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Title: Costly campaign vows face reality check
Source:
AP
URL Source: http://news.yahoo.com/s/ap/20080224 ... _el_pr/campaign_budget_reality
Published: Feb 24, 2008
Author: ANDREW TAYLOR
Post Date: 2008-02-24 15:37:53 by richard9151
Keywords: None
Views: 90
Comments: 2
2 hours, 24 minutes ago WASHINGTON - Barack Obama promises $4,000 credits to help pay college tuition. Hillary Rodham Clinton backs $25 billion for home heating subsidies. And John McCain wants to not only extend President Bush's tax cuts, but eliminate the alternative minimum tax at a cost of about $2 trillion over 10 years. Then there's reality. These campaign pledges — and dozens more in the manifestos of the leading presidential candidates — face a collision with the real world come January. That's when the new president will start putting together a real budget and economic plan, one drafted against the backdrop of record federal deficits exceeding $400 billion. Even more challenging is the growth of the Medicare and Social Security retirement programs, which budget experts say could require wrenching benefit cuts, politically difficult tax hikes or both to handle the retirement of the baby boom generation. In that environment, promises to effectively rebate the first $500 of Social Security payroll taxes (Obama), provide $1,000 tax credits for retirement savings (Clinton) or cut the corporate income tax by 10 percentage points (McCain) may turn out to be campaign fantasies. "They're operating in Never Never Land.... None of them are honestly addressing the real challenges that they're going to be facing if they're elected," said Leon Panetta, former budget director and chief of staff for President Clinton. "We're facing a deficit bubble that is getting increasingly worse and at some point is going to explode on us." Democrats Obama and Clinton face a situation eerily familiar to 1992, when Bill Clinton ran a campaign promising middle-class tax cuts and universal health care. Instead, worsening deficit predictions led him to push through Congress a tax-heavy deficit reduction plan that helped Republicans take over Congress in 1994. For Republican McCain, the parallel is to the one-term presidency of George H.W. Bush, who inherited a budget crisis — and a Congress controlled by Democrats — that ultimately led him to break his "read my lips" pledge not to raise taxes. For now, however, the campaigns are sticking with policy papers that don't add up but cater to political constituencies. Obama's "Keeping America's Promise" manifesto is full of costly prescriptions for the economy. Obama proposes tax cuts for senior citizens and college students, and $500 for every wage-earner, totaling $80 billion-$85 billion a year. He says he would pay for the tax cuts by closing loopholes and closing offshore tax havens, but those steps would fall far short of fully offsetting their costs. Both Obama and Clinton would keep in place many of the Bush tax cuts, including rate cuts for most taxpayers and the $1,000 per child tax credit. Both would let rate cuts for upper-income taxpayers expire, and use the savings to help pay for their health care promises. To address looming shortfalls in Social Security, Obama supports raising the cap that limits the 6.2 percent Social Security payroll tax to the first $102,000 of income. Almost in an aside, the Obama campaign document says he supports closing the "doughnut hole" in the Medicare drug benefit — the gap created at the point when beneficiaries have to pick up all of their drug costs before catastrophic drug coverage kicks it. Closing it would roughly double the cost of the Medicare prescription drug program, however, and Obama offers no way to pay for it. Obama also promises a $60 billion investment in infrastructure and an $18 billion per year boost in education spending. The Illinois senator says his plan to withdraw U.S. forces from Iraq will generate savings to help pay for these items, but that doesn't qualify as an offset under budget rules because the Iraq spending is an emergency expense, not a permanent part of the budget. For his part, McCain voted against Bush's tax cuts as tilted too much in favor of the wealthy. He has since changed his mind. Now, with most budget experts forecasting deep deficits for the future, McCain wants to extend the Bush tax cuts, which expire at the end of 2010. The price tag for McCain's plan would soon exceed $300 billion a year after government borrowing costs are factored in. McCain also wants to eliminate the alternative minimum tax, or AMT, which would add more than $2 trillion in accumulated deficits to the federal ledger from 2010-2020. The AMT was enacted in 1969 to make sure the wealthy paid at least some tax, but now also threatens about 20 million additional taxpayers with levies averaging $2,000 if annual fixes aren't renewed. Clinton's campaign generally succeeds more than the others at providing offsets — revenue increases or spending cuts — to finance programs such as her plan to provide health care for all. But even if the next president "pays for" new initiatives, they will still be left with an underlying budget deficit exceeding $400 billion and the looming crises in Social Security, Medicare and the Medicaid health care program for the poor and disabled. Even so, Clinton campaign literature promises a "return to fiscal responsibility. After six and a half years of Bush's fiscal irresponsibility, Hillary wants America to regain control of its destiny. She will move back toward a balanced budget and surpluses." Just how Clinton — or any of her rivals — might miraculously produce a budget surplus is not answered. "They face a collision with reality," said Bob Greenstein, who heads the Center on Budget and Policy Priorities, a liberal think tank. "None of the three candidates is coming to grips with budget realities." Urban Institute President Robert Reischauer, who directed the Congressional Budget Office during landmark budget debates of 1990 and 1993, says there's only so much any incoming president can hope to accomplish. Already, Reischauer says, the agenda includes bruising battles over renewing the Bush tax cuts, as well as reforming the AMT and preventing Medicare payments to doctors from being cut . "There's a certain amount of political capital and energy that new administrations have and because the plate is already full, it's going to be very hard for them to push forward on new initiatives," Reischauer said. I admit to more than some laughing as I read this. To suggest that these so-called candidates have no idea of the reality of the situation.... well, I guess the sheeple believe 'stuff' like that. I guess they must, or they would not bother to vote...... right?
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#1. To: richard9151 (#0)
Never forget, if it costs a few billion to help the peasants, it's "too expensive" and will "bust the budget". But if it costs a few trillion and benefits the overlords, then it's "a necessity" and "a worthwhile investment" and "unavoidable".
 | Gold and silver are REAL money, paper is but a promise. |
#2. To: richard9151 (#0)
Oh, I know how. Just increase in the income tax to around 200% or so and the budget will be back in black in no time. I wonder how many bridges the Iraq war budget fix? You laugh, but I've come up with a way to end the war and make a bundle of cash in the process. Just have every US soldier sell his weapon to the nearest Iraqi and use that cash to buy a one way plane ticket home. Anyone who sells a tank or bomber would be required to turn most of the surplus in to cover the cost of the mess.
Just how Clinton — or any of her rivals — might miraculously produce a budget surplus is not answered.
"The more I see of life, the less I fear death." - Me.
"If violence solved nothing, then weapons technology would have never advanced past crude clubs and rocks." - Me.
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