Undermining McCain Campaign Attack, Republicans Back Obama‘s Version of Meeting With Iraqi Leaders

Earlier this week, the campaign of Sen. John McCain, R-Ariz., seized upon a column in the New York Post that described Sen. Barack Obama, D-Ill., as having urged Iraqi leaders in a private meeting to delay coming to an agreement with the Bush administration on the status of U.S. troops.

"Obama has tried in private to persuade Iraqi leaders to delay an agreement on a drawdown of the American military presence," Post columnist Amir Taheri wrote, quoting Iraqi Foreign Minister Hoshyar Zebari, who told the Post that Obama, during his meeting with Iraqi leaders in July, "asked why we were not prepared to delay an agreement until after the U.S. elections and the formation of a new administration in Washington."

The charge -- that Obama asked the Iraqis to delay signing off on a "Status of Forces Agreement," thus delaying U.S. troop withdrawal and interfering in U.S. foreign policy -- has been picked up on the Internet, talk radio and by Republicans, including the McCain campaign, which seized on the story as possible evidence of duplicity.

The Obama campaign said that the Post report consisted of "outright distortions."

Lending significant credence to Obama's response is the fact that -- though it's absent from the Post story and other retellings -- in addition to Obama and Iraqi Prime Minister Nouri al-Maliki, this July meeting was also attended by Bush administration officials, such as U.S. Ambassador to Iraq Ryan Crocker and the Baghdad embassy's legislative affairs advisor Rich Haughton, as well as a Republican senator, Chuck Hagel of Nebraska.

Attendees of the meeting back Obama's account, including not just Sen. Jack Reed, D-R.I., but Hagel, and Senate Foreign Relations Committee staffers from both parties. Officials of the Bush administration who were briefed on the meeting by the U.S. embassy in Baghdad also support Obama's account and dispute the Post story and McCain attack.

The Post story is "absolutely not true," Hagel spokesman Mike Buttry told ABC News.

"Barack Obama has never urged a delay in negotiations," said Obama campaign national security spokesperson Wendy Morigi, "nor has he urged a delay in immediately beginning a responsible drawdown of our combat brigades."

Buttry said that Hagel agrees with Obama's account of the meeting: Obama began the meeting with al-Maliki by asserting that the United States speaks with one foreign policy voice, and that voice belongs to the Bush administration.

A Bush administration official with knowledge of the meeting says that, during the meeting, Obama stressed to al-Maliki that he would not interfere with President Bush's negotiations concerning the U.S. troop presence in Iraq, and that he supports the Bush administration's position on the need to negotiate, as soon as possible, the Status of Forces Agreement, which deals with, among other matters, U.S. troops having immunity from local prosecution.

Obama did assert at the meeting with the Iraqis that he agrees with those -– including Hagel and Sen. Richard Lugar, R-Ind., the ranking Republican on the Senate Foreign Relations Committee -- who advocate congressional review of the Strategic Framework Agreement being worked out between the Bush administration and the Iraqi government, including the Iraqi parliament.

The Strategic Framework Agreement is a document that generally describes what the relationship between the two countries should look like over time.

According to one person present at the meeting, Obama told al-Maliki that the American people wouldn't understand why the Iraqi parliament would get to have a say on the Strategic Framework Agreement, but the U.S. Congress would not, especially since Bush is only months from leaving the White House, regardless of whether Obama or McCain succeeds him.

Morigi said in a statement that "Barack Obama has consistently called for any Strategic Framework Agreement to be submitted to the U.S. Congress so that the American people have the same opportunity for review as the Iraqi parliament."

It’s possible, Obama advisers believe, that either Zebari or Taheri confused the Strategic Framework Agreement -- which Obama feels should be reviewed by Congress -- with the Status of Forces Agreement, which Obama says the Bush administration should negotiate with the Iraqis as soon as possible.

Two officials of the Bush administration say that if Obama had done what the Post story asserted –- which they believe to be untrue -– Crocker and embassy officials attending the meeting would have ensured that the Bush administration heard about it immediately. If such an incident occurred in front of officials of the Bush administration, it would have constituted a foreign policy breach and would have been front-page huge news; it would not have leaked out two months later in an op-ed column.

