3 Candidates With 3 Plans, but One Deficit

[dtotire]

By LARRY ROHTER and MICHAEL COOPER
Published: April 27, 2008

The Republican and Democratic presidential candidates differ strikingly in their approaches to taxes and spending, but their fiscal plans have at least one thing in common: each could significantly swell the budget deficit and increase the national debt by trillions of dollars, according to tax and budget experts.

The reasons reflect the ideological leanings of the candidates, with Senator John McCain proposing tax cuts that go beyond President Bush’s and the Democrats advocating programs costing hundreds of billions of dollars. But for fiscal experts concerned with the deficit, both approaches are worrisome.

With the national debt soaring to $9.1 trillion from $5.6 trillion at the start of 2001, in part because of the Iraq war and Mr. Bush’s tax cuts, the crucial question about the candidates to succeed him is “whether they are helping to fill the hole or make it deeper,” said Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan organization that advocates deficit reduction. “With the proposals they have on the table, it looks to me like all three would make it deeper.”

Representatives of all three campaigns disputed such assessments, questioning the accounting methods analysts used to calculate the growing debt and saying they could enact their plans without making matters worse.
Mr. McCain’s plan would appear to result in the biggest jump in the deficit, independent analyses based on Congressional Budget Office figures suggest. A calculation done by the nonpartisan Tax Policy Center in Washington found that his tax and budget plans, if enacted as proposed, would add at least $5.7 trillion to the national debt over the next decade.

Fiscal monitors say it is harder to compute the effect of the Democratic candidates’ measures because they are more intricate. They estimate that, even taking into account that there are some differences between the proposals by Senators Hillary Rodham Clinton and Barack Obama, the impact of either on the deficit would be less than one-third that of the McCain plan.

The centerpiece of Mr. McCain’s economic plan is a series of tax cuts that would largely benefit corporations and the wealthy. He is calling for cutting corporate taxes by $100 billion a year, and the elimination of the alternative minimum tax would affect not only the middle class, but also the wealthy taxpayers for whom it was created, a step that would reduce revenues by $60 billion annually. He also would double the exemption that can be claimed for dependents, which would cost the government $65 billion.

Read the rest:

http://www.nytimes.com/2008/04/27/us/politics/27fiscal.html?_r=1&hp&oref=slogin

[seasat]

1. This is the 800 lb gorrilla in the room

Reducing the debt shores up large plans like government health care by reducing interest payments. Debt reduction gives the government more options when dealing with foreign countries like China that own so much of our debt. Debt reduction aids the Fed in response to recessions by removing long term pressures on consumer and business interest rates.

The problem is that an actual debt reduction plan is too wonky and inevitably pisses off some constituency so politicians never give a realistic road map for it.

Gov Richardson had some good ideas about cuts to military spending that could shave up to 100 billion in budget outlays. He proposed eliminating most of the big cold war level weapon programs that are currently on the budget and nuclear missile reductions. Further military cuts would make sense to me since we spend about 8 times the amount of our nearest rival on the military.

Tax reform that streamlines the tax code and eliminates some outdated exemptions and loopholes could bring more revenues. Gov Richardson also talked about 3rd party reporting for capital gains taxes as a loop hole that allowed some of the wealthiest to escape taxes. Eliminating it could bring in from 10 to 25 billion extra dollars. While I disagree with Obama's point that the cap on social security taxes needs to be raised because SS is in trouble, I think his raise could be used for an increase to retire debt quicker and restore Al Gore's lock box idea. There are a ton of special tax exemptions that could be eliminated raising significant revenue.

They could also look at subsidies and save a ton of money there. Some of the farm subsidies are pretty ridiculous. They end up costing consumers more while lining the pockets of some large corporations. I'd cap subsidy amounts like Tom Daschle originally proposed. I'd eliminate some subsidies like the one for sugar. The oil and gas subsidies are also pretty stupid with oil and gas corps making money hand over fist.

Increasing Government efficiency is another cost saving measure. The reinventing government initiative under Clinton as headed by Gore was pretty effective. They managed to actually decrease the size of the bureaucracy. Something that no Repug has accomplished and McSame certainly won't do. The government has numerous problems with duplicate services and excessive upper management. Many programs could be combined into one office with reduction in upper level administration while increasing lower level workers. The result would be greater efficiency and better response to citizens taking advantage of those services.

