PITTSBURGH — Republican Sen. John McCain on Tuesday called for a summer-long suspension of the federal gasoline tax and several tax cuts as the likely presidential nominee sought to stem the public’s pain from a troubled economy.
Timed for the day millions of Americans filed their tax returns, the Arizona senator offered some immediate steps as well as long-term proposals in a broad economic speech. The nation’s financial woes have replaced the Iraq war as the top concern for voters.
“In so many ways, we need to make a clean break from the worst excesses of both political parties,” McCain told an audience at Carnegie Mellon University. “Somewhere along the way, too many Republicans in Congress became indistinguishable from the big-spending Democrats they used to oppose.”
To help people weather the downturn immediately, McCain urged Congress to institute a “gas-tax holiday” by suspending the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day. By some estimates, the government would lose about $10 billion in revenue. He also renewed his call for the United States to stop adding to the Strategic Petroleum Reserve and thus lessen to some extent the worldwide demand for oil.
Combined, he said, the two proposals would reduce gas prices, which would have a trickle-down effect, and “help to spread relief across the American economy.”
Aides said McCain’s Senate staff was drafting a bill on the proposal. It’s likely to face strong opposition not only from Congress but the states. The federal gasoline tax helps pay for highway projects in nearly every town through a dedicated trust fund.
To immediately address concerns about gas prices and the fallout from the credit crunch, McCain also said the Education Department should work with governors to ensure that each state’s guarantee agency — nonprofits that traditionally back student loans issued by banks — is able to be the lender of last resort for student loans.
In the long-term, McCain offered plans aimed at helping the middle class and eliminating wasteful spending, saying he wants to:
n Raise the tax exemption for each dependent child from $3,500 to $7,000. Aides estimated it would cost $65 billion over one year to double the tax exemption, but argued that McCain would offset such expenses by cutting federal spending.
n Require more affluent people — couples making more than $164,000 — enrolled in Medicare to pay a higher premium for their prescription drugs than less-wealthy people.
n Offer people the option of choosing a simpler tax system with two tax rates and a standard deduction instead of sticking with the current system.
n Suspend for one year all increases in discretionary spending for agencies other than those that cover the military and veterans while launching an expansive review of the effectiveness of federal programs. Aides estimated a one-year freeze would save $15 billion.
He offered few details for his new proposals and did not include estimated price tags. Later, aides said if all of McCain’s tax plans are implemented, including those previously announced, the total cost would be $195 billion as changes are phased in. They said McCain has found, or would find, the same amount of spending reductions to match.
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