The McCain-tax activist smackdown, cont.

In an escalating war of words, fiscal conservatives call on John McCain to renounce his past opposition to the Bush tax cuts.

Published March 21, 2007 4:55PM (EDT)

The war of words between John McCain and Republican anti-tax activists heated up further today. The Club for Growth, a political action committee that opposes Republicans who are not sufficiently conservative on fiscal issues, put out a press release demanding that McCain "renounce" the "class-warfare rhetoric" he used in 2001 and 2003, when McCain opposed President Bush's tax cuts.

At the time, McCain said the tax cuts disproportionately favored the richest Americans. Now, McCain supports making those tax cuts permanent, and points to them as some of the best policy initiatives of the Bush administration.

Last week in Iowa, I asked McCain how he reconciles those two positions. The full exchange follows:

Salon: Can you explain how you get from not supporting the president's tax cuts in 2001 to wanting to extend them now?

McCain: It's very simple. First of all I had a tax proposal of my own in 2000, which was tax cuts, but it also had restraint on spending, and it also put money aside for the Social Security trust fund. They were significant tax cuts. If we'd enacted them, we'd be talking about more tax cuts now because it would have forced a restraint on spending. And at the time that they were not made permanent, I said this is going to force us -- because of budget gimmickry -- this is going to force us to make them permanent. Because none of us are going to favor tax increases. So that's exactly where we are. If you don't vote to make them permanent, then it will have the overall effect of a tax increase. I mean, you don't have any choice. If you had restrained spending, it would have been fine, because the revenues associated with the tax cuts have been phenomenal. It's just spending went out of control.

Salon: But a lot of that [spending] was the war and the war on terror?

McCain: Mmmm. Very small. Very small amount, if you look at the overall budget. Most of it is just overall spending. The biggest increase in the size of government since the Great Society.

Budgetary numbers can be cut a thousand different ways. And there is a tangled debate, pushed by conservatives, about how much tax cuts grow the economy and therefore offset any revenue losses. But there is no denying that the Bush tax cuts have been the biggest single factor in taking the nation's bank account from surplus to deficit.

According to the Congressional Budget Office, the tax cuts account for 51 percent of the $2.3 trillion in lost revenue between 2001 and 2006 due to legislative changes. Another 33 percent came from increased defense, international aid and homeland security spending. The smallest portion -- 16 percent -- came from increased entitlement and discretionary spending, including funds to pay for Hurricane Katrina relief.

By Michael Scherer

Michael Scherer is Salon's Washington correspondent. Read his other articles here.

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