In much the same way that night follows day, a desperate John McCain predictably played the "socialist" card against Barack Obama. Ratcheting up his recent scurrilous attacks that Obama's tax cuts for working Americans constitute "welfare," McCain in his Saturday radio address followed running mate Sarah Palin and Ohio Senator George Voinovich in branding Obama a socialist. Sadly for McCain, his thundering diatribe against refundable tax credits makes him a sworn enemy of his hero Ronald Reagan and, as it turns out, himself.
Again ignoring the inconvenient truth that virtually all American workers pay Social Security and Medicare payroll taxes, McCain went on the warpath against Obama's plan that would offer tax relief to 95% of taxpayers:

"You might ask: How do you cut income taxes for 95 percent of Americans, when more than 40 percent pay no income taxes right now? How do you reduce the number zero?
Well, that's the key to Barack Obama's whole plan: Since you can't reduce taxes on those who pay zero, the government will write them all checks called a tax credit. And the Treasury will cover those checks by taxing other people, including a lot of folks just like Joe.
In other words, Barack Obama's tax plan would convert the IRS into a giant welfare agency, redistributing massive amounts of wealth at the direction of politicians in Washington. I suppose when you've voted against lowering taxes 94 times, as Senator Obama has done, a new definition of the term "tax credit" comes in handy.
At least in Europe, the Socialist leaders who so admire my opponent are upfront about their objectives."

Unfortunately for McCain, there are a least three fatal flaws in his red-baiting scheme.

First, as I detailed yesterday, McCain is willfully ignoring the fact that essentially all Americans pay Social Security and Medicare payroll taxes starting with very first dollar they earn. Importantly, as the nonpartisan Tax Policy Center concluded in a 2003 analysis, "three quarters of filers pay more in payroll taxes than in income taxes." As Robert Gordon and James Kvaal noted at the New Republic:

"It is true that Obama has proposed several tax credits that include families who earn too little to owe income taxes, a group that include about half of families with children. But many of these families work and pay thousands of dollars in other taxes. For example, a family of four must earn about $25,000 before owing income taxes--but they must pay payroll taxes on the first dollar they earn. Indeed, Obama's biggest refundable credit is designed to cushion the blow of payroll taxes."

It is with good reason that Salon deemed the shared critique of John McCain and his allies at the Wall Street Journal, "economic illiteracy."
Which brings us to the second part of McCain's fraudulent charge. That millions of hard working American families pay no income taxes is due in large measure to the Earned Income Tax Credit. Created in 1975, the EITC "a refundable federal income tax credit for low-income working individuals and families" that results in a tax refund to those who claim and qualify for the credit when the EITC exceeds the amount of taxes owed. As the Center for Budget and Policy Priorities detailed in 2005, the EITC has not only been extremely successful in reducing poverty, it has enjoyed broad bipartisan support:

The Earned Income Tax Credit has been found to produce substantial increases in employment and reductions in welfare receipt among single parents, as well as large decreases in poverty. Research indicates that families use the EITC to pay for necessities, repair homes and vehicles that are needed to commute to work, and in some cases, to help boost their employability and earning power by obtaining additional education or training.
The EITC has enjoyed substantial bipartisan support. President Reagan, President George H. W. Bush, and President Clinton all praised it and proposed expansions in it, and economists across the political spectrum - including conservative economists Gary Becker (a Nobel laureate) and Robert Barro, among others - have lauded it.

While John McCain is apparently content to side with the likes of Newt Gingrich and Phil Gramm in terming EITC recipients "lucky duckies," the self-proclaimed "footsoldier in the Reagan revolution" sadly finds himself fighting the Gipper himself.
While many of his conservative allies expressed disdain for the working poor, Ronald Reagan championed the refundable Earned Income Tax Credit. As the American Prospect recalled in 2006:

Almost 20 years ago, as he signed into law the tax bill expanding the Earned Income Tax Credit, President Ronald Reagan hailed it as "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress."

It's no wonder John McCain in 1999 called the EITC a "much-needed tax credit for working Americans."
The third and final nail in John McCain's socialism argument comes from McCain himself. The centerpiece, after all, of McCain's calamitous health care plan is a $5,000 tax credit to all Americans whether they pay income taxes or not. But staunchly Republican business groups such as the U.S. Chamber of Commerce, the Business Roundtable and the National Federation of Independent Business fret about McCain's tax credit scheme not because they see it as the red menace of socialism, but as disaster that will drive millions of Americans into the ranks of the uninsured.
Of course, Barack Obama's tax proposals do not represent socialism, but instead a continuation of innovative, bipartisan approaches to encourage those President Bill Clinton deemed "the hard-working people who play by the rules." But with the odds of his election growing longer, John McCain has instead decided to it is better to call Obama red than see his own presidential hopes dead.