As we head into the final stretch of the presidential campaign, the challenges confronting the next president on the domestic front look dramatically different than they did just a few months ago when the Republicans and Democrats concluded their primaries. The summer months saw a painful spike in the cost of living for American families, driven in particular by gas and food prices; and the fall has seen a colossal financial crisis that is certain to send the economy into an extended recession.
Whatever else might be on his plate, the next president will need to meet three pressing needs in particular: Help middle-class and poor families contend with rising costs, spur economic growth and reform failing institutions that threaten our future prosperity.
Even before the recent series of economic crises brought these needs to the forefront, John McCain had warned about them, and organized his policy agenda around them. He proposes a series of measures that are relatively modest, largely non-ideological (which will prove important given the almost certainly increased Democratic majority in Congress next year) and directed precisely to the problems of the moment. Eloquent rhetoric matters in hard times, but substantive solutions that are both realistic and achievable matter far more.
To help families contend with rising costs, McCain has proposals that would both keep more money in taxpayers’ pockets and lower their costs. He proposes to double the dependent tax exemption from $3,500 to $7,000 per child — leaving parents with more of the money they’ve earned to spend on their family’s needs. His health care plan would reduce the tax burdens of all but the very highest income earners, and leave the average middle-class family with an additional $1,200 in the bank at tax time, while also helping to bring down premium costs through increased competition.
McCain would also phase out the alternative minimum tax, which increasingly threatens middle-class families. And by eliminating restrictions on offshore drilling and other barriers to oil and natural gas production, and encouraging the development of alternative energy sources, he would help to reduce the price of gas, and with it the cost of food, clothing and other essentials that have suffered badly from rising transportation costs.
His homeowner rescue plan, meanwhile, would help those who — despite their best honest efforts — have found themselves on the verge of foreclosure in the current crisis. He would have the government use a portion of the recently appropriated bailout funds to help homeowners who qualify replace their adjustable-rate mortgages with 30-year fixed-rate loans that are federally guaranteed.
As he offers help to families dealing with rising costs and falling home values, McCain would also energetically seek to encourage economic growth, to put the economy back on the path to prosperity. More than any particular assistance program, a general pro-growth economic policy is the crucial component in getting America out of the crisis we now confront. McCain’s approach is a well proven formula: Keep taxes low on employment, investment, economic activity and personal income, and prevent the government from wasting the hard-earned money of taxpayers.
To keep taxes low and encourage new hiring, he proposes to reduce business tax rates to make doing business in America more appealing to investors and employers, and he wants to make the tax cuts enacted in the past eight years permanent so that families don’t suddenly face a much-increased bill from Uncle Sam. He also promises adamant opposition to any effort to levy new taxes on hiring, and he proposes to promote free trade to encourage export growth and employment.
Keeping down the cost of government, meanwhile, has been something of an obsession for McCain for decades. He would freeze discretionary spending, with a few exceptions for programs of particular importance, while his Office of Management and Budget would review existing programs for opportunities to increase efficiency and lower costs. And he promises to veto any appropriations bills packed with special interest earmarks.
But perhaps the most crucial of McCain’s domestic priorities is institutional reform. It is not for nothing that McCain has been known as a reformer for much of his career, on issues from immigration to environmental policy, from campaign-finance reform to homeland security, from intelligence reform to telecom regulation. These efforts have sometimes put him on the right and sometimes on the left; some have succeeded and some not. But they always have aimed at common ground on large national problems.
McCain proposes a bipartisan process to reform the entitlement programs that threaten to bankrupt the federal government. He aims to bring our institutions of financial regulations up to date, to avert a repetition of the last few months. His ambitious health care reform proposal would seek to create a true market in individually purchased coverage while keeping intact our employer-based system — so that people who are not served or are poorly served by the system we have can get coverage, but those who like the insurance they have need not lose it; and all without pushing millions into government-run insurance.
Reform, above all, would be the watchword of McCain’s domestic policy. He does not promise to change the world and make the sun shine brighter, but to address the discrete and particular real-world problems we face. He would seek not to grow the government but to improve its efficiency; not to increase taxes but to promote job creation; not to pretend we can spend our way out of a recession, but rather to grow our way out of it; not just to talk, but to act.
These have been John McCain’s hallmarks, and they would define his approach to the grave domestic challenges we now confront. It is neither liberal nor quite conservative. It is not as rhetorically ambitious as some of what we have heard from others this year. But it is a plausible and practical agenda for badly needed reforms, advanced by an experienced leader who has shown he can turn hopes into policy in the real world.
Yuval Levin is the Hertog Fellow at the Ethics and Public Policy Center and author of “Imagining the Future: Science and American Democracy” (Encounter Books). He served as associate director of the White House Domestic Policy Council from 2004 through 2006.