Nonetheless, based on nothing more than the Post report, McCain senior foreign policy adviser Randy Scheunemann issued a statement earlier this week, expressing outrage.

“It should be concerning to all that (Obama) reportedly urged that the democratically-elected Iraqi government listen to him rather than the U.S. administration in power,” Scheunemann said, apparently not having talked to anyone with knowledge about the meeting in the Bush administration, the U.S. embassy in Baghdad, Hagel, or any Republican staffers on the Senate Foreign Relations Committee.

“If news reports are accurate, this is an egregious act of political interference by a presidential candidate seeking political advantage overseas,” Scheunemann continued. “Sen. Obama needs to reveal what he said to Iraq's foreign minister during their closed door meeting. The charge that he sought to delay the withdrawal of Americans from Iraq raises serious questions about Sen. Obama's judgment, and it demands an explanation.”

What actually demands an explanation is why the McCain campaign was so willing to give credence to such a questionable story with such tremendous international implications without first talking to Republicans present at Obama’s meeting with al-Maliki, who back Obama’s version of the meeting and completely dismiss the Post column as untrue.

McCain Secretly Plans New Tax on Middle Class

John McCain should not be traveling in a bus called the Straight Talk Express. No, that equivocating multimillionaire who kowtows constantly to the wealthy should be riding in one of those private, gilded railroad cars.

That would be symbolically appropriate as well since he is trying to railroad the middle class on taxes.

He is actually proposing a brand new tax on the middle class.

This has gotten so little attention it is astounding. And frightening, frankly, as television reporters and commentators focus instead on inane incidents like the lipstick-on-pigs remark.

McCain intends to tax workers for the value of health insurance that they receive from their employers.

Really.

Although it’s not included in the description of his plan on his web site. It is, however, on the site of the Henry J. Kaiser Family Foundation, a non-profit organization that specializes in health policy.

I understand McCain neglecting to mention this new tax on the middle class. If I were proposing this shocking tax increase, one that will cost the average American worker an additional $110 a month in taxes out of the blue, I would conceal it as best I could too.

So let me provide you with some clarity. This comes from the Kaiser Foundation evaluation of the McCain and Barack Obama health plans. It says McCain would “reform the tax code to eliminate the exclusion of the value of health insurance plans offered by employers from workers’ taxable income.”

The value of the typical plan provided by an employer to a family is $12,106, of which the employer pays $8,824, and the worker pays the remaining $3,282. The median household income is $44,389, which places most American families in the 15 percent income tax bracket.

McCain wants to add the employer’s cost — an additional $8,824 — to that middle class family’s income, then tax it. The hit to the average family is 15 percent of the McCain-added income — $1,323 more in income taxes.

This new tax would affect the 158 million Americans who are insured through their employer.

Right now you should be yelling, “What?” And demanding to know why you haven’t heard about this before. That is because the media keeps focusing on McCain’s proposed health care tax credits — $5,000 for families and $2,500 for individuals.

McCain certainly wants the attention to stay on those credits. It sounds so much better to be giving families tax credits than tax increases. But what you need to know about those tax credits is that they don’t go to you – they’re to be sent to the insurance companies. You never get actual money in your pocket. McCain says it right on his web site: “the money would be sent directly to the insurance provider.”

So if you choose to remain with your employer-based insurance, there’s no guarantee that you’ll ever see any benefit from that $5,000 payment. In addition, giving young healthy workers $2,500 to buy insurance on their own, where it won’t be taxed, will encourage them to leave employer-based plans, quickly raising the costs for everyone remaining and thus eliminating benefits of the tax credits. Finally, the tax credits rise only at the rate of inflation, not the vastly faster rate of medical costs, so, again, their value will quickly erode, according to several studies, including one released last week by health economists from Columbia, Harvard, Purdue and Michigan and published in the journal “Health Affairs.”

Still, somehow, no one mentions the new tax part of McCain’s plan. Even the credits don’t sound so great after you hear the whole story.

