Hillary Clinton and Barack Obama have been making many promises to start new programs, but not specifying where the funds would come from. So, the Washington Post added up the costs of all the promised new programs and both candidates come up short of fiscal integrity.
It isn't sexy, as the second editorial below the first one says, but failing to explain the source of funding for new programs seems to me to be unethical and a reason why any candidate should be voted out or down.
vj
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from WashingtonPost.com at:
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/24/AR2008042402917.html
Who'll Cover the Checks?
The Democratic candidates' tax and spending plans are costly and ambitious -- and probably short on fiscal realism.
Friday, April 25, 2008; A22
THE DEMOCRATIC presidential candidates have some big plans -- with big price tags attached. By our calculations, using figures supplied by the campaigns, Sen. Hillary Rodham Clinton (N.Y.) has proposed new spending and tax breaks that would amount to almost $265 billion a year when fully implemented, while the initiatives proposed by Sen. Barack Obama (Ill.) total nearly $333 billion. Those initiatives, which would be phased in over time and which the candidates say they have identified ways of funding, don't include billions of dollars more in one-time spending.
In addition, both candidates would extend the Bush tax cuts for those making less than $250,000 a year, at an annual cost of another $140 billion in 2012, and renew the research tax credit ($9 billion). And both say they would take steps to prevent the alternative minimum tax from sweeping in additional taxpayers, adding $50 billion or so to the annual price tag. So the deficit -- even before any new spending -- would be that much deeper than it would have been if the tax cuts were permitted to expire.
These numbers, moreover, don't include some initiatives that the candidates talk about but for which they haven't formulated specific policies. For instance, Mr. Obama's campaign Web site says he supports closing the "doughnut hole" in the Medicare prescription drug plan, while Ms. Clinton has promised on the campaign trail to "fix" the hole. That could cost as much as $40 billion annually. Meanwhile, both Democrats put themselves into a new straitjacket at the last debate by promising that they would never raise taxes on the middle class -- which they went on to define generously as those earning less than $200,000 or $250,000 a year.
Altogether, then, they are talking about additional costs to the tune of a half-trillion dollars per year, more (Obama) or less (Clinton). The total federal budget this year is about $2.9 trillion.
Mr. Obama and Ms. Clinton don't pretend to offset the cost of extending the tax cuts or fixing the alternative minimum tax, but then, the presumptive Republican nominee, Sen. John McCain (Ariz.), would do the same and more without paying for it. As to the new spending, both candidates say they have identified "pay-fors" that would more than cover the cost of the new initiatives. But will these savings materialize? Some of those savings, for example, from undoing part of the Bush tax cuts, can be measured with certainty; others, such as wringing tens of billions of dollars in costs out of the health-care system, are gauzy and speculative; still others -- doing away with corporate subsidies, say -- would be politically tough to achieve.
Are the candidates understating expected costs? The Obama campaign claims that the Clinton health-care plan would cost $30 billion more than she acknowledges, while the Clinton campaign claims that the Obama campaign is aggressively overestimating its expected health-care savings by about the same amount. The argument simply underscores the uncertainty on both the spending and savings sides of both candidates' grand plans.
Frugal wouldn't be a word we would use to describe either candidate. Mr. Obama, whose program would cost more primarily because of his large tax cut, relies more than Ms. Clinton does on expected savings from winding down the war in Iraq and on significant revenue from auctioning permits for a cap-and-trade system to curb carbon emissions in order to get to theoretical balance. Ms. Clinton has also been clearer about specifying costs and precise sources of funding.
While both Democratic candidates would spend far more on new programs than Mr. McCain would, the Republican's proposals for new tax cuts dwarf the Democrats' plans. The Democrats are clearer than Mr. McCain -- though that's a relative term -- about how they would foot the bill. Still, no one's winning any awards this campaign season for fiscal responsibility.
Other editorials in the Ideas Primary, a series of editorials on the issues of the presidential race, can be found here.
