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Federal deficit soars, but McCain, Obama offer no answers

Another diamond among the coal. How are they going to pay for it all?


Source

By David Lightman and Kevin G. Hall | McClatchy Newspapers
WASHINGTON — Just weeks before the government's fiscal year ends Sept. 30, the nonpartisan Congressional Budget Office on Tuesday projected a near-record federal budget deficit of $407 billion, sharply higher than White House projections six weeks ago and more than double last year's figure.

Mammoth federal-budget deficits feed inflation, make America dependent on foreign lenders, cost taxpayers hundreds of billions of dollars in interest payments on the growing national debt and drain capital savings from more productive investments.

The widening gap between what the government spends and the revenue it brings in is sure to weigh on the next president and impede his efforts to spend on new or larger programs or to cut taxes.

Yet John McCain and Barack Obama show few signs that they're ready to take tough steps to curb deficits, according to budget analysts.

"I don't think either candidate is treating the deficit, or the debt, seriously. And I don't see any proposals from either one that would make the situation any better," said Robert Bixby, the executive director of the Concord Coalition, a bipartisan budget-watchdog organization.

Maya MacGuineas, the president of the bipartisan Center for a Responsible Federal Budget, said in a statement that both candidates "are promising hundreds of billions more in spending and tax cuts than they are paying for."

Republican nominee McCain has promised to balance the budget by 2013, but most analysts consider that goal elusive unless lawmakers make radical changes in Social Security, Medicare and Medicaid funding. McCain has made no such dramatic proposals.

Obama issued a statement Tuesday on the new data, promising that he'd "bring real change by cutting taxes for middle-class families and small businesses, paying for all his proposals to reduce the deficit" and working toward fiscal responsibility. He'd let tax cuts for the wealthiest earners expire and would impose higher taxes on certain corporations.

However, the Brookings Institution-Urban Institute Tax Policy Center has found that Obama's tax-reduction plan would increase the national debt by $3.5 trillion by 2018. McCain wants to leave existing tax cuts in place rather than let them expire, which the center said would add $5 trillion to the debt.

The CBO also offered a dismal forecast Tuesday, projecting a record deficit of $438 billion in the coming year due to the slowing economy, which would reduce tax receipts to the Treasury.

That fiscal 2009 deficit could rise another $83 billion if Congress, as expected, adjusts the alternative minimum tax. The deficit projection also doesn't include the potential costs to taxpayers from last weekend's seizure of mortgage-finance giants Fannie Mae and Freddie Mac. The CBO had estimated a takeover cost of $25 billion, although financial experts suggest that it could exceed $100 billion.

The CBO's latest estimate for fiscal 2008 is $18 billion higher than the Bush administration's projection six weeks ago. The record is $413 billion in fiscal 2004. Fiscal 2007's deficit was $161 billion.

"The significant expansion in the deficit is the result of a substantial increase in spending and a halt in the growth of tax revenues," the CBO said.

White House Press Secretary Dana Perino said that one big reason the deficit went up was the stimulus that President Bush signed into law in February. The CBO said that another large part of the deficit's unexpected growth came from rising unemployment-benefit payments and higher spending to cover insured deposits in insolvent financial institutions.

Another boost to the deficit came from Congress and Bush's appetite for discretionary spending, which is expected to rise by $85 billion, or 8.1 percent, in the current fiscal year, mostly because of higher defense costs.

The CBO projected that economic growth would slow to a 1.5 percent annual rate this calendar year and 1.1 percent next year. Even if the tax cuts of 2001 and 2003 expire as scheduled on Jan. 1, 2011, the deficit would be $325 billion the following year.

To bridge the gap between spending and tax revenues, the federal government borrows, increasing the national debt. It's grown from $5.7 trillion in 2000 to almost $9.7 trillion on Tuesday.

Analyst Bixby doubted that either presidential candidate's proposals would make a serious dent in the deficit and debt.

"Even if both of them can pay for their new initiatives and not make the situation any worse, the situation is unsustainable," he said. "Simply treading water is not good enough if you are headed over the falls."


