With this and the last thing, buying up mortgages, seems like McCain's making a pretty obvious attempt to buy votes.

While I don't think that McCain's idea does anything to slow down the economic collapse, there may actually be some value for middle class voters. If redemptions from mutual funds are large it is possible that the funds will generate large capital gains through the forced sale of appreciated assets even while the fund's NAV is decreasing. It is entirely possible to have a fund depreciate by 50% while kicking out taxable gains on a large portion of the loss. It is a lose/lose scenario similar to that which devastated many during the unwinding of the .com bubble.

John McCain REALLY doesn't get it.

I've taken a beating in the stock market this week like everyone else, but most of my stuff is in one of several IRA's, rolled over from previous 401(k) accounts and SEP plans. So my earnings (when I have them) don't get special treatment like capital gains and dividends do - they're taxed as ordinary income when I take the money out.

The other day McCain proposed a suspension of the retirement plan mandatory distribution rules. This will only benefit people who don't NEED to take retirement distributions.

All that John McCain (and his lobbyist advisers)can think of to help the "middle class" is something to help the wealthiest 2% of America.

John McCain just doesn't get it.

McCain's plan makes perfect sense for the Middle Class when you remember that he thinks the middle class goes up to $5 mil a year.

Tax cuts on capital gains and dividends. How long has that been a Republican hobbyhorse? He missed eliminating the inheritance tax too. Nothing opportunistic about repackaging failed ideas that benefit the few as a solution to a genuine crisis.

What's next, government-subsidized gasoline at two dollars a gallon?

So will this proposal then eliminate the tax writeoffs for capital losses?

doesn't seem so smart...

"do-overs" is the new republican way -- president paulson and his mighty executive staff is providing us with a massive $750 billion do-over. Bet there'll be more in a day or two... from Mccain and Prez paulson.

He's been doing this for months. Before the summer began, he promoted his gas tax holiday and even got Hillary to adopt and promote the idea. When everyone pointed out that it would not solve the energy crisis or even lead to lower gas prices, he stopped talking about it even though we continued to pay $4 for gas into the summer months. A man of principle would defend his ideas, even in the face of criticism. That's the mavericky thing to do.

To the extent that middle-class stock holdings are in retirement accounts that defer--or, in the case of Roth IRAs, already are exempt from--taxes, this is not terribly helpful.

And do we really want to encourage further selling right now?

More and more, it seems that McCain actually believes the middle class is people making $5 million a year. Obama must be hoping this proposal lasts a few days. That is, until the third debate.

The Trick is to Keep Making Stuff Up that way you Stay in the News!
If you keep announcing, "I'm going to make something up" You get the press to announce you name.
Then you make up your idea and the press announce your name, talk more about your idea (without any real analysis because they haven't had time yet). And you get Good Press.
Then the press analyzes your idea, calls it the crappy idea it is. You go, "The Press is Lying about my great idea." The press dutifully reports your idea and how You think it is great, again.
The people Hopefully realize your idea is crap and swing more for the other guy.
And You Announce You have Another Great Idea.
It's the fact that You Hope the People who are voting won't recognize that you are planning More Crap that doesn't really help them that you are praying for.
It worked for Bush for 8 years, so McCain is hoping that it will work for him.
Meanwhile, McCain is the news Planning Things. Making these Huge Announcements. And then proclaiming that Obama has no plans for the future. And the McCain fans will tell you this is The Truth. That Obama has No Plans, No Platform, just a Hidden Agenda of Terrorism and Far Left Extremist Plans. Because Faux News isn't covering a constant barrage of Bad Plans like McCain is making up.
Just a nice fully stated set of plans that have been on his web site since the beginning.
Oh, and I've noticed that Obama answers everyone that asks him what his plans are on a subject, fills out all those positional questionnaires. McSame doesn't bother to fill them out, may be refers to his website which tells nothing. Who has Plans and Ideas?
Yeah, it gets annoying.

"[T]he middle class doesn't collect capital gains, or dividends, in any material amount."

Wrong: Middle-class retirees do collect capital gains and dividends in material amounts. And while there won't be many capital gains in the forseeable future, there were before September of this year -- thus, reportable for 2008 taxes payable next spring.

Proposing to reduce those taxes is a direct play for the elder vote, which at this stage is McCain's only hope.

