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Archive for Wednesday, August 6, 2008

Next president will face fiscal mess

August 6, 2008

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Barack Obama pledges to extend health insurance coverage. John McCain plans another round of tax cuts.

But the latest budget projections make clear that whoever is elected president in November probably will spend his first year in office coping with a fiscal mess left by the Bush administration while also seeking to spur a lagging economy. That's no easy task, but it seems inevitable, given the figures the White House issued last week. They predict the federal deficit will reach record levels next year, thanks to the economic slowdown and the fiscal failures of Congress and the administration.

None of this has stopped the presumptive nominees from pressing ahead with proposals that might exacerbate the situation - Obama with too much new spending, McCain with unaffordable tax cuts.

Indeed, each might be wise to temper public expectations about how much he can do, given the likelihood that the winner will inherit an even worse situation than President Bush's economic advisers concede.

Their deficit figures retain the dishonest practice of recent years of failing to include the full cost of projected spending for wars in Iraq and Afghanistan. They also fail to provide for action beyond this year to offset the impact of the alternative minimum tax on middle class families, on the dubious assumption that the tax system will be reformed. And they use more optimistic growth and inflation forecasts than many economists.

Even without the soaring deficit, the next administration will face tough fiscal decisions. Besides coping with a weak economy, it will have to decide whether to seek extension of the massive tax cuts Bush pushed through Congress at the start of his first term.

The reason is a 2001 compromise that limited their duration to make them seem less expensive in the long term than if they had been permanent.

In recent years, Bush has sought without success to extend the cuts. Democrats blocked him, contending too much of the benefit went to wealthier taxpayers.

McCain initially voted against the cuts for that reason. But in wooing Republican conservatives, he switched his stance. Now, he favors extending the cuts, plus giving upper-income taxpayers an added bonanza by eliminating the AMT.

But his main emphasis is on curbing spending, especially by eliminating the "earmarks" that enable lawmakers to designate funds for local projects, including some of dubious value. He vows to veto any bills with earmarks and says he can save $100 billion by eliminating them. According to the nonpartisan FactCheck.org, most analysts estimate the actual saving at closer to $18 billion.

McCain says he'll cut other wasteful spending but has not been specific. The truth is such efforts rarely produce anything close to their goals.

Obama also has made fiscally questionable proposals.

For example, he says the widespread use of electronic records would pay much of the $120 billion cost of his health care plan. But FactCheck.org says that's based on a Rand study that specifies it will take a dozen years to save that much.

And Obama counts on phasing out Iraq spending more quickly than is likely, especially if he simultaneously steps up the military effort in Afghanistan.

Meanwhile, Congress struggles with the budget. So far, it has not passed any of the bills needed to fund the government after Oct. 1. And if Democratic leaders have their way, lawmakers will buck the issue to the next administration - which they expect to be Democratic - by extending last year's spending levels until sometime next year.

That may be irresponsible, but it reflects political reality. True, the Bush administration has been able to reach compromises with Democratic leaders on such issues as electronic surveillance rules and the housing mortgage mess. But their taxing and spending priorities are sufficiently different that accords are unlikely, especially this close to an election.

- Carl P. Leubsdorf is Washington bureau chief of the Dallas Morning News.

Comments

acoupstick 6 years, 1 month ago

STRSPlease re-read my post. What is voluntary is your residence in this country. It appears you want all the benefits, yet none of the financial cost.

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jmadison 6 years, 1 month ago

53.3 % of federal budget for transfer payments-social security, medicare, federal retirement. 7.5% of federal budget for medicaid. Over 60% of the budget is on autopilot. Until this is addressed, whoever wins presidential elections will be facing a mess. Chances of our political class acting in a responsible manner--0%.

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SettingTheRecordStraight 6 years, 1 month ago

Lower Taxes + More Government â ProsperityHigher Taxes + More Government â ProsperityLower Taxes + Reduced Government = ProsperityThese are the commonsense equations that so many in local, state and federal government fail to understand.

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SettingTheRecordStraight 6 years, 1 month ago

acoupstick,You're joking, right? You think paying taxes is voluntary? Voluntary?! Try not paying taxes and see what government does to you.

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Confrontation 6 years, 1 month ago

This is what happens when you put someone with a 3rd grade level of intelligence in charge of the country. Daddy bought his way into a good college, but it sure didn't help. Being a Yell Leader and a crackhead will only get you so far.

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SettingTheRecordStraight 6 years, 1 month ago

In fact, acoupstick, try not paying property taxes on that house you "own." We live in a society where our private property can be confiscated by our government if we do not pay the appropriate property tax. If private property can be taken from us if we don't pay a tax on it, do we actually own that property?

