McCain would hike drug costs for wealthy Americans

PITTSBURGH (Reuters) - U.S. Republican presidential candidate John McCain will outline economic proposals on Tuesday that would increase drug costs for wealthy seniors and freeze billions in government spending for a year.

McCain economic advisers told reporters in a conference call on Monday that the Arizona senator will make the proposals in a major economic speech in Pittsburgh that will emphasize a conservative point of view toward repairing the U.S. economy.

In Washington, McCain said he believes the economy is in a recession, and regardless of the technical term, many Americans are hurting.

McCain, accused by his Democratic rivals of lacking a strong understanding of the economy, will give what economic adviser Doug Holtz-Eakin called a "big and ambitious" speech that will touch on taxes, spending, trade, health care, education and energy issues.

Holtz-Eakin and another economic adviser, Carly Fiorina, former chief of Hewlett-Packard, said McCain will propose reducing spending in the federal government's Medicare prescription drug program.

He would require older couples making $160,000 to pay higher premiums for the benefit if they are enrolled in the program.

Many conservative Republicans have criticized the drug program, a product of the Bush administration, as too large a benefit and believe it should be scaled back.

Holtz-Eakin said the plan would save billions of dollars that could be returned to taxpayers or put to a better use.

McCain will also call for a one-year freeze in many areas of the federal government -- but not the U.S. military and veterans benefits and pension programs for the poor and elderly -- in order to conduct a review of every federal program, department and agency to determine if it is needed, Fiorina said.

This is part of McCain's effort to restrain government spending, a frequent topic for him on the campaign trail. He will repeat his vow that, if elected in November over either Democrat Barack Obama or Hillary Clinton, he would veto any legislation that includes what he considers wasteful spending projects.

McCain would require that the results of every review of the various parts of the federal government be posted on the Internet.

McCain will also charge his Democratic opponents with preparing to raise taxes on virtually all Americans with their ambitious spending proposals.

Fiorina said McCain will also lay out some ideas on helping wean America's dependence on foreign oil.

He will repeat a pledge from last week that if elected, he would order the federal government to stop putting oil into a depository known as the Strategic Petroleum Reserve because he believes purchasing the oil contributes to higher pump prices, Fiorina said.