This is a great opportunity for Obama to point out the fundamental unfairness of our tax system, and how that relates to the current economic atmosphere.
1) Low cap gains and 15% payroll tax discourage work and productivity that comes from work. (It's easier and more profitable to invest, assuming you know what you're doing.)
2) McCain wants to cut social security benefits. Therefore s.s. contributions can no longer be considered part of a contractual agreement with the government to provide for retirement.
3) The more incentive you provide to invest money in securities (cap gain tax deductions/IRAs/401Ks/low interest rates), the more you inflate the stock market bubble. We wouldn't be seeing the Dow drop 6000 points if there were enough assets and profits in these companies to justify the stock prices.
4) If there were more actual production, and investment in new competitive companies rather than monopolistic giants, there would be both better stock value and more people buying things (the workers).

Proposing to reduce those taxes is a direct play for the elder vote-allbetsareoff

But Obama has already proposed that senior citizens would be tax exempt up to $50,000. As I understand it, they would have to make $75,000 or more to even reach the 15% marginal rate.

I just love the idea that there's a stimulus to be had by cutting capital gains when the stock markets have declined 40%. It's like selling baby carriages at the old folks home.

Senile dementia.

It's like selling baby carriages at the old folks home.
Or bullshit at McCain campaign headquarters.

allbetsareoff @ 2:10 p.m.

I disagree. Not your average retiree. Most of what they have is equity in homes, Social Security, 401(k)s, a fixed pension if they're lucky, and none of those would be affected by a reduction in capital gains tax rates, which are already low at 15%. Retirees lucky enough to have substantial capital gains in individual accounts are at the top, not in the middle.

If they really want to help seniors, they can start Social Security income, taxed at 85% for very modest income levels, and not indexed for inflation. Why the hell should they be taxed on SS before they recoup what they paid into it? Or at all, a good argument could be made. Seniors don't have the time to weather market crashes, and can't just jump up and get high paying jobs when economic conditions go sour. Walmart greeters don't get paid much, and there's only a limited number of positions available.

I should have said 85% of which is taxable on SS income

It's beginning to look like McCain knows he will lose the election, and is simply helping his Republican enablers to loot the treasury so as to leave a smoking ruin for Obama. People being what they are, they will have no patience with Obama if he hasn't managed to get the country back on track in his first term (I know they gave Bush a four-year second chance to sort things out, but Bush is a Republican), and will start talking about how it's time for a change in Washington.

Realistically, Republicans don't want to be in power right now anyway - the country is bled of its wealth, and it will need at least one Democratic administration to build up America until it's worth stealing from again. Then you can look for a big Republican push to seize power.

Meanwhile, John McCain and Sarah Palin serve as an instructive exercise in how to lose, which would be the opposite of winning - and are a useful barometer for future voter's sensibilities, upon which Republicans will play like a harp. See, even when Republicans lose, they get something out of it.

allbetsareoff do you not know that IRA & 401K distributions are taxed as income, not capital gains? The middle class has very few capital gains!

Rinse. Wash. Repeat.

Hey everyone!

I've been away from the computer for 4 hours.
Anybody got a link to McCain's newest economy proposal?

McCain takes a Mulligan.

"And third, is it me or is the McCain campaign deliberately trying to reinforce the "erratic" meme the Obama campaign has been pushing? Since the financial crisis began in earnest, consider just how many responses McCain has offered the public: he was for and against the AIG bailout on successive days; he wanted to see Chris Cox fired; he wanted a commission to study what had gone wrong; he pretended to "suspend" his campaign; he said earmarks are the real problem; he unveiled a "Homeowner Resurgence Plan." "

You omitted McCain's first comment, that the economy was fundamentally sound. On that he was correct, and any plan will depend on the economy being fundamentally sound. But as with the others that you mentioned, he dropped it right away. I expect Obama to hammer McCain even more as the list of McCain's proposals lengthens, as I think it will. McCain has pretty much dug himself into a hole, and he keeps digging.

In this crisis, Obama's studiousness at Columbia and Harvard, and his highly praised teaching and work at his law firm look like highly desirable attributes for the next president. He can't deliver on his grand promises (5 million new jobs, tax cuts for 95% -- but McCain's grand promises are also unfulfillable), but he isn't
wobbling all over like an idiot.

If present trends continue (a favorite phrase of mine), MmcCain will continue to disintegrate and Obama will win a landslide.

Every 72 hours, McC trots out a new economic policy that bear little or no connection to his previously trotted-out economic policies.

Can you imagine him being this erratic on national security and foreign policy?

McC is finally ignorant and disdainful of economics. If not totally contemptuous.

He quit the Navy and ran for the US House about the time he married Cindy.

