Impact of Candidates' Tax Plans on Deficit Worsens

The Tax Policy Center has updated its analysis of the fiscal impact of the tax proposals of Presidential candidates Senators John McCain and Barack Obama. In both cases, the impact on the national debt would be greater than under the Center’s previous model.

Senator Obama’s plan as described by his economic advisers would increase the debt by about $3.4 trillion by 2018; Senator McCain’s plan would increase it by $5.0 trillion.

And the health proposals and campaign promises not in the official descriptions could increase the costs still further. This compares with increases of $3.3 trillion and $4.5 trillion respectively in the Center’s previous analysis.

Both candidates claim, however, that they will reduce spending below the Congressional Budget Office’s baseline projection used by the Center, which would shrink the deficits.

Although both candidates have at times stressed fiscal responsibility, their specific non-health tax proposals would reduce tax revenues by an estimated $4.2 trillion (McCain) and $2.8 trillion (Obama) over the next 10 years.

These numbers are down slightly from $4.5 trillion and $3.3 trillion estimated earlier. Both candidates argue that their proposals should be scored against a “current policy” baseline instead of current law. Against current policy, Senator Obama’s proposals would raise $800 billion ($700 billion earlier) and Senator McCain’s proposals lose $600 billion, unchanged from earlier.

The Center notes that details on many parts of the plans are lacking so estimates are based on assumptions.

The new analysis adds a ”very preliminary” estimate of the economic impact of the candidates’ health plan proposals. Under the Center’s assumptions, if the plans took effect in 2009, the McCain plan would cost about $1.3 trillion over ten years and the Obama plan would cost about $1.6 trillion.

Comments

[DavyJ:]

Does it make any difference?

There is no intention to pay off the national debt ever. EVER!

And there is no person or office responsible for paying off the debt.

2008 Jul 25 11:58 AM

[Jason Rines...:]

The American citizen is being held responsible for paying the public debt through inflation. So you keep running deficits you bankrupt the middle class and what occurs is two classes, the top 3% and evereone else on some form of government subsidy.

Productivity drops as the American workers begins to see there is no winning. Political or physical revolution occurs. The bailout behavior of Freddie and Fannie demonstrate my point.

Foreigners will not continue subsidizing our debts as we buy less imports from them. Imports slow when the bottom 97% can only afford non-discretionary spending. Plenty of data this last quarter to prove this point.

That means it's the taxpayer money alone for the foreseeable future that either coughs up in ever increasing amounts or we default on our debt.

It's not 1987, the entire world has lent us money and bought into our failed economic experiment of the last 15 years. Now they expect us to honor our obligations. We are borrowing from foreigