October 29, 2008
Column # 1,418
Neither Candidate Fiscally Responsible
by Mike McManus

My grandchildren are visiting this week. On Halloween, we will trick or treat with all six
of them.

As I think about their future, however, I am depressed as I compare the political proposals of both Barack Obama and John McCain. Each of them have outlined massive spending increases and tax cuts when the federal deficit is huge and growing. The deficit for Fiscal 2008, which ended Sept. 30 was a staggering $455 billion.  Experts believe it will hit $1 trillion this year, as a result of declining tax revenues and increasing social costs.

Yet both candidates say they do not have to trim back any of their vast pre-crisis proposals, although America's fiscal crisis has become grave in the past month.

Indeed, both calling for a "fiscal stimulus" that could add $150 billion to $300 billion more to the deficit.

Why?  Politicians can ignore my grandchildren who are not old enough to vote.  Yet who will have to pick up the tab for whatever this generation spends plus interest?

Let's recall a little history. To his credit, Clinton had a  $236 billion budget surplus in his last year in office. The total Federal debt was $5.6 trillion. 

Bush proposed a tax cut projected to cost $1.3 trillion over a decade, but also said, "My tax cut plan for America is responsible because it sets priorities...My plan balances the budget."

In fact, the national debt has doubled just during his years to more than $10 trillion.

That's a reason for healthy skepticism about McCain and Obama.

McCain has proposed bigger tax cuts than Obama.  He also promised spending cuts, but is not specific about where most would come from.  Yet he says he would balance the budget by the end of his first term.  According to the Tax Policy Center, McCain's tax cuts would cost $1.5 trillion in lower revenue over his first term, and $4.2 trillion over a decade. 

More than one-third of that would pay for extending the Bush tax cuts of 2001 and 2003  beyond their expiration in 2010. He would also change the alternative minimum tax so it would impact fewer middle income taxpayers and cut corporate taxes.

Finally, McCain proposes a $5,000 tax credit per family to buy health insurance, although it would be partly paid for by taxing worker-provided health care benefits. The net cost: $800 billion through 2013.

McCain's spending proposals are more modest than Obama's.  He proposes increasing the size of the military plus energy incentives, income supplements to older, low-income workers and more money for the No Child Left Behind program now costing $26 billion.

He says reductions in the forces in Iraq will save billions, though neither he nor Obama count the cost of sending more troops to Afghanistan. He says he'll cut corporate welfare, ending earmark spending and freeze domestic appropriations except for Defense, Medicare Social Security and veterans.

Obama would also extend the Bush tax cut for those earning less than $250,000 a year, but would repeal tax cuts about that level immediately.  He proposes tax cuts for low income workers and small businesses, and a cut on the alternative minimum tax, except for the rich. Obama claims that his tax increases on the rich would pay for his health care plan that costs $115 billion the first year.

Even though Obama would raise some taxes, his tax cuts would cost $1 trillion over his first term and $2.9 trillion over a decade.

Obama's health plan would extend health care coverage to half of the 45 million uninsured Americans by requiring all parents to get coverage for their children, and would expand public programs such as Medicaid to help pay for it. He would require bigger corporations to offer health insurance to workers or pay into a fund that would subsidize coverage to others, such as those in small businesses.

The federal cost of Obama's health plan is $1.6 trillion over 10 years according to the Tax Policy Center vs. $1.3 trillion for McCain's.

Yet none of these proposals deal with the huge increased costs of Social Security and Medicare due to the retirement of the baby boom generation, which gets underway after 2010. The respected Concord Coalition estimates that unfunded liability at $50 TRILLION.

It is time for Obama and McCain to learn from America's fiscal crisis.  Both individuals and the financial sector spent too much and saved too little. 

Our candidates for President should be setting examples of fiscal probity.  Instead both offer proposals that lack any monetary credibility.

Speaking for my grandchildren, I vote against both Obama and McCain on fiscal issues.