Click to view image: '224470-mccain_obama_nbc.jpg'

Added: Sep-10-2008 
By: jayboulware
In:
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Tags: Deficit, McCain, Obama
Views: 8618 | Comments: 21 | Votes: 1 | Favorites: 1 | Shared: 1 | Updates: 0 | Times used in channels: 1
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  • Mccain wants to continue using $3,000,000,000 a week in Iraq.

    Mccain wants to tax the poor and give to the rich.

    Mccain wants to use billions on 'star wars' weapons.

    Mccain wants to bomb Iran.

    Posted Sep-10-2008 By 

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    • could he have said some of gb's tax cuts were good and some of them were bad. which means to me, he has some logical thinking going on in his head. they don't all have to be good or bad, maybe a little of both. is that to logical for you?

      Posted Sep-10-2008 By 

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    • And Obamas plan will cost us 2 Trillion on taxes alone. Not to mention whatever we do with the current wars.

      Posted Sep-10-2008 By 

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    • "The Tax Policy Center estimates that over 10 years, McCain's tax proposals could increase the national debt by as much as $4.5 trillion with interest"

      http://money.cnn.com/2008/06/11/news/economy/candidates_taxproposals_tpc/?postversion=2008061113

      Obamas tax proposals save $1,3 trillion.

      ===

      Osama also has America out of Iraq saving $3,000,000,000 a week.

      Posted Sep-10-2008 By 

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    • * oops Obamas tax plan saves 1,3 trillion compared to Mccains

      Posted Sep-10-2008 By 

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    • I'm sorry, but I dont get my tax info from CNN. Just my accountant who studies this for a living. And really until you start living here and paying taxes like I do, along with my business tax, your comment means nothing to me. I can post links to pastisan estimates also.

      Posted Sep-10-2008 By 

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  • They play by the old game book. Never admit any weakness in an election. Never bring up any bad news. Pretend everyone is becoming richer, happier, sexier, younger, less fat, etc.

    Posted Sep-10-2008 By 

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  • HAVE A CLOSE LISTEN TO THIS UNFOLDING INFO.


    http://www.youtube.com/watch?v=8npeYfKI_ns

    Posted Sep-10-2008 By 

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  • Obama wants to raise the tax bar for the rich.

    Obama wants to stop giving all these forgien countries who talk shit to us Financial Aid.

    Obama Wants to bring the troops home and stop the stupid wasteful spending of billions per week in Iraq.

    Obama wants to go back to Bill Clinton income taxing style. (remember, when Bill Clinton left office, the United states didnt have a Deficit, in fact we had a surplus)

    Its clear who will fix the deficit problem.

    But it doesnt matter. Women will vote for More..

    Posted Sep-10-2008 By 

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    • Oh No! You did not just say that!

      "This election is a joke. WOmen shouldnt be allowed to vote."

      I'm coining a new term here Neo-Lib, They stand for the return to the lib values of the 1890's

      Posted Sep-10-2008 By 

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    • Comment of user 'jsczerby' has been deleted by author (after account deletion)!
    • And here I thought I was being cutting edge on naming a new trend!

      Posted Sep-10-2008 By 

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    • Comment of user 'jsczerby' has been deleted by author (after account deletion)!
  • First he says one thing, than another: Bush tax cuts bad, Bush tax cuts good; the Surge in Iraq bad, the Surge in Iraq good; we should talk to our enemies without preconditions, we should definitely have preconditions; the war on terrorism is flawed and warmongering, the war on terrorism is a serious threat... On and on and on!

    everything you just said represents a man thinking about things before making a final decision. do you think about things before making a final decision or just go wi More..

    Posted Sep-10-2008 By 

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  • "measure twice, cut once"

    Posted Sep-10-2008 By 

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  • thank the Bush administration for turning the surplus into a record deficit

    2 occupations and a trillion dollars later, here we are

    F 'em

    Posted Sep-10-2008 By 

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