McCain outlines his tax initiatives

WASHINGTON–A summer vacation from the 18.4-cent federal gas tax, and the 24.4-cent diesel tax. A phase-out of the alternative minimum tax. A permanent ban on Internet taxes and on new cellphone taxes. A doubling of personal exemptions for dependents. And, a simpler, flatter, fair tax code.

Republican presidential candidate John McCain promised a slew of new tax initiatives, even as he acknowledged that his Grand Old Party had squandered its reputation for fiscal responsibility.

“We need to make a clean break from the worst excesses of both political parties,” he said. “For Republicans, it starts with reclaiming our good name as the party of spending restraint. Somewhere along the way, too many Republicans in Congress became indistinguishable from the big-spending Democrats they used to oppose.”

On a day that many Americans were rushing to file their taxes, McCain, who has represented Arizona in the U.S. Senate for 22 years, said he has never asked for a special appropriations earmark, the congressional sleight of hand that bypasses committee and public review.

Promising that if elected he would use his veto pen vigorously against earmarks and undertake a one-year spending pause to evaluate most government programs, he criticized his Democratic rivals - New York Sen. Hillary Rodham Clinton and Illinois Sen. Barack Obama – for championing pork-barrel spending. He singled out Clinton in particular for requesting a $1-million earmark for a museum to Woodstock, site of a summer rock concert that galvanized the “free love” generation of the 1960s.

“That kind of careless spending of tax dollars is not change, my friends,” he told an audience of several hundred at Carnegie Mellon University in Pittsburgh. “It is business as usual in Washington, and it’s all a part of the same wasteful and corrupting system that we need to end.”

Assailing his opponents for supporting tax increases, McCain said that Clinton and Obama “would like you to think that only the very wealthy will pay more in taxes, but the reality is quite different.” Without detailing the Democratic tax plans, McCain said they would produce a tax increase for “Americans of every background,” including seniors, parents and small business owners.

“All these tax increase are the fine print under the slogan of ‘hope,’ ” McCain said, alluding to Obama’s bestselling book, “Audacity of Hope.” McCain quipped, “They’re going to raise your taxes by thousands of dollars per year - and they have the audacity to hope you don’t mind.”

But Obama, in a speech to the Building and Construction Trades’ national legislative conference in Washington this morning, called McCain’s economic prescriptions a virtual third term of the Bush administration.

“John McCain seems to think the Bush years have been pretty good because he’s offering more of the same,” he said. “This is supposed to be a day when we pay what we owe to the government. But it’s become a day when George Bush’s Washington rewards its friends on Wall Street.”

Noting that McCain once opposed the Bush tax cuts because “so many of the benefits go to the most fortunate,” Obama said that “somewhere along the way to the Republican nomination, I guess he figured that he had to stop speaking his mind and start toeing the line, because now he wants to make those tax cuts permanent.”

At Carnegie Mellon, McCain won applause from the audience when he attacked pork-barrel spending and when he suggested a holiday on the federal tax on gas from Memorial Day to Labor Day. But the crowd offered little reaction when he assailed the “extravagant salaries and severance deals of CEOs” and named names – James Cayne of Bear Stearns and Angelo Mozilo of Countrywide – who walked away with millions as “the American people are left to bear the consequences of reckless corporate conduct.”

Although he has said economic issues are not his strong suit, McCain also offered proposals to allow homeowners to refinance if they are about to default on their mortgages, and to allow college students to continue their education by expanding state “lender-of-last-resort” programs. He also called for reforms in the Medicare prescription drug program so that the federal government is not subsidizing medications for the most affluent.

McCain coupled his economic speech with the release of a new television ad on the economy in Pennsylvania and Ohio, promising to make taxes simple and fair, make energy cleaner and cheaper, and make healthcare portable and affordable.

But AFL-CIO President John Sweeney, in a statement, said McCain’s proposals “badly missed the mark, offering little more than a repackaging of President Bush’s failed economic agenda.” Charging that McCain had ignored the economic crisis until recently, Sweeney called McCain’s prescriptions “shortsighted proposals that would do more to pad the profit margins of large corporations than help struggling working families.”

johanna.neuman@latimes.com