Another way of reducing spending is to reverse privatization. Privatization ends up costing more money, in most cases, with much lower oversight. The use of private firms to replace government workers leads to huge amounts of corruption with corporations using campaign contributions and lobbyists to influence the award of contracts. Shrub Inc has lowered funds going to government research but massively increased funds going to private research.

There are several other ways to balance the budget quite rapidly but you won't hear it from the candidates. Too many wealthy folks either would stop donating or start funding attacks if you presented some of these ideas.

[KSinTX]

2. Almost sounds like a Huckabee endorsement :-)

I think he's really the only candidate to go deep into most of those issues. With the exception of the farm subsidies, his plan pretty much echoed yours here. I don't think any other candidate spoke much to these issues from the approach you have.

[seasat]

3. Gov Richardson did

That's one of the reasons I was among his few supporters here on DU. I never heard Huckabee talk about significantly cutting defense spending. Kucinich, Richardson, and Edwards were the only ones I really heard address that. Obama has also talked about reducing and eventually eliminating our nuclear arsenal. Richardson identified actual line items that needed to be eliminated in the defense budget totaling about 98 billion. Richardson also laid out eliminating the 3rd party capital gains tax reporting loop hole as a means of paying for increased support for veterans.

Huckabee supported the ridiculous premise of a national sales tax which I'm highly against. Even if a candidate supported a progressive agenda on everything else, that one issue is a deal killer for me. I wish I'd saved it, but a liberal economist a while back outlined a tax simplification plan that would keep the progressive income tax but eliminate a large amount of the complex deductions. I don't buy the Repug talking point that a progressive rate on different income levels is complicated. I find it pretty simple and I would also like to see the top rate raised to at least 40%. I would never support a change from that to a VAT or national sales tax. Sales taxes are highly regressive. Most states already have some form of sales tax and adding one at a national level would result in a huge shift of the tax burden on to the poorest folks.

Now, I didn't list everything I'd like to see done but Richardson also had some points that I disagreed with. He supported keeping capital gains tax at 15%. I'd agree with Obama and others that it should be higher. A higher capital gains and dividend tax doesn't greatly effect those in the lower brackets as much since most have their investments in some sort of tax deferred or future tax deferred retirement account. Ideally, I'd like to see capital gains tied to the highest marginal rate for each individual. You'd take a sum of all income from all sources, look up the highest marginal rate in a table, then tax the capital gains at a slightly lower percentage like at a 10% discount from the top rate. That would mean that the wealthiest would pay something like 30% under a 40% rate while those in the 15% bracket would only pay 5%. Those in the 10% bracket, would pay nothing.

Now some of the Repugs are now against large farm subsidies (since they are out of power) but few will touch the sugar subsidy. Even the Democratic candidates supported keeping that subsidy. However, I think it is a waste. It costs us 100s of millions each year and goes to support a few corrupt families down here in S Florida that have used their profits from these subsidies to lobby for more tariffs and subsidies while blocking the clean up of the Everglades.

The monstrous farm subsidy bill that passed earlier under Shrub Inc made anything done previously under the Democrats look like chump change. It was basically to bolster support for them in the mid term elections. Tom Daschle worked very hard to get lower caps on the maximum amount of subsidy an individual could receive but was shot down by the Repugs in charge at the time. I find it ironic that Shrub Inc is now supporting those caps since they were the ones that originally campaigned for the higher limits.

I guess what I'm saying is that I disagree that Huckabee supported most of those ideas. The streamlining and reinventing government was a Clinton/Gore idea. Hillary has talked about that some. I never heard a Repug, including Huckabee support reversing privatization and giving the government more control over services. Most Repugs argue that SS is in trouble and needs to be privatized. I disagree with both those premises. I never heard Huckabee support raising the top SS income level to pay down the debt. I also never heard Huckabee address eliminating subsidies for the oil and gas industries but every Democrat has supported that. About the only thing his proposals and what I wrote had in common is that he did talk about making government more efficient and he supported simplifying the tax code. However, his simplification was a horrible national sales tax. I prefer the idea of eliminating some of the complex deductions.