The idea that deficits don’t matter (promulgated as a matter of politics by Dick Cheney) certainly has sunk in on the Republican side, with tax proposals pushed by John McCain likely to add trillions to our deficit over the next decade (if adopted). The current administration squandered the surplus left by the Clinton Administration, and has deficit spent us into a major problem. The New York Times has looked at the proposals of the three candidates for president remaining in terms of how they would impact the deficit. The result was not pretty.
With the national debt soaring to $9.1 trillion from $5.6 trillion at the start of 2001, in part because of the Iraq war and Mr. Bush’s tax cuts, a crucial question about the candidates to succeed him is “whether they are helping to fill the hole or make it deeper,” said Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan organization that advocates deficit reduction. “With the proposals they have on the table, it looks to me like all three would make it deeper.”
McCains tax plans appear to impact the deficit in the worst way.
Mr. McCain’s plan would appear to result in the biggest jump in the deficit, independent analyses based on Congressional Budget Office figures suggest. A calculation done by the nonpartisan Tax Policy Center in Washington found that his tax and budget plans, if enacted as proposed, would add at least $5.7 trillion to the national debt over the next decade.
Some of the McCain specifics:
The centerpiece of Mr. McCain’s economic plan is a series of tax cuts that would largely benefit corporations and the wealthy. He is calling for cutting corporate taxes by $100 billion a year. Eliminating the alternative minimum tax, which was created to apply to wealthy taxpayers but now also affects some in the middle class, would reduce revenues by $60 billion annually. He also would double the exemption that can be claimed for dependents, which would cost the government $65 billion.
The difference in approach on the Alternative Minimum Tax is stark. Democrats favor elimination as well, but feel that you must replace the revenue or cut spending by that amount. (Pay-Go). Republicans just favor continuation of the deficit explosion. And the words of the candidate himself seem to buttress that argument:
When Mr. McCain outlined his tax cut plan, he backed away from his pledge to balance the budget during his first term, but said that he would do so by the end of his second term. And in an interview last Sunday on “This Week With George Stephanopoulos” on ABC, Mr. McCain said he would push ahead with his tax cuts even if Congress did not approve his spending cuts.
And what of the Democrats:
Mrs. Clinton has calculated that her universal health care plan would cost about $110 billion a year, while Mr. Obama’s somewhat more modest proposal would cost up to $65 billion annually, his advisers say. Both candidates have also talked of new government incentives and investment to encourage the development of alternative sources of energy, which would cost about $15 billion a year.
The Democratic candidates have suggested that they could finance these and other programs by allowing parts of the Bush tax cuts to expire. That, however, ignores projections of the Congressional Budget Office, which has already assigned those savings to deficit reduction.
Democrats, looking to fund items that many feel have been underfunded for eight years, nonethless struggle with how to pay.
On the spending side, Mr. Obama has argued that ending the Iraq war is one way to pay for some of the new programs, including creating a national infrastructure investment bank and increasing the foreign aid budget. But such savings, which Mrs. Clinton does not count on, would not immediately make their way into the Treasury, and some experts say it is not clear whether they would be sufficient to finance all the programs Mr. Obama has enumerated.
With the collapse of the dollar, commodity prices surging, housing prices in full retreat, and the mortgage crisis leading us to the financial brink is it not time to say enough? If a program is worth having then it is worth paying for. If a war is worth fighting then it is worth paying for. There is no free lunch. Lets elect some adults who will not be afraid to make choices, and put our fiscal house back in order. Read the Times story at this link.
Bill Manzi.com 