Also see:
AOL/Microsoft-Hotmail Preventing Delivery of Truthout Communications •
Go to Original
McCain Budget Numbers Don't Add Up, Experts Say
By Andy Sullivan
Reuters
Monday 10 March 2008
Washington - John McCain's reputation for "straight talk" has helped
him clinch the U.S. Republican presidential nomination but budget experts say
his numbers do not add up.
McCain's promises to reduce wasteful spending if elected president in November
would not begin to cover the costs of his proposed tax cuts, analysts say.
He also has not yet explained how he would rein in the health-care and retirement
costs expected to swamp the federal budget as some 77 million people retire
from the U.S. work force in the coming decades.
On top of that, a President McCain would inherit a $400 billion budget deficit,
wars in Iraq and Afghanistan that cost nearly $200 billion per year and a similar
bill for interest payments on the $10 trillion national debt.
Many experts said McCain's proposals would make the fiscal picture worse.
"This is one of the most fiscally irresponsible plans we've seen by a
presidential candidate in a long time," said Robert Greenstein, executive
director of the liberal Center on Budget and Policy Priorities.
Vague, expensive promises are not unusual on the campaign trail and the proposals
put forward by Democratic candidates Barack Obama and Hillary Clinton also would
likely lead to increased deficits, analysts said.
"I don't think anybody's numbers add up when they run for president,"
said Jared Bernstein of the liberal Economic Policy Institute. "I do fear
that (McCain's) don't add up the most."
As an Arizona senator, McCain has fiercely criticized the congressional pet
projects known as "earmarks," which have figured in several recent
corruption scandals.
On the campaign trail, he often says he would veto any bills that contain earmarks.
But the $18 billion spent on earmarks last year accounted for less than 1 percent
of the federal budget, according to the watchdog group Taxpayers for Common
Sense. McCain advisors say the actual figure is closer to $60 billion when spending
for projects passed in earlier years is included.
Cost of Wars
Still, McCain would have a tough time cutting all of that spending because
much of it would come out of the Pentagon's budget as the United States fights
in Iraq and Afghanistan, said Joshua Gordon, senior policy analyst at the Concord
Coalition, a centrist budget watchdog group.
McCain's spending cuts would be outweighed by his proposed tax cuts, experts
say.
He angered conservatives when he opposed President George. W. Bush's income-tax
cuts in 2001 and 2003 on the grounds that they favored the wealthy and were
fiscally irresponsible. He now supports making them permanent, echoing Bush
in saying that allowing them to expire would amount to a tax increase.
McCain also wants to slash corporate tax rates from 35 percent to 25 percent
and allow businesses to immediately write off capital expenses. He has called
for reforming the Alternative Minimum Tax, initially targeted at the wealthy
but now snaring many middle-class taxpayers.
These tax cuts would shrink annual federal revenues from $4.55 trillion today
to $3.4 trillion in 2018, according to Len Burman of the Brookings Institution's
Tax Policy Center.
Federal revenues would account for 15.3 percent of U.S. gross domestic product,
the lowest level since 1950.
"There's almost no conceivable way he'll be able to cut spending"
to those levels, Gordon said.
The impact of such tax cuts could be offset somewhat if they lead to increased
growth, said Brian Riedl, the conservative Heritage Foundation's lead budget
analyst.
McCain's top economic adviser, Douglas Holtz-Eakin, says simplifying the tax
code would close many loopholes. Cleaning up military procurement also would
generate savings, he said.
Yet any changes in spending and taxes will be dwarfed by the ballooning costs
of the Social Security retirement and Medicare health-care entitlement programs,
Riedl said.
"McCain's record on spending will be basically defined by whether or not
he addresses Social Security, Medicare and Medicaid," Riedl said.
McCain has said little about how he would rein in these programs and Holtz-Eakin
said any changes would have to be worked out in a bipartisan manner with Congress.
Although some of McCain's core proposals are not cure-alls, he said, ridding
the budget of waste would give McCain the "moral authority" to tackle
bigger but more sensitive problems like health and retirement spending, as well
as Pentagon contracting.
--------
Additional reporting by Caren Bohan.
-------
Jump to today's Truthout Features:
(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. t r u t h o u t has no affiliation whatsoever with the originator of this article nor is t r u t h o u t endorsed or sponsored by the originator.)
"Go to Original" links are provided as a convenience to our readers and allow for verification of authenticity. However, as originating pages are often updated by their originating host sites, the versions posted on TO may not match the versions our readers view when clicking the "Go to Original" links.
Print This Story
E-mail This Story