John McCain wants to kill employer-provided health insurance. He wants every American to go out on his or her own and try to buy insurance. He says that on his site if you read between the doubletalk. He says, for example, “The key to health care reform is to restore control to the patients themselves.. . .Health care. . . should not be limited by where you work.”

Here’s the way the New York Times put it in an April 30 story, in which there was only straight talk: “Mr. McCain’s health care plan would shift the emphasis from insurance provided by employers to insurance bought by individuals.”

Since 2000, the percentage of employers offering health insurance has declined from 69 percent to 60 percent.

Many more companies would dump their plans as soon as the federal government offered tax credits to individuals who bought their own. Corporations would disingenuously justify this abandonment the same way McCain does — by saying workers would get the advantage of carrying their individual plans from job to job as they move around the country.

They won’t mention the cost, however. To buy plans comparable to what workers now receive from employers, families are going to have to shell out a lot more money from their own pockets.

The math is simple. To buy the $12,106 plan with the $5,000 family tax credit, a worker is going to have to cough up an additional $3,824. (That is the $8,824 the employer previously paid toward the plan minus the $5,000 credit.)
That is, assuming, of course, that you can get coverage. Insurance companies are notorious for rejecting anyone with pre-existing conditions, including acne, being overweight and diabetes.

John McCain himself would likely be unable to find an insurer on the private market since he’s had the most serious form of skin cancer, melanoma, more than once.
But he doesn’t have to worry because, as a U.S. senator, he’s covered by a government plan. And he’s certainly not proposing eliminating that!

McCain could resolve the exclusion problem by requiring insurance companies to accept people with pre-existing conditions. But he doesn’t. Instead, he suggests setting up a system in which states would become responsible making sure those people get insurance. He says he won’t shift the costs to the states, but what’s the chance of that? He’s establishing a pool of all of those rejected by insurance companies – thus those with the highest risk. And he’s telling the states to deal with the problem that creates.

Meanwhile, insurance companies would be left to profit big time by providing insurance for the young, the healthy and everyone who doesn’t have anything at all wrong with them. What a deal!

He claims this plan will increase competition and drive down prices – as if an individual worker, on his own, without any real knowledge of the system, has the negotiating power of a major corporation with full-time experts on its staff whose only function is to buy insurance for a pool of hundreds or thousands of workers.

While McCain is planning to increase your taxes if you’ve got insurance at work or to force you into the insurance market at a huge financial loss, he intends, at the same time, to cut taxes on corporations — you know, like those giant oil companies that just raked in the largest quarterly profits of any firm ever in the history of mankind. And he plans to permanently retain those income tax cuts his friend George W. Bush gave to the rich, because, of course, the wealthiest Americans, like McCain and Bush, need a break today.

In the meantime, McCain is traveling to states like Michigan, Ohio and Pennsylvania, hard hit by the economic devastation caused by eight years of Bush administration fiscal policy failures. At each stop, McCain is sucking up the middle class – as if his administration wouldn’t cost workers dearly.

He needs to stop lying to America’s workers.

In fact, maybe Mr. Straight-Talk-Express needs to slap on some lipstick. Because sometimes the truth is a bitch.

Time: New McCain Attack Ad Plays Race Card

When politicians interject race into a campaign, they seldom do it directly. Consider McCain's new ad, which the campaign says it will be airing nationally ...

This is hardly subtle: Sinister images of two black men, followed by one of a vulnerable-looking elderly white woman.

Let me stipulate: Obama's Fannie Mae connections are completely fair game. But this ad doesn't even mention a far more significant tie--that of Jim Johnson, the former Fannie Mae chairman who had to resign as head of Obama's vice presidential search team after it was revealed he got a sweetheart deal on a mortgage from Countrywide Financial. Instead, it relies on a fleeting and tenuous reference in a Washington Post Style section story to suggest that Obama's principal economic adviser is former Fannie Mae Chairman Frank Raines. Why? One reason might be that Johnson is white; Raines is black.

The AP digs into the thin claim that Raines is an Obama adviser:

Obama's campaign says Raines is not an Obama adviser and that McCain's campaign knows it because Raines said so in an e-mail earlier this week to Carly Fiorina, a top McCain adviser. Obama's campaign provided The Associated Press with a copy of the e-mail.

