McCain’s economic challenges

Tuesday June 10

Five elements of Senator John McCain's electoral platform distinguish him from his Democratic opponent:

• He believes that taxes should be kept low across the spectrum - including through a cut in corporate tax from 35% to 25% - and that the system should be simplified.

• He aims to pay for these tax reductions by slashing wasteful government expenditure -- an ambition that his opponents find unrealistic.

• He pledges to overhaul US entitlement programmes, particularly Social Security System and Medicare.

• He is a strong believer in the benefits of globalisation and free trade, and has frequently said so, even in politically unreceptive environments.

• He emphasises that there is a pressing need for a long-term energy strategy to wean the United States from its dependence on oil imports.

McCain presents a relatively coherent plan for dealing with long-term economic challenges, but he has been conspicuously silent on the more immediate economic policy issues facing the US.  If elected, he will face a very challenging economic situation stemming from three factors: the ongoing US housing market bust; the continued credit crisis; and the surge in international oil prices, which are at a historic high – even adjusted for inflation.

During the campaign, he has studiously avoided being drawn into discussing the details of what he might do to address the housing and credit market crises. Could they come back to haunt him?

McCain's presents a relatively coherent plan for dealing with long-term economic challenges, but he has been conspicuously silent on the immediate economic policy issues.