pay for the business tax cuts. McCain knows full well that identifying "loopholes" is fraught with difficulty and controversy. Congress would probably serve up hikes on overseas operations of U.S. businesses and on the oil and gas industry, but those alone would come nowhere near paying for the cuts.

Glenn Hubbard's and John Cogan's Wall Street Journal op-ed this morning seems persuasive until you consider that their premise is wrong, their math is misleading, and they fail to explain the real reason federal revenues have risen as a share of gross domestic product over the past 25 years.

First the wrong premise -- Hardly anyone is proposing to allow the 2001 and 2003 marginal tax rate cuts, marriage penalty relief, or child tax credit to expire in 2010. Senators Obama and Clinton have repeatedly promised to extend those tax cuts for all but the very wealthy. Senator Clinton defined wealthy as those making over $250,000 a year.

Second, Hubbard and Cogan examine only the past 25 years, starting in fiscal year 1983, when President Reagan's tax cuts first took full effect, driving federal revenues down to 17.5% of GDP from 19.6% when he took office in 1981.

I suppose I'll have to let ideology slide for the sake of expediency. I will not stand in the way of Stan calling Steve Forbes a capitalist tool.