"Carly: Is this true?" Raines asks above a forwarded note informing him that Fiorina was on television saying he was an Obama housing adviser. "I am not an adviser to the Obama campaign. Frank."

Obama's campaign says Fiorina did not respond.

McCain spokesman Brian Rogers said he was not aware of the e-mail to Fiorina, but noted that the Post reported on three occasions, between July 16 and Aug. 28, that Raines was advising Obama.

"If he was not advising, obviously someone somewhere along the way should have corrected the record," Rogers said.

Obama spokesman Bill Burton said he has since asked the Post for a correction. Burton said Obama only met Raines once briefly at an event, and that Raines sought an introductory meeting with Obama Senate aide Mike Strautmanis. At that meeting, Burton said no advice was sought from or given by Raines, who also had served as President Clinton's budget director.

Watch the ad:

McCain Plays the Race Card

When politicians interject race into a campaign, they seldom do it directly. Consider McCain's new ad, which the campaign says it will be airing nationally:

This is hardly subtle: Sinister images of two black men, followed by one of a vulnerable-looking elderly white woman.

Let me stipulate: Obama's Fannie Mae connections are completely fair game. But this ad doesn't even mention a far more significant tie--that of Jim Johnson, the former Fannie Mae chairman who had to resign as head of Obama's vice presidential search team after it was revealed he got a sweetheart deal on a mortgage from Countrywide Financial. Instead, it relies on a fleeting and tenuous reference in a Washington Post Style section story to suggest that Obama's principal economic adviser is former Fannie Mae Chairman Frank Raines. Why? One reason might be that Johnson is white; Raines is black.

And the image of the victim doesn't seem accidental either, given the fact that older white women are a key swing constituency in this election.

After the McCain campaign introduced the ad, the Obama campaign responded with this statement:

Statement from Frank Raines on the ad: "I am not an advisor to Barack Obama, nor have I provided his campaign with advice on housing or economic matters."

"This is another flat-out lie from a dishonorable campaign that is increasingly incapable of telling the truth. Frank Raines has never advised Senator Obama about anything -- ever. And by the way, someone whose campaign manager and top advisor worked and lobbied for Fannie Mae and Freddie Mac shouldn't be throwing stones from his seven glass houses," said Obama-Biden campaign spokesman Bill Burton.

At Politico, Ben Smith reports:

McCain spokesman Brian Rogers notes that Obama didn't contradict the claim when it first appeared in the Post.

McCain Flub? Republican Says He'd Fire SEC Chair as President

ABC News' David Wright reports: At a joint rally in Cedar Rapids, Iowa, Thursday, Republican John McCain slammed the Security and Exchange Commission (SEC) for being "asleep," saying that if he were president, he would fire Chris Cox, the chairman of the SEC since 2005 and a former Republican congressman.

McCain said the SEC has allowed trading practices, such as short selling, to stay in place, that turned the "markets into a casino."

"The regulators were asleep, my friends," McCain said. "The chairman of the SEC serves at the appointment of the president, and in my view, has betrayed the public trust. If I were president today, I would fire him."

But while the president nominates and the Senate confirms the SEC chair, a commissioner of an independent regulatory commission cannot be removed by the president.

From time to time, presidents have attempted to remove commissioners who have proven "uncooperative." However, the courts have generally upheld the independence of commissioners. In 1935, President Franklin Delano Roosevelt fired a member of the Federal Trade Commission, and the Supreme Court ruled the president acted unconstitutionally.

Asked how McCain would fire Cox if the president does not have the formal power to fire the chairman of the Securities and Exchange Commission, the McCain campaign pointed to former SEC Chairman Harvey Pitt, who resigned in 2002 when it was made clear to him that he had lost the confidence of the Bush administration.

"Not only is there historical precedent for SEC chairs to be removed, the president of the United States always reserves the right to request the resignation of an appointee, and maintain the customary expectation that it will be delivered," said McCain spokesperson Tucker Bounds.

SEC Chair Chris Cox released a statement Thursday in which he disagreed with McCain that he should be fired, and defended the regulatory agency he heads.

