Born-Again Supply-Sider?

Sen. John McCain, who echoed Teddy Kennedy on taxes when he ran for president in 2000, now sounds more like Jack Kemp as a 2008 candidate. “I’ve never voted for a tax increase in 24 years,” he told me last week. “Never, ever, not under any president including President Reagan, and I will never vote for a tax increase, nor support a tax increase.”

He wants to make permanent the Bush tax cuts. (“If I didn’t vote to make those tax cuts permanent, it would have the effect of a tax increase.”) He supports radically scaling down the estate tax and does not now favor upper income increases in the Social Security tax. McCain gets tax policy advice from conservatives, including supply-side founding father Arthur Laffer. “I may have changed some of my views,” the senator said in an interview. “You learn over 24 years.”

Thus, McCain passes the tax litmus test for Republicans, as he did not in 2000. That may be why McCain has lost liberal journalists and other non-Republicans who were entranced by his campaign against George W. Bush. McCain pained these former admirers by making peace with Jerry Falwell and advocating more troops in Iraq, but it is his current position on taxes that most aggravates them.

In an Iowa presidential debate Jan. 15, 2000, he confronted Gov. Bush: “Your tax plan has 36 percent of it going to the richest 1 percent in America. . . . I think that we ought to give the tax relief to the people who need it most.” In 2001, he broke party ranks to oppose President Bush’s tax cut. Interviewed by Stephen Moore of The Wall Street Journal in November 2005, he preached class warfare in defending that vote: “I just thought [Bush’s tax cut] was too tilted to the wealthy, and I still do. . . . We have a wealth gap in this country, and that worries me.”

In contrast, McCain last week told me he voted against the Bush tax cut “because of my concerns with no commensurate restraint in spending.” He said, “We are all happy with results of the tax cuts as far as revenues are concerned, and they have been justified,” adding, “I am glad the tax cuts had the effect they did.” So did McCain regret voting no? “I can’t tell you that I cast exactly right votes over the years.”

McCain sounded most like Kemp when he told me: “I want everyone to be rich. I worry about inequities. I think that corporate greed is hurting their image. But trying to enact some kind of legislation that would take money from the rich and give it to the poor, that’s just out of the question.”

He has not yet joined his confidant, Sen. Lindsay Graham, in wanting to raise the cap on taxable income — taxing the rich — as part of general Social Security reform: “I have not taken any position that would either increase taxes or raise the cap.”

McCain’s economic policy chairman is Douglas J. Holtz-Eakin, former head of the Congressional Budget Office. The senator has reached out to California financier Gerald Parsky, a former assistant Treasury secretary described by McCain as “very important to me.” That was also how he labelled supply-side pioneer Laffer, who has been counseling him the past year. McCain’s longtime political ally, former Sen. Phil Gramm, advises him frequently. While McCain conceded disagreement among them, “the people that advise me, I guarantee, are very conservative economists.”

It is difficult to measure how much transformation of McCain from taxer to tax-cutter has contributed to his fading popularity among Washington’s media elite, but the romance is gone. The change, however, has not boosted McCain’s stock in Congress, particularly the House. Conservatives justifiably complain about his positions on global warming and campaign finance.

But McCain was fighting congressional earmarks before it was popular, and that has antagonized Republicans in Congress. So do comments like the ones he made to me that Republicans “have spent more and increased the size of government more than at any time since the Great Society.” Passing the litmus test on taxes will not make McCain popular with the House GOP elite.