McCain on the Economic Challenges

John McCain gave a speech to the Economic Club of New York yesterday. According to the betting at Tradesports.com, McCain is the leading candidate to win the Republican nomination in 2008. (Full disclosure: I was among a handful of economists working for Senator McCain during the 2000 presidential primary, and I even rode the campaign bus with him for a couple days, but I have not talked with him since then.)

The whole speech is worth reading. Here are my two favorite passages:

A tsunami of entitlement spending is threatening our economy, while providing no real security to retirees. We have made promises that we cannot keep. Under moderately optimistic scenarios Social Security, Medicare and Medicaid will in the decades to come grow as large as the entire government is today. Someday the government will be forced to make drastic cuts in these programs, or crippling increases in taxes on workers – or both. The longer we wait to make the hard choices necessary to repair these programs, the harder the problem becomes. My children and their children will not receive the benefits we will enjoy. That is an inescapable fact, and any politician who tells you otherwise, Democrat or Republican, is lying....

A global rising tide of protectionism and a retreat from market-based economic policy is threatening the entrepreneurs of developed and developing countries alike. Free trade is the key to global economic growth, and a key to U.S. economic success. We need stand up for free trade with no ifs, ands or buts about it. We let trade and globalization be politicized at our own peril.

By my reckoning, any candidate who is not willing to put some version of these two paragraphs into his or her speeches doesn't pass the test of intellectual seriousness. McCain passes with flying colors.

What the speech does not do, however, is propose specific policies consistent with these admirable generalities. But maybe that is too much to hope for at the beginning of a presidential campaign.