“While I have great respect for Sen. McCain, we have sometimes disagreed, and this is one such occasion," Cox said in a statement. "The SEC has made plain that we have zero tolerance for naked short selling. In this market crisis, the men and women of the SEC have responded valiantly, as they always do –- with the utmost dedication and professionalism."

The White House said this week it wants to stay out of politics, but a Bush administration spokesperson said today of SEC Chairman Cox, who was nominated by President George W. Bush, "The chairman has the president's support."

Campaigning together in Iowa today, McCain and Gov. Sarah Palin accused the Obama campaign of taking political advantage of the recent economic crisis.

"My opponent sees an economic crisis as a political opportunity instead of an opportunity to lead," McCain said.

Palin said, of Obama, “He likes to point the finger of blame, but does he ever lift a finger to help?”

McCain accused Obama of taking more campaign contributions from Fannie Mae and Freddie Mac executives than anyone, aside from the chair of the congressional committee that regulates the lenders.

“While Sen. Obama was lining his pockets with campaign contributors, he didn’t lift a finger,” said McCain, who took credit for warning Congress of the impending crisis two years ago. McCain also noted that the former head of Obama’s vice presidential search committee, Jim Johnson, was formerly a Fannie Mae executive.

The Obama campaign says that, when talk show host Sean Hannity asked Palin last night whether there should be an investigation of campaign contributions by Fannie and Freddie executives, she deferred, saying, “that’s significant, but even more significant is the role that lobbyists play in this.”

Obama campaign staffers note that several of McCain’s top advisors –- including campaign manager Rick Davis, vice presidential vetter Arthur Culvahouse, and McCain consigliere Charlie Black -– lobbied on behalf of the mortgage giants.

Conservatives Scare More Easily Than Liberals, Say Scientists

Deep-seated political differences aren't simply moral and intellectual: They're also biological.

In reflex tests of 46 political partisans, psychologists found that conservatives were more likely than liberals to be shocked by sudden threats.

Accompanying the physiological differences were deep differences on hot-button political issues: military expansion, the Iraq war, gun control, capital punishment, the Patriot act, warrantless searches, foreign aid, abortion rights, gay marriage, premarital sex and pornography.

"People are experiencing the world, experiencing threat, differently," said University of Nebraska political scientist John Hibbing. "We have very different physiological orientations."

The study, published today in Science, has not yet been duplicated, but adds a potentially troubling piece to the puzzle of biology, behavior and politics.

Earlier studies have linked reflexive responses to threats -- which for testing purposes take the form of loud noises and graphic images -- with existing states of heightened anxiety.

Though the Science study's authors cautioned against an overly broad interpretation of their findings, the results suggest that fear leads to political conservatism.

"Threatening situations do indeed seem to increase people's affinity for politically conservative opinions, leaders, and parties," said New York University psychologist John Jost.

Study co-author Kevin Smith, also a University of Nebraska political scientist, demurred at making such a connection. "Historically speaking, politicians have appealed to the 'be afraid' response in the electorate in an attempt to mine votes," he said. "But in terms of going from campaigning to what we did in the laboratory, that's a large leap."

But even Smith agreed that "people with stronger responses are more sensitive to potential threats in their environment."

Asked whether the findings imply a fearmongering strategy for conservatives, New York University psychologist David Amodio responded, "Yes. And some people believe that they are actively using this strategy."

The Bush administration has been accused of exploiting fears, though it's hardly a new approach.

"The whole aim of practical politics," wrote journalist gadfly H.L. Mencken, "is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins."

Jost condemned such tactics. "From an ethical standpoint, conservative campaigns should not exploit feelings of fear in the general population," he said.

Of course, ethics tend to be forgotten during election seasons -- but fear-mongering may be counterproductive.

"From a practical standpoint, I think that there will eventually be a backlash against those tactics as it becomes more obvious how exploitative they are," said Jost.

Darren Schreiber, a University of California, San Diego political psychologist, contends that a candidate "who merely tries to trigger fear simply can't be successful in the long run. Joe McCarthy had his run, but now his name is synonymous with a vile form of politics."

Exploitation aside, there may be a gentler side to the findings.

