Tuesday, October 14, 2008

McCain-Palin Campaign Conference Call On John McCain's Pension And Family Security Plan

"John McCain is going to talk today about his Pension and Family Security Plan. This is a plan that builds on his existing proposals for Jobs in America, to foster small business growth, to keep taxes low to control government spending, provide flexible health benefits and all of the above energy policy and create markets around the world for Americans." -- Doug Holtz-Eakin

Today, the McCain-Palin 2008 held a press conference call with Doug Holtz-Eakin, McCain-Palin 2008 Senior Policy Adviser, to discuss John McCain's Pension and Family Security Plan:

Doug Holtz-Eakin: "John McCain is going to talk today about his Pension and Family Security Plan. This is a plan that builds on his existing proposals for Jobs in America, to foster small business growth, to keep taxes low to control government spending, provide flexible health benefits and an 'all of the above' energy policy and create markets around the world for Americans. That basic plan is one he has been working on now during the entire campaign. But we have experienced tremendous turmoil, and damage to the U.S. commerce and financial markets in recent weeks. This plan is specifically targeted at those who have been harmed so badly by that -- seniors in America, those who are saving for college or for their retirement, homeowners and workers. There are elements in this plan designed to help each of those.

"In particular, as John McCain talked a couple of days ago about, changing the rules for pulling money out of retirement accounts, so that seniors are not forced to sell into markets that are down, still about 30% from last year. He wants to add to that today with new tax rules that would have a maximum tax rate of 10% for any money coming out of a tax for an account, an IRA or 401(k), so that we can in this economy help the seniors who are counting on their retirement accounts to manage their lifestyles. The retirement accounts have been damaged. The government does not need to be taking so much out of that in this time. And that will help get basic cash in the pocket, an important element of the U.S. economy.

"We also think, we need to help out savers. Those folks who have been trying to meet some of their goals and are now facing losses. Some of those folks have had to sell off their financial instruments in the midst of this downturn in order to pay college tuition or meet other bills.

Current law says that if you had to sell off at a loss, you can deduct only $3,000 at most of those losses. The original tax rule had it been indexed for inflation that number would be about $11,000 right now. John McCain thinks that for the next two years, we should allow individuals to deduct 15% or $15,000 of those losses against their income. This will help them by reducing their taxable income, give a little break to those who have suffered greatly while trying to meet their needs.

"He also wants to cut the capital gains tax rate from 15% to 7.5%. This is the rate that applies to long-term capital gains. Those gains which increase in things held for one year or longer. Reducing capital gains tax rates is a proven way to support asset markets, stock markets in particular. The benefits of supporting those markets will spread broadly through the economy. We've got pension funds, whether they be union, public employee or private company funds that are weighed down as a result of the stock market. We have individual accounts for IRAs, 401(k)s as I mentioned are badly damaged by the downturn. Providing incentives to get into and hold over a sustained period will support the goals of those individuals.

"He's going to restate his plan to help stabilize housing markets. The American Homeownership Resurgence Plan is an attempt to take the $700 billion that Congress has already allocated to stabilizing financial markets, and helping the economy and focusing it on the American homeowner. The goal here is to meet two objectives simultaneously. Individuals will be able essentially to call the bank and ask to have an underwater or a distressed mortgage re-financed.

They would get government help in retiring the existing mortgage and receive in replacement an FHA 30-year fixed rate mortgage at current market valuations and market interest rate. What does that accomplish? Well, those individuals no longer go through the sad cycle of delinquency, default, foreclosure, maybe even bankruptcy. Then the houses as a result do not sit vacant, and lead to neighborhood blight. We stabilize the housing values for every American homeowner who has seen their house valu es fall and their property taxes go up. We break that cycle. For the individual homeowner, they now have the money that they can use to meet their groceries, or their gasoline bills because they have a manageable mortgage. So we stabilize the consumer sector, the economy tremendously at a time when there is a lot of downward pressure.

Simultaneously, the banks are now relieved of the uncertainty over whether someone is going to default over a mortgage and that's a fundamental uncertainty that's plagued the banking system. They have on their balance sheet cash, that cash is available to make new loans. This should contribute greatly to improving the credit market conditions that were starting to impinge on every small business in America. The car dealers, the dry cleaners, those who needed the credits just to do their daily operations.

"And the final piece, the help for workers, is simply to have a waiver of the tax on unemployment benefits. Currently, any unemployment insurance benefits that you receive are included in your taxable income. John McCain thinks those most in need, those making less than $100,000 should not have this as part of their taxable income, and he has proposed that we eliminate the tax on them.

"Overall, this is the plan which would broadly benefit the economy. It would put cash in the hands of those who have been damaged by the stock market -- the seniors, those who had to cash out, the unemployed, the homeowners who are in distress with finding themselves able to meet their other needs. There is no better short run stimulus than relieving the negative pressures that we're seeing in the housing and asset markets and it would stabilize as well some of the financial insecurities that we've seen. In addition to his Jobs for America plan, it will round out nicely with some of the recent distresses and counter them and it can be done with a budget cost that's on the order of $52 billion over the next two years. Obviously, Senator McCain has a long and proud history of controlling government spending. He is not happy about the outlook at the federal level. And if elected president, we immediately set out to rectify it in any way he could."

Listen To The Conference Call

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