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McCain adviser talks of ‘mental recession’
Question of the Day
With the economy on the top of voters’ minds, Republican presidential candidate John McCain’s top economic adviser said the Arizona senator will lay down a detailed program to revive dynamic growth with dramatic tax and spending reforms.
In an interview with the Washington Times, Phil Gramm, a former Texas senator who is now vice chairman of UBS, the giant Swiss bank, said he expects Mr. McCain to inherit a sluggish economy if he wins the presidency, weighed down above all by the conviction of many Americans that economic conditions are the worst in two or three decades and that America is in decline.
“You’ve heard of mental depression; this is a mental recession,” he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. “We may have a recession; we haven’t had one yet.”
“We have sort of become a nation of whiners,” he said. “You just hear this constant whining, complaining about a loss of competitiveness, America in decline” despite a major export boom that is the primary reason that growth continues in the economy, he said.
“We’ve never been more dominant; we’ve never had more natural advantages than we have today,” he said. “We have benefited greatly” from the globalization of the economy in the last 30 years.
Mr. Gramm said the constant drubbing of the media on the economy’s problems is one reason people have lost confidence. Various surveys show that consumer confidence has fallen precipitously this year to the lowest levels in two to three decades, with most analysts attributing that to record high gasoline prices over $4 a gallon and big drops in the value of homes, which are consumers’ biggest assets.
“Misery sells newspapers,” Mr. Gramm said. “Thank God the economy is not as bad as you read in the newspaper every day.”
Mr. McCain’s economic program will seek to enliven growth by enabling taxpayers to opt into a new, simplified tax system with two low rates of 10 percent and 25 percent and no itemized deductions, he said.
Mr. McCain would tackle intransigent budget deficits by wrestling down burgeoning benefits programs and aggressively attacking wasteful spending whether it’s in the Pentagon’s procurement and weapons budget or congressional pork-barrel bills, he said.
A proven “instrument” of bipartisan reform and change in many areas, Mr. McCain would seek out Democratic leaders like Senate Majority Leader Harry Reid of Nevada to fashion a bipartisan reform of Social Security.
Mr. Gramm said a bipartisan deal might include raising the retirement age to 70 over 30 years, indexing the benefits of wealthier retirees to inflation rather than the more generous wage rate, and creating a private account program for younger workers.
Mr. McCain, a Republican with a proven record of voting for spending cuts, will renew efforts to balance the budget through spending reforms, he said. “It will be popular with the public but hated in Washington.”
Mr. McCain also will pursue immigration reforms that would start with effective border enforcement but include a possible doubling of legal immigration, including no limits on scientific and technical workers and a generous sized guest worker program, he said.
“The American story is a story of immigration,” he said. “I would be the last person who would say immigrants are not important to America.” Mr. Gramm noted that Albert Einstein was one prominent immigrant who might have been excluded under an anti-immigration regime.
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