In other words, since 1958, when he graduated from Annapolis, he's never ever had to work for a living where his paycheck was uncertain. To the extent he's needed money for a big-dollar purchase, Cindy opened her checkbook and started writing.

McC's even worse than Bush when it comes to having the slightest clue what middle class Americans are experiencing right now.

So today he's introducing a new plan. I'll bet that by Wednesday it will be long forgotten in favor of the next new solution.

Let's just ask John McCain the average income of his version of the "middle class". Nope, we sure don't worry about capitol gains or dividend taxes - hasn't he heard what we really worry about? Home, job, food, etc.

Democrats need to be ready for a Gilmore (the old VA governor and soon not to be Senator) style hail-Mary - some massive and reckless proposal for tax cuts/ rebates. VA residents only got part of it in the end because it was so fiscally irresponsible. But it bought the election.

Free ponies for everyone!

McCain deserves a bit of slack on his economic ideas. He's not the only confused one out there.

Look at what's happening to my beloved Wealthcare.

Seems the bailout needs major tweaking and we are hearing ideas about, my god, partially nationalizing sectors of our financial industry.

The demoncrats are calling for a MASSIVE economic stimulus package.

So cut John some slack on this one Steve.

We are seeing why greed driven derivative-based non-regulated markets are unable to sustain perpetuawar.

To get our economy back on track we have to exit Iraq, flood into Afghanistan, take that country over, build the pipelines to heaven and minimize killing civilians. We can do it!

Actually maybe waging war sucks. Anyone for trying how to wage peace?

Stop being such a f88king war whore USA and try real peace for a change. I bet the economy would rock!

Peace is more than the absence of war.

It's bad enough that there's already a lower rate applied to capital gains (but I accept adjustment for change in "the value of money" i.e. inflation, which leaves short-term turnover taxation the same as for earned income, as it should be.) Same for capital gains. This is just the standard Republican pimping for the Wall Street crowd, especially egregious since only initial start-up capital capitalizes business.

If McCain were a real "maverick" he would buck his party's tropes and ask for the same rate on all kinds of income, even if at lower percentages than now.

Besides that, we don't want to encourage people to sell, which is how cutting capital gains taxes can have an effect (if they don't sell, they don't get the savings). We want to encourage people to hold their stocks, or even buy.

The Wall Street/Global Meltdown is the result of a giant Republican-created Ponzi Scheme...or maybe a Pyramid Scheme...gone very, very wrong...with the schemers responsible wanting a bail-out while leaving the "marks" to hold the bag.

The McCain campaign doesn't seem to understand that while a ten-point plan can be impressive and reassuring, a one-point plan ten days in a row is exactly the opposite.

Furthermore, putting out a new proposal before there's been any time for a reaction to your previous proposal makes it extremely obvious that their only purpose is political.

There is a fourth, as well. Since Lindsay Graham injected the same proposal on the morning talk shows, the campaign has backed off it, claiming, effectively, that it was never under consideration. Ouch! Kevin Drum, Oliver Willis, Mark Kleiman have all mentioned the development already.

How about a capital gains rebate on your seventh home?

Actually, the latest news this morning via Politico is that the impending new policy proposals ain't so pending any more:

"Presented with 30 options for new economic measures, Sen. John McCain (R-Ariz.) has – at least for now – chosen none of them.

His campaign had been planning to roll out new proposals this week that would be aimed at restoring confidence in financial markets and encouraging investors to return.

On Sunday, hours before attending a big strategy meeting at McCain campaign headquarters, Sen. Lindsey Graham (R-S.C.) told Bob Schieffer on CBS’ “Face the Nation� that McCain was planning “a very comprehensive approach to jump-start the economy, by allowing capital to be formed easier in America by lowering taxes."

But when the meeting ended, so did plans for a new economy push. The campaign now says no new policy announcements are planned. Participants in the meeting refused to say what happened.

“We’re locked down,� said one official."

Let me dumb it down for the McCain campaign and its supporters.

If you lower EVERYONE's taxes to zero, but you still don't earn enough to buy groceries, gas, and pay the electric bill, it doesn't really matter that you get these great tax cuts. The problem is wage stagnation and McCain hasn't even admitted this is a problem.

The service economy works for those that own infrastructure. I'm doing okay, myself, but I've no idea how everyone else is going to survive the 20% increases in groceries I've been seeing and I don't think we're finished.

Cut taxes to ZERO and people will STILL be struggling, John. Does that help you understand why all your plans SUCK? At some point, we need actual MONEY. Trickle down economies eventually stop because only so many people can drink from a trickle.