"Instead of political opponents thinking their opposite party is simply being willfully bullheaded," said Hibbing, "you can say, 'Well, they see a little differently than I do.'"

McCain Camp Removed Bush Criticism From Wall Street Statement

In private late Tuesday evening, the McCain campaign circulated a draft statement on the Wall Street crisis that attacked the Bush administration for a slow and "inconsistent" response, and charged that executives at several financial firms had made "misleading and false" statements.

But the criticism never appeared. After being circulated not only among McCain aides but also major campaign donors who have worked in the investment industry, the language was softened.

The official McCain statement released Wednesday morning made no mention of the Bush administration, instead accusing management and speculators of "creat[ing] this mess."

The earlier draft, obtained by the Huffington Post, was circulated among top advisers such as Douglas Holtz-Eakin and Matt McDonald, as well as some major donors, including Greg Wendt of the Capital Group. It expressed "concern[s] that the Administration has been inconsistent with the way they have dealt with each crisis. Taxpayer money was used for Bear Stearns, it was not used for Lehman Brothers and now it is used again for AIG. The American people need to know the thinking and the standards behind using taxpayer's money to support these private sector institutions."

The draft added, "We also should know why the Administration did not deal with the problems at Fannie Mae and Freddie Mac sooner."

This proclamation was far more caustic to President Bush than the language McCain ultimately used. Indeed, in the official statement, McCain never mentioned concerns about the administration.

Criticism of Wall Street executives was also toned down. In the draft, McCain accused management at Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, and AIG of making "misleading and false" statements, and called for "an investigation into whether these senior managers were knowingly dishonest with the public when they knew their companies were in deep trouble."

McCain's final version simply stated, "Important questions remain to be answered by Wall Street. Did executives mislead investors and regulators about the severity of the problem?"

The toned-down comments are a reflection of the difficulties McCain has faced in navigating the current market failures. While Barack Obama has railed against President Bush for pursuing the lax economic oversight that led to risky investments and an unstable housing market, McCain has refrained from directly addressing his party head. It has left him at a disadvantage, unable to distance himself from the figurehead of the current crisis. On Thursday, McCain ratcheted up his rhetoric against the administration, calling for the firing of Christopher Cox, the Bush-appointed head of the Securities and Exchange Commission. As ABC News noted, McCain's statement made little sense as the President actually lacks the authority to fire an SEC commissioner.

While much of the rest of the draft and the private statements remain the same, there are some subtle differences. In the former, the Senator states that any federal intervention on AIG's behalf should "ONLY" be for the protection of "the people who hold insurance policies, retirement plans and other accounts with AIG and protect the financial system from collapsing." That line was ultimately softened to read that "the focus of any such action" should be to protect those groups and the financial system more broadly - an alteration that, it seems, was meant to give the campaign leeway to embrace federal action if need be.

HERE IS THE DRAFT STATEMENT AS OF LATE TUESDAY EVENING:

The government rescue of AIG is another unfortunate event following the bailout of Fannie Mae and Freddie Mac. It is another example of the reckless management of one of the most important companies in America. Given the serious financial conditions of the markets and at AIG, it was decided to extend a borrowing facility from the Treasury. This action should only protect the people who hold insurance policies, retirements plans and other accounts with AIG and protect the financial system from collapsing. Under no condition should incompetent management, the board of directors and shareholders benefit from this remedy.

Misrepresentation have been made in the recent past by senior management of these companies confirming the financial health of their companies. In cases like Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac and now AIG these statements proved to be misleading and false. It has been at the expense of taxpayers, good employees, and the savings and retirement accounts of hardworking people. I call for an investigation into whether these senior managers were knowingly dishonest with the public when they knew their companies were in deep trouble. If they misled the public there should be serious penalties.

I am also concerned that the Administration has been inconsistent with the way they have dealt with each crisis. Taxpayer money was used for Bear Stearns, it was not used for Lehman Brothers and now it is used again for AIG. The American people need to know the thinking and the standards behind using taxpayers money to support these private sector institutions. American workers see their businesses suffering and many are going out of business but there is no bailout for them. We also should know why the Administration did not deal with the problems at Fannie Mae and Freddie Mac sooner.

