McCain camp hits Obama on taxes

Posted: Monday, July 07, 2008 11:21 AM by Domenico Montanaro

From NBC’s Domenico Montanaro
Flat-taxer Steve Forbes went after Obama on taxes, claiming Obama’s tax proposals would “devastate” the American economy. He said that even though Obama now says he will cut taxes for the low-income to middle-class voters, Forbes and McCain economic adviser Douglas Holtz-Eakin claimed Obama voted for increasing taxes on those making as little as $32,000 a year.

The McCain campaign also sent out a memo, reinforcing the point. "This year, Barack Obama returned to the United States Senate twice to vote in favor of a budget resolution which raises income tax rates by three percentage points for the 25, 28 and 33 percent tax brackets," Holtz-Eakin writes in the memo. "This would mean a tax increase for those earning as little as $32,000. While Barack Obama campaigns on a promise of no tax hikes for anyone but the rich, we once again find that his words are empty when it comes time to act.  In both March and June, Barack Obama could have put the force of his vote behind his words. Instead, he decided that 'rich' now means those making just $32,000 per year."

But NBC’s Ken Strickland spoke with a Democratic aide at the Senate Budget Committee who said there was never a budget vote that said: Let's raise taxes. What the budget vote did do was estimate how much additional revenue would be needed, and then it would go to the Finance Committee to determine how to raise that amount (raise taxes, close loopholes, etc).
 
The aide thinks what the McCain campaign has seized on is this revenue growth -- and has taken one of the possible ways to get there: by raising taxes among all income groups. But the budget vote never called for raising taxes, the aide said.

On the call, Holtz-Eakin said, “Sen. Obama can say what he wants this week… but this is about his record. It reveals what his true values are” -- that he voted for something that would raise taxes on low-income voters, Holtz-Eakin claimed.

Forbes also called Obama’s proposals, the “biggest tax increase since Herbert Hoover.” By contrast, Forbes called McCain’s proposals “very exciting” and would do more for small businesses than Obama. He added, “You don’t raise taxes when the economy is in trouble” and claimed Obama would tax “anything that moves or breathes in this country.” McCain “believes the way to get economy moving is to cut the tax burden.”

Asked about Democratic charges against McCain of “flip-flopping” on taxes -- that he didn’t vote for the Bush tax cuts, but now says he’d expand them -- Forbes said, "Sen. McCain has never voted for a tax increase.”

*** UPDATE *** The DNC issued this response, in part: "On a conference call with reporters today, Steve Forbes and Doug Holtz-Eakin showed how far the McCain is willing to go to deflect attention away from McCain’s promise of a third Bush term on the economy. First, Forbes falsely claimed that John McCain has never voted for a tax increase—a claim that prompted a rebuke from the Club for Growth during the primaries. In fact, McCain has support tax increases on everything from vaccines to phone cards.

"Then, Doug Holtz-Eakin tried to explain how John McCain plans to make the Bush tax cuts he once opposed permanent and still balance the budget by 2013.  His recipe: cutting discretionary spending and promoting growth.  Not only does McCain’s math not even come close to adding up, but Holtz-Eakin himself said it would be impossible to cut enough spending to balance the budget.  Plus, before he reversed himself to pander to the right wing of his party, McCain used to reject the idea that we can grow our way out of budget-busting tax cuts.  The new McCain, however, is promising four more years of George Bush’s borrow and spend budgeting."

*** UPDATE 2 *** NBC's Ken Strickland fact checks Holtz-Eakin's memo:
The questionable line from the Holtz-Eakin memo is that Obama "returned to the United States Senate twice to vote in favor of a budget resolution which raises income tax rates by three percentage points for the 25, 28 and 33 percent tax brackets. This would mean a tax increase for those earning as little as $32,000." 

Is it true? As with many things political, the answer is yes and no. Secondly, it's a recycled argument Republicans make often about Democrats and raising taxes.  In other words, what at first blush appeared to be newsworthy is 'not so much' in my humble opinion.

THE FACTS:
- There was no vote during the budget resolution process to actually raise taxes.  Simply put, there was not a vote which in effect said, "let's raise taxes by 3% on certain tax brackets." So Obama did not vote to raise taxes per se. BUT... 

- The overall budget resolution does assume the BUSH 2001/2003 tax cuts will expire (or have to be offset by new spending.) And if they expire, taxes in the 25, 28, and 33 percent tax brackets would increase 3% as Holtz-Eakin suggests. (Democrats are happy to remind folks that McCain was against those tax cuts, before he was for them.)

- Also noteworthy: The budget resolution is NOT/NOT a law, NOT binding. (The President of the United States doesn't even sign it.) Instead, it's a blueprint of sorts that gives guidance to how congressional tax writers write tax laws in the Finance Committee. That panel is not bound to what the budget says, and often votes to "waive" budget rules.

Bottom line: While it may be a bit of a stretch to say Obama voted to raise taxes, it is accurate to suggest that Obama's support for the budget resolution indicates a willingness to let the tax cuts expire--thus potentially causing a tax increase.

*** UPDATE 3 *** The Obama campaign, per NBC's Andrea Mitchell, maintains the budget resolution encompassed middle class tax cuts, more than offsetting the lost benefit of the Bush tax cut extensions for lower-income taxpayers.

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