Monday, February 25, 2008

Democratic Promises May Break Treasury

USA Today adds a cautionary note to election debates by showing how a Democratic administration in 2009 will cost the treasury hundreds of billions of dollars in new spending:

To listen to Hillary Clinton and Barack Obama campaign in Ohio and Texas is to hear pledges on health care, middle-class tax cuts, mortgage assistance, tuition help, energy initiatives and more.

It's all very appealing. It's also almost certainly too good to be true.

In 2009, when the next president takes office, the government is expected to spend
$400 billion more than it takes in, adding to a national debt that tops $9 trillion. Yet Clinton and Obama both offer a long list of new spending proposals that suggests a lack of seriousness in confronting the nation's fiscal condition...both candidates have major new health care initiatives and other spending proposals; Obama tacks on a major tax cut for working Americans to offset Social Security tax payments.

While it's hard to come up with a precise price tag given the lack of specifics in many of their proposals, these plans are likely to cost the Treasury well into the hundreds of billions of dollars a year. The National Taxpayers Union, a conservative group that favors lower taxes and smaller government, gives a very rough estimate of $287 billion for Obama and $218 billion for Clinton.

How would the candidates pay for all these new programs without driving the deficit to new heights? Some have specific funding sources; some don't. The candidates rather vaguely claim that costs would be covered primarily by repealing President Bush's tax cuts and ending the Iraq war.

This is where the math gets fuzzy.
Not that fuzzy, actually, if one's realistic about this.

The Democrats will have to raise taxes to finance their spending proposals, and the potential "savings" from winding down
America's deployments in Afghanistan and Iraq will add to the already overwhelming demands for surrender among the Democratic Party's antiwar base.

hare-brained theories are being developed among some far-lefties justifying Robin Hood-style confiscatory policies to soak the rich.

The truth is - in this time of potential recession - the country needs expansionary fiscal policies in the form of tax cuts to stimulate spending, precisely the opposite likely to happen under a left-wing presidency.

Budgetary politics is going to be one of the hottest areas of debate in the months ahead.

Will big government sell in public opinion? I wouldn't bet against it.