This crisis is pushing to a breaking point our financial markets, the economy and hardworking Americans. We need answers and I plan to get them. We need to change the way Washington and Wall Street do business and I plan to make them.

AND HERE IS THE OFFICIAL STATEMENT RELEASED WEDNESDAY MORNING:

"Today, the government was forced to commit $85 billion to stop the collapse of AIG, another in a growing series of events that includes Bear Stearns, Lehman Brothers, Fannie Mae and Freddie Mac. These actions stem from failed regulation, reckless management, and a casino culture on Wall Street that has crippled one of the most important companies in America. The focus of any such action should be to protect the millions of Americans who hold insurance policies, retirement plans and other accounts with AIG. We must not bailout the management and speculators who created this mess. They had months of warnings following the Bear Stearns debacle, and they failed to act.

"We should never again allow the United States to be in this position. We need strong and effective regulation, a return to job-creating growth and a restoration of ethics and the social contract between businesses and America. Important questions remain to be answered by Wall Street. Did executives mislead investors and regulators about the severity of the problem? We must investigate whether or not there was misrepresentation on part of the company executives. If there was, there must be penalties. We need to change the way Washington and Wall Street does business, and as President I will."

McCain ad misrepresents Obama's tax plan. Again.

The McCain-Palin campaign has released a new ad that once again distorts Obama's tax plans.

• The ad claims Obama will raise taxes on electricity. He hasn't proposed any such tax. Obama does support a cap-and-trade policy that would raise the costs of electricity, but so does McCain.

• It falsely claims he would tax home heating oil. Actually, Obama proposed a rebate of up to $1,000 per family to defray increased heating oil costs, funded by what he calls a windfall profits tax on oil companies.
  

• The ad claims that Obama will tax "life savings." In fact, he would increase capital gains and dividends taxes only for couples earning more than $250,000 per year, or singles making $200,000. For the rest, taxes on investments would remain unchanged.
  

The McCain campaign argues in its documentation for this ad that, whatever Obama says he would do, he will eventually be forced to break his promise and raise taxes more broadly to pay for his promised spending programs. That's an opinion they are certainly entitled to express, and to argue for. But their ad doesn't do that. Instead, it simply presents the McCain camp's opinion as a fact, and it fails to alert viewers that its claims are based on what the campaign thinks might happen in the future.

Analysis

In what has become an ongoing theme, the McCain-Palin campaign has released yet another ad that makes false claims about Barack Obama's tax plan. The ad, which was released on Sept. 18 and which the campaign says will air nationally, claims that Obama will raise income taxes and will tax "life savings, electricity and home heating oil." As we keep saying, Obama says he'll raise income taxes and capital gains taxes only for couples earning more than $250,000 per year or singles making over $200,000. He has proposed no plans to raise taxes on either home heating oil or electricity.

Electric Charges
The ad opens with standard-issue Republican warnings of the economic dangers of big government before proclaiming that Obama and his liberal allies want to bring back "a massive government" complete with billions in spending increases and waste. We are then told that Obama would raise income taxes and would increase taxes on "life savings, electricity and home heating oil."

This isn't the first time the McCain-Palin campaign has claimed that Obama would raise taxes on electricity. The claim is just as false now as it was when it first came up. The campaign bases its charge on a single comment Obama made in an interview with a San Antonio columnist. Obama did in fact say, "What we ought to tax is dirty energy, like coal and, to a lesser extent, natural gas." But, as we said then, the comment is grossly out of context. Obama's remark comes after he was asked whether we ought to tax renewable energy sources. This was not a general call for increasing taxes on coal or natural gas, and Obama certainly does not have any such proposal as part of his public platform.

One could argue that Obama's proposed cap-and-trade program constitutes an indirect tax on electricity. But McCain proposes cap-and-trade, too, and we haven't heard McCain say that he wants to tax your electric bill. These programs are designed to reduce carbon emissions by requiring companies to pay for pollution credits. Since most electricity in the U.S. is generated via coal and natural-gas plants, both carbon-emitting fossil fuels, a cap-and-trade program will result in higher electricity costs.

