McCain unveils economic proposal

Backs lower tax on capital gains, retirement withdrawals

Election 2008

October 15, 2008|By Maeve Reston and Seema Mehta | Maeve Reston and Seema Mehta,Los Angeles Times

BLUE BELL, Pa. -

Eager to show his understanding of Americans' economic distress, Republican Sen. John McCain of Arizona unveiled new economic prescriptions yesterday that include slashing the tax rate on capital gains in half and helping senior citizens grappling with shrinking retirement accounts.

The new proposals come just three weeks before the election and on the eve of the final presidential debate between McCain and his opponent, Democratic Sen. Barack Obama of Illinios at Hofstra University in Hempstead, N.Y. They are part of McCain's effort to right his campaign and regain voters' trust in his handling of the economy, an area in which more voters favor Obama. He also must convince voters that he does not represent a continuation of the Bush administration's policies.

"If I am elected president, I will help to create jobs for Americans in the most effective way a president can do this - with tax cuts that are directly specifically to create jobs and protect your life savings," he told a cheering crowd at a community college in Montgomery County.

"When I leave office, I can promise you that this nation will not be on the same path as it is today. I will not play along with the same Washington games and gimmicks that got us into this terrible mess in the first place. I am going to Washington to fight for you."

McCain's standing in the race has been damaged by the nation's economic troubles, and there was new evidence of that trend in polls from Quinnipiac University. Obama is now leading McCain in Colorado, Michigan, Minnesota and Wisconsin by significant margins, according to the poll conducted for The Wall Street Journal and WashingtonPost.com.

In the Philadelphia suburb of Blue Bell, McCain called for reducing the maximum tax rate on long-term capital gains by half, from 15 percent to 7.5 percent in 2009 and 2010 - a proposal his campaign hopes will restore liquidity to the markets.

Assailing Obama's proposal, which was introduced Monday, to suspend penalties on withdrawals of up to $10,000 from 401(k) accounts through 2009, McCain said it would encourage early withdrawals. In a measure aimed at senior citizens, McCain called for lowering tax rates on withdrawals from IRA and 401(k) accounts to 10 percent, the lowest rate, in 2008 and 2009. His campaign estimated that the proposal - which would apply to the first $50,000 withdrawn - would give 9 million people more flexibility with retirement funds.

He said that his capital gains tax reduction on stocks held more than a year - which drew a far bigger cheer than his plan to use $300 billion to buy up bad mortgages - "will promote buying, raise asset values, help companies and shore up the pension plans for workers and retirees."

The Obama campaign quickly responded, criticizing the McCain plan for ignoring the middle class.

"John McCain's latest gambit is a day late and 101 million middle-class families short," said Obama campaign spokesman Bill Burton. "McCain's plan would spend $300 billion to bail out the same irresponsible Wall Street banks that got us into this mess without doing anything to help jump-start job growth for America's middle class. His plan continues to provide no tax relief at all to 101 million hard-working families, including 97 percent of senior citizens, and it does nothing to cut taxes for small businesses or give them access to credit."

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