The White House announced today that -- whoops! -- its economic brain trust had misunderestimated the federal deficit. In 2009, it's likely to soar, or skyrocket, or spiral -- pick your cliché here -- to $482 billion. That's a record, by the way, edging out 2004's imbalance of $413 billion. And, according to the USA Today, "The actual 2009 deficit could climb still higher because the new projection does not reflect full funding for the wars" in Iraq and Afghanistan. Curiously, White House Press Secretary Dana Perino declined to blame those wars for the ballooning deficit, even after a reporter gave her the chance. "We make no apologies for the money we have spent to protect the people of this country," she said. Instead, she implicitly blamed Congress, and the "bipartisan economic stimulus plan that was passed in February." (Note that sneaky passive voice.) "Both parties agree that even with a larger deficit that that plan was needed in order for it to have an impact to help pull us out of the downturn that we've been in."
No matter -- let's look forward, not backward. The revision "is likely to scramble the plans of the next president, regardless of which candidate prevails," writes the Washington Post's Jonathan Weisman. "Either Republican John McCain or Democrat Barack Obama will enter the White House in a tide of red ink."
Or not. Although both campaigns released official statements that condemned the Bush Administration's irresponsible budgeting, Weisman reports at the end of an early draft of his piece that "McCain economic advisers this morning shrugged off the new deficit figures." Specifically, Harvard's Martin Feldstein called the uptick cyclical, adding, "I don't think it has implications going forward."
In truth, neither Obama nor McCain have talked much about the deficit. Obama is proposing tax cuts for about individuals making under $200,000 or couples making less than $250,000, which works out to 87 percent of all households in 2012, according to an analysis by the Tax Policy Center. That will decrease revenues to the Treasury Department by $2.8 trillion over ten years, or $3.4 trillion when you include additional interest costs to finance the resulting debt. McCain would extend the Bush tax cuts for everybody, and would cost the Treasury $4.2 trillion, or $5 trillion with interest factored in.* But the thing is, that's only if you accept the McCain tax plan as his advisers describe it, which includes permanently fixing the Alternative Minimum Tax by indexing its exemption to inflation. McCain himself, by contrast, has repeatedly promised on the stump to repeal the AMT altogether. If he did that, then the Tax Policy Center figures the ten-year hit to revenues at $7 trillion. Seven trillion dollars.
Both campaigns, of course, criticize the Tax Policy Center for failing to consider how their candidate will force spending cuts. McCain in particular promises to stand tall against Congressional earmarks and entitlement programs, mocking Obama for proposing more government programs. But the candidates are dreaming if either thinks he could, as president, control spending. What president since Reagan has? (Oh, that's right: Clinton did.) Americans want the government to spend money on them. They like government programs when the programs benefit them. The Tax Policy Center knows this, that's why they've tried to align their projections with the assumptions that the Congressional Budget Office makes.
Frankly, it's unconscionable that our current president has led us into war without asking us to make sacrifices on the home front. And it's just as unconscionable for Barack Obama and John McCain to continue such irresponsibility. Really, most of us deserve tax increases. It's literally the least we could do.
*This is actually an upward revision from an analysis published in June. At the time, the Tax Policy Center concluded that McCain's tax cuts would cost the Treasury $3.6 trillion over a decade. The figure for Obama's plan hasn't changed.
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