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The Candidate: John McCain (R)
The Issue: Taxes
The Position: Lower all
The Cost: “When you raise taxes you hurt the
economy.” (Source: Duane Parde, National Taxpayers Union
)
The Media Position: Tax cuts “cost” the
government money.
The Issue
With Sen. John McCain
proposing $92.4 billion in new spending and Sen. Barack
Obama proposing $293 billion in new spending, according
to conservative per-year estimates from the National
Taxpayers Union Foundation, the candidates must find a
way to pay for their promises. After all, government
money doesn’t just appear; it comes from the taxpayers.
The two candidates have
starkly different plans for four major areas of the tax
code – income, capital gains, corporate and estate
taxes. Obama proposes lowering income taxes for lower-
and middle-class earners, but raising taxes on people
making more than $250,000 a year. He also proposes
raising the corporate and capital gains tax rates.
McCain supports lowering taxes generally across the
board.
McCain portrays his opponent
as a tax-raiser, while Obama portrays the Republican as
trying to benefit the super-wealthy at a cost to average
Americans. The media have sided with Obama.
In 56 of the more than 218
stories on broadcast networks mentioning tax cuts, they
were described as a “cost” to the government. Only 31
stories since the beginning of 2008 have featured voices
labeling tax cuts a “relief” to Americans struggling in
a slowed economy.
The Media Position
The candidates’ differing
approaches to taxation have sparked a lot of media
attention – more than 218 mentions on the broadcast
networks. But the coverage portrayed tax cuts as a
“cost” to the government almost twice as often as it
characterized them as a “relief” to taxpayers.
Fifty-six of the 218 stories
mentioning “tax cuts” characterized them as a “cost” to
government. While both candidates have claimed their
cuts will benefit taxpayers in a time of financial
strain, only 31 stories since the beginning of 2008 have
labeled tax cuts as “relief.”
Much of the cost-centered
criticism of tax cuts has focused on McCain’s support
for making the Bush tax cuts permanent, pointing out how
the relief would “cost” the government money even though
it would maintain the status quo.
CNN’s “Your $$$$$” criticized
McCain’s approach by suggesting on the July 13 broadcast
that it would put Social Security and Medicare at risk.
Reporter
Michael Chernoff said the “price” of McCain’s tax
relief would be an increase in the deficit – unless
programs and other spending were cut – and that McCain
wouldn’t be able to balance the budget without “chopping
Social Security by 50 percent or slashing Medicare by 70
percent.”
On NBC’s “The Chris Matthews
Show” June 22, MSNBC host Chris Matthews suggested
McCain was trying to “pull a Houdini and escape the
situation that surrounds him” by “tagging Barack Obama
as the guy who’s going to raise your taxes.”
On the ABC “World News” April
15, correspondent Ron Claiborne portrayed McCain as
“scrambling to show that he gets it,” referring to the
economy. Claiborne raised questions about McCain’s
ability to “pay for” tax cuts, but didn’t point out the
expected benefits of cuts to invigorate the economy.
The broadcast networks – ABC,
CBS and NBC – have offered little detail in coverage of
specific tax-related issues. Since the beginning of
2008, they’ve mentioned the “capital gains” tax 38
times.
Most of the mentions came from
candidates or their representatives, as journalists
conducting interviews stuck to broad topics. But when
they approached capital gains, reporters certainly
didn’t favor cutting the tax.
“Rudy Giuliani proposed
lowering corporate tax rates and capital gains taxes,
costing trillions,” Andrea Mitchell said on the January
12 “Saturday Today” show on NBC.
Talking about an existing
“loophole” in the capital gains tax on the January 17
“Today” show, co-host Ann Curry exclaimed, “My goodness”
at the thought of not having to pay capital gains tax on
profits from the sale of a home after a spouse’s death.
Network viewers wouldn’t have
any idea about the candidates’ differing positions on
the estate tax. NBC is the only network to have
mentioned the tax, and none of its three mentions were
related to the campaign. Instead, they were included in
financial self-help segments.
ABC allowed liberal
billionaire investor Warren Buffett to slam the current
capital gains tax rates as too low on two separate
occasions – “World News” May 3 and “Nightline” May 16.
“[M]y cleaning lady, who pays more on her payroll tax
than I pay on capital gains, she doesn’t have a
lobbyist,” Buffett said.
Other contributors managed to
balance the picture a bit. Dick Morris told the June 24
“Today” show that increasing capital gains taxes would
“drive capital away from the United States.”
Occasionally reporters would
acknowledge the benefits of tax cuts. On the CBS
“Evening News” June 6, reporter Priya David noted that
in cities like Allentown, Penn., companies “are adding
jobs because of corporate tax breaks.”