Overheated Claims

Contrary to the ad's claim, Obama has not proposed raising taxes on home heating oil. In fact, just the opposite. Obama is proposing rebate checks of up to $500 per individual or $1,000 per family for what he calls an "emergency energy rebate." Obama says the rebate would be large enough that a typical family in a northern state could offset the full increase in home heating costs that have resulted from rising oil prices. Obama plans to fund the rebate through a five-year windfall profits tax on oil companies.

The McCain-Palin campaign counters that a windfall profits tax on oil companies will raise the cost of heating oil. The campaign points to a Washington Post editorial which charges that the cost of the five-year tax:

Washington Post (Aug. 6): would be passed along in forgone investment in new production, lower dividends for pension funds and other shareholders, and higher prices at the pump – thus socking it to the consumers whom the plan is supposed to help.

This is a fairly standard view in economics. Corporations don't really pay taxes. Any taxes levied on a corporation are passed along to one of three places: shareholders, in the form of smaller dividends on their investments; employees, in the form of lower wages; and consumers, in the form of higher prices. The McCain-Palin campaign's argument is that increasing taxes on oil companies amounts to increasing the price of heating oil and that that increase really is just a tax being levied on home heating oil. But the tax could also fall mainly on the stockholders of the oil companies, in the form of reduced after-tax profits, dividends and stock prices. That is actually how both the Congressional Budget Office and the independent, nonpartisan Urban-Brookings Tax Policy Center allocate the benefits of tax changes on corporations.

We'll leave it to you to decide whether or not a windfall profits tax on oil companies makes economic sense. But it is misleading to describe Obama's view as a tax on home heating oil when Obama is actually proposing a rebate for home heating costs and a tax increase for oil companies.

Life Savings

The ad's claim that Obama will raise taxes on your "life savings" is only true if you're an individual making more than $200,000 (or a couple earning more than $250,000) and paying capital gains and dividend taxes. (We've said this many times now.) The "ad facts" that the McCain campaign released to reporters state very prominently that "Barack Obama would raise capital gains and dividend taxes" and that 26.7 million Americans received capital gains income while 31.5 million received dividend income. That's all true. But the very article that the campaign cites to support its claim also says quite clearly that Obama will raise capital gains and dividend taxes only on couples making more than $250,000 per year. We'd also note that more than 80 percent of all capital gains income in 2006 went to those earning more than $200,000 a year. See our Ask FactCheck on the subject for more.

McCain's Magic 8 Ball

The ad says sweepingly that "we would pay" the increased taxes, even though what Obama has proposed would produce tax cuts, not tax increases, for about 80 percent of all workers and families and about 95 percent of those with children, according to independent analysis by the Tax Policy Center. To justify its claim that "we" would pay, the McCain campaign is making a new argument. In an "ad facts" document, it cites two opinion columns which argue that Obama's new spending proposals would require him to break his pledge, and to raise taxes on couples making less than $250,000 per year. That's a prediction, which the McCain campaign states as fact in its ad. Viewers are given no indication that the ad is based on opinion about what could happen in the future.

It's certainly true that Obama's proposed spending is higher than his projected revenues, and Obama has made no secret of the fact that his plan will not result in balanced budgets for the next four years. According to the Tax Policy Center, without spending cuts elsewhere, Obama's proposals could lead to between $3.6 trillion and $5.9 trillion in new debt over 10 years. The McCain-Palin campaign is certainly entitled to argue that that level of debt is unsustainable and that Obama would therefore have to raise taxes.

That, however, is a dangerous argument. The same Tax Policy Center analysis shows that McCain's proposals would raise the debt by between $5.1 trillion and $7.4 trillion over 10 years. And while McCain has promised to balance the budget by 2013, the Tax Policy Center notes that doing so would require a 25 percent reduction in federal spending. Few economists outside the McCain-Palin campaign think that is a feasible goal. So, by the ad's logic, Obama could just as easily claim that McCain supports a massive tax increase. But if he did he would have no more justification than McCain does for this ad.

In fact, it's impossible to know for certain what either candidate will actually do if elected. Both sides are free to speculate. But unless they possess really good Magic 8 Balls, they are not free to present those speculations as settled facts.