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SettingTheRecordStraight 6 years, 1 month ago

logrithmic's and merrill's definitions of "corporate handouts" and "corporate welfare" reveal a frightening perspective on who owns capital and property. If government reduces a corporation's tax burden, logrithmic and merrill label it a handout. We all know that a handout is something transfered by an owner to someone else. Logrithmic's and Merrill's defintion of a handout, therefore, assumes the government owns the corporation's capital in the first place and that any money it doesn't confiscate is a benevolent "handout." Wrong assumption. We own the capital, not the government, and we involuntarily cede large portions of our resources to the government through taxes. If government reduces our tax burden, the government isn't "giving" us anything - unless you erroneously believe, as logrithmic and merrill do, that government is the owner of everything. A reduction in taxes isn't a handout; is simply government taking less of what belongs to us.

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Flap Doodle 6 years, 1 month ago

Right Arm, loggy!Truth to power!Put the running dogs up against the wall!Free Huey!There will be tea and cookies in the Unicorn Room after the revolution.

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Richard Heckler 6 years, 1 month ago

Repairing existing streets and sidewalks = dollars and senseProviding public transportation and safe bike travel = dollars and sense.Corporate welfare to the wealthy makes absolutely no sense anywhere!This makes no dollars and sense especially in Lawrence,Kansas:http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americans

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JHOK32 6 years, 1 month ago

Thank Bush for leaving office with a $500 Billion dollar debt for us to pay for, while his big oil buddies are making the highest recorded profits ($11 Billion dollars) in U.S. history! (that we are paying for). Thank Bush for a $560 Billion dollar war to help big oil, that WE are paying for. Bush actually inherited a budget surplus from Clinton, but blew that away too. McCain wants even more handouts to the rich. Have we had enough yet? Obama will return $1000 to each middle class family from the big oil profits. Sounds like the first sensible thing I've heard in 8 years!

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acoupstick 6 years, 1 month ago

"we involuntarily cede large portions of our resources to the government through taxes"No, you voluntarily pay taxes because you choose to live and do business in an industrialized democratic capitalist country with a modern infrastructure and regualatory system that exists to protect citizens and the environment."Lower Taxes + Reduced Government = Prosperity"Until the Political Right ditches the Religious Right, we will never know whether this is true or not. I suspect that it isn't.

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beatrice 6 years, 1 month ago

"Thank Bush for leaving office with a $500 Billion dollar debt for us to pay for, ..."Try again. It is almost $5 Trillion! He has doubled the national debt since taking office, which is now over $9 trillion. Think of it this way, if you could add a dollar to a pot at the speed of light -- roughly $186,000 per second -- and then figure how much that would be for every second of every minute for every day for an entire year, and we would be approaching two light years worth of debt. Half of that is owed to all previous administrations to varying degrees, but to Bush, we owe half of the total debt. For anyone to rejoice in this fact is a sad individual.

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bevy 6 years, 1 month ago

A few thoughts for both sides:Chances of enough people getting off their duffs and voting where it COUNTS - for their congresspeople and senators - pretty slim. (The president doesn't make the laws, folks, your representatives do!)Chances of people who do vote disregarding party lines and voting for the better person - slimmer. Chances of the people who spend all day griping on this website running for office to take back AMERICA - probably slim, too. We need some real people in Congress and in government, not rich lawyers. How about some term limits, people? We have a chance every 4 years for a bloodless revolution - but most of us don't get involved as much as we should - myself included. As long as we don't - both parties will continue with the status quo and we will pay the price.

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SettingTheRecordStraight 6 years, 1 month ago

acoupstick,It is impossible to live on private land that cannot be confiscated by the government if a property tax is not paid. Therefore, I challenge you to answer my original question: Do any of us actually own property if the government may take it from us if we do not pay the government's tax? The answer is no. We are all utter slaves to the government machine.And no, I do not want the "benefits" that you are probably referring to.

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blessed3x 6 years, 1 month ago

logrithmic (Anonymous) says: Four years is not enough power. We should have referendums not unlike California and the power to recall politicians if they refuse to do what we ask them to do.Recent polls have shown that nearly 75% of the American Public wants immediate domestic drilling. The Democrats in Congress (Pelosi) have held democracy hostage by denying an up or down vote on an energy bill that includes domestic drilling. Does logrithmic think we should recall Pelosi and the democrats? ... I didn't think so. Recalls are only in order for those politicians that are on the other side of the aisle.

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scott3460 6 years, 1 month ago

Blessed3x, agreed, we live in a representative democracy and our elected leaders are expected to exercise judgment and to some extent restrain the excesses of popular opinion. As we are especially seeing these days with a lazy, corporate media gleefully parroting the day's line of government propaganda from virtually all organs of mainstream media, the population is easily swayed to almost any idiotic position with enough advertising effort. Thank God for the Democrats. The greatest treasure this country posseses is it tremendous natural beauty. We will come to appreciate the efforts of those who have fought, so far successfully, to preserve that heritage from those who would destroy the common good for private gain and their aiders and abettors in the halls of government.

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