McCain's budget figures don't add up
FICTION MAY require a willing suspension of disbelief, but presidential campaigns shouldn't.
Yet here's the fanciful proposition John McCain wants us to swallow: that he can extend the Bush tax cuts, pile other tax breaks and revenue reductions atop them - and still balance the federal budget in four years.
The deficit in the final budget of his first term would be around $440 billion if the Bush tax cuts are extended and the Alternative Minimum Tax is indexed for inflation, according to Congressional Budget Office figures. Add the extra $47 billion that the nonpartisan Tax Policy Center estimates as the net cost of McCain's various tax-cut plans, and the deficit would be about $490 billion for that fiscal year.
So how would McCain balance the budget? "The answer is, through courageous leadership," former
One nostrum McCain stresses is eliminating congressional earmarks. But that would only save about $18 billion a year. Other large - and nebulous - reductions would supposedly come from reduced deployments abroad, "slower discretionary spending in nondefense and Pentagon procurements," plus savings and "reductions in mandatory spending" on areas from agricultural and ethanol subsidies to healthcare costs to Medicaid, a McCain campaign document says.
Although Douglas Holtz-Eakin, a senior policy adviser, maintained during the same call that "the senator has laid out a very realistic plan," that's hardly the way fiscal experts see it.
"I don't think there is any there there," declares Bob Bixby, executive director of the nonpartisan Concord Coalition, who says that in his attempt to portray himself as both a tax cutter and a deficit hawk, the Republican candidate is using "very vague numbers."
"He certainly hasn't specified how he is going to get there, and his tax cuts are going to make it a lot harder," says Len Burman, director of the Tax Policy Center.
"It's preposterous," says Jim Horney, director of federal fiscal policy for the liberal Center on Budget and Policy Priorities. As a round-number illustration of the difficulty, Horney notes that $400 billion would be more than 80 percent of the amount projected for fiscal year 2013 domestic discretionary spending.
Unlike McCain, Barack Obama hasn't made an unrealistic commitment to balance the budget in four years. Rather, he's talked of whittling it down over the longer term.
But the Democratic candidate has offered a clearer - and politically braver - idea of how he'd pay for his tax cuts and spending increases and shore up other programs. For example, he'd roll back the Bush tax cuts for those earning more than $250,000 a year and increase rates on capital gains and dividends. He'd also extend Social Security taxes to incomes above $250,000 and reduce subsidies for some Medicare plans.
We still haven't seen a detailed analysis of the candidates' spending plans, but on the revenue side, Obama's total tax proposals would leave the federal government in better shape than would McCain's. If you assume that the Bush tax cuts would otherwise expire as scheduled, McCain's major tax plan proposals would cost the treasury $3.6 trillion over 10 years, compared to $2.7 trillion for Obama's, according to the Tax Policy Center. If you assume that the Bush tax cuts will be extended and the Alternative Minimum Tax patched, Obama's proposals would raise about $300 billion over 10 years, while McCain's would lose about $600 billion. (Those projections don't include the candidates' healthcare plans.)
"Obama has a very ambitious agenda, but he has identified some potential ways of paying for it," says Bixby. "Those may involve some heroic assumptions, but from what I can tell, the McCain pay-fors are all heroic assumptions."
So, though Obama is a long way from being a deficit hawk, he deserves credit for giving voters a reasonable idea of how he'd operate. McCain is asking them to buy a pig in a poke.
Scot Lehigh can be reached at email@example.com.