George Stephanopoulos cited
Tax Policy Institute predictions that McCain’s corporate
tax cuts “could end up doing more for enhanced economic
growth and economic efficiency” than Obama’s middle
class tax cuts, on ABC’s “This Week” June 15.
But journalists have
long opposed tax relief, assuming lower tax rates
must mean a bigger deficit – even though a surge of
higher tax revenues in 2005 led to a $100-billion
reduction of the deficit.
The media’s long history of
opposing tax relief has been accompanied by a tendency
to
spin many tax issues – from tax cuts “for the
wealthy” to tax cuts as “costs” to the government to
calling tax breaks “loopholes,” implying those who use
legal deductions are doing something wrong.
The networks have consistently
supported other taxes as well, including a
windfall profits tax on Big Oil companies – a
proposal McCain opposes.
Lower Taxes Help
Characterizing tax cuts as a
“cost” to the government, as reporters have done time
and again, is evidence of a distorted view of the
government’s role as money manager.
“It’s a lie,” National
Taxpayers Union president Duane Parde said of the
characterization. “It’s another example of the media
being in the tank for big government.”
“Even taxes that all or most
people would regard as legitimate are still monies that
initially belonged to people that as democratic citizens
they chose one way or another to allow the government to
have in order to carry out the business of the state,”
George Mason University economist professor Dr. Donald
Boudreaux said. “The idea of talking about tax cuts as a
cost to government very sneakily changes the
presumption. The presumption is that, well, it’s the
government’s money, it initially belongs to the
government and by the government letting you keep more
of what you earn … that’s a cost to the government.”
He compared the government
cutting taxes to a thief who decides to steal less. “An
analogy would be if a thief, say who was stealing
$30,000 annually on average, decided to cut back on his
thievery. You could say – and people would know what
you’d mean – well, if the thief now steals only $20,000
annually you say well it costs the thief $10,000 to stop
thieving. But most of us would regard that as an abuse
of terms because it would presume that somehow the thief
has a right to that money.”
CNNMoney.com
reported June 11 that the difference between McCain
and Obama for the wealthiest taxpayers is a nearly
$1-million spread. McCain’s plan would mean an average
$269,364 savings for taxpayers with incomes greater than
$2.9 million. Obama’s plan would raise the same
taxpayer’s bill by $701,885.
In fact McCain’s plan would
result in lower taxes for all taxpayers, according to
analysis from
the liberal Tax Policy Center, while Obama’s would
raise taxes on Americans making more than $227,000 and
lower taxes on other incomes.
But Cato Institute senior
fellow and Business & Media Institute adviser Dan
Mitchell raised questions about McCain’s dedication to
lower taxes, criticizing his “mixed record” on the
issue. “He was against some of the good tax policy
earlier this decade. Matter of fact, he even used
left-wing class warfare rhetoric against lower tax
rates, and that worries me.”
“Now he does say today that he
wants to extend the good parts of the 2001 and 2003 tax
cuts. He does say that he wants to lower the corporate
tax by 10 percentage points,” Mitchell noted. “I hope
that his conversion is sincere and that he really does
want to reduce the burden of government.”
“We need dramatic tax reform
in the United States,” Parde said. “Part of that is
lowering the corporate tax rate and simplifying the tax
code so that you don’t have various loopholes. But the
fact of the matter is that the U.S. is not competitive
in the global marketplace and we are seeing the effects
of that today.”
Boudreaux said simply lowering
the corporate tax rate might not be enough. “A much
better system unquestionably would be to – I mean, I’d
get rid of the corporate income tax, but if you’re going
to have one, dramatically lower it, indeed and get rid
of – they’re all special interest-driven – all the
special interest-driven exceptions and the things that
Obama calls loopholes. So do make it simpler and in that
way you have less political influence on the way
corporate activity is conducted and you have more
corporate activity conducted toward the market because
the tax rate will be lower.”
But Mitchell wasn’t
optimistic that much would change about the tax code,
however. “What will actually happen at the end of the
day? I’m very pessimistic. Politicians from both parties
are just so greedy they don’t want to give up any
revenue even when you have a tax where the rate is so
high, like the corporate tax, that is probably actually
losing revenue for the politicians in the long run.”
The Heritage Foundation
estimated McCain’s tax plan would have more positive
impact on jobs and economic growth than Obama’s. The
foundation’s Center for Data Analysis (CDA) predicted an
annual average of 2.13 million new jobs under
McCain’s plan – compared to 970,000 million new jobs
each year under Obama.
The CDA estimated McCain’s plan would encourage
$283.7 billion in
average annual GDP growth through 2018 – compared to
a $101.7 billion annual average under Obama’s plan.
Obama: Read about
the media’s promotion of liberal “class warfare”
rhetoric.
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