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Here is a follow up to the above editorial posted on a blog:
http://blog.washingtonpost.com/the-trail/2008/04/25/fiscal_discipline_not_on_agend.html
Dan Balz's Take
Fiscal Discipline Not on Agenda for Democrats
By Dan Balz
It's too bad there won't be a Democratic debate in North Carolina this weekend. Thanks to the good work of my colleague Ruth Marcus and an editorial in Friday's Washington Post, there would be plenty of questions for both Barack Obama and Hillary Rodham Clinton about how they plan to prevent blowing a new hole in the federal deficit.
The Democratic race has featured much talk about new initiatives for expanding health care coverage, paying for rising college tuition costs, creating jobs, providing displaced workers new skills, investing in alternative energies and giving tax cuts to middle class families.
For the first time, The Post editorial page added up the cost of these promises. They amount to about $330 billion annually for Obama and about $265 billion annually for Clinton. Roll in the cost of rolling back President Bush's tax cuts for the wealthiest Americans and some other tax changes and the budgetary gap is instantly clear.
The candidates' spending promises have come despite assurances, particularly from Clinton, that they recognize the need to restore some fiscal discipline in Washington. Clinton has talked about this since before becoming a candidate. Here's what she said in April 2006, speaking to the Economic Club of Chicago:
"I think a return to fiscal discipline, living within our means, is essential to our long-term health. It is also critical to whether or not we control our own destiny as a nation.... Red-ink fiscal policies will undermine America's competitiveness. We have to ask ourselves whether our taxing and spending policies are in line with our economic goals."
Her campaign has often pointed to ways in which she would offset the cost of new spending -- with revoking the Bush tax cuts and ending subsidies to oil companies the favored new revenue sources for the new programs. But as The Post editorial suggests, the potential gap between real spending and imagined savings could be substantial.
Obama has been even less, shall we say, disciplined about fiscal discipline. If the budget deficit worries him, he rarely lets it show. His politics of change do not feature as a central tenet a break from the often irresponsible approach to deficits practiced by the Bush administration and by many Democratic administrations of the past.
The Clinton administration was an exception. With a valuable push from the Gingrich-led Republicans in Congress, President Bill Clinton presided over a balanced budget. The combination of a robust -- even overheated -- tech-driven economy and a political détente on the budget brought about a sudden and significant shift in the fiscal picture.
The rosy projections of budget surpluses quickly disappeared once Bush took office, thanks to massive tax cuts and a war in Iraq that has far exceeded even the costliest estimates at the time of the invasion in 2003.
Among the Democratic candidates, only John Edwards spoke forthrightly about the deficit. He didn't particularly care whether it grew while he was president. Edwards was candid in saying that, given the trade-offs, he preferred to spend $100 billion or so annually to achieve universal health care and additional resources into other new programs than to worry about the budgetary consequences. At least with Edwards, the voters knew what they were getting.
With Obama and Clinton, that is far less clear. Clinton has resisted outlining any plans for dealing with the fiscal health of Social Security by arguing that until Washington brings back some fiscal sanity, there is no point it tackling the looming entitlements problem. But as The Post editorial makes clear, getting to that promised land of manageable red ink or better will be far harder than she's acknowledged.
Obama has been more forthcoming about Social Security -- and Clinton has hammered him for doing so -- but overall appears to be less a fiscal hawk than she is.
The candidates know they can dance effectively away from most questions about whether their plans add up. The press has little patience for that kind of debate, particularly given the other elements of this contested Democratic race. Voters say they care about the deficit but their concerns don't rise to the level of their fear of losing a job or trying to pay for gasoline or health care.
The Post editorial does not give John McCain a pass either. The champion of spending discipline has suddenly become a supply side tax cutter this spring. He too has questions to answer about how he would manage the budget.
What is at issue here is credibility as much as economics. Experts long have debated what constitutes a manageable deficit -- and even whether sustained surpluses are healthy. The question is whether voters can trust any of the candidates when it comes to speaking honestly about the deficit. At this stage, as The Post editorial page makes clear, they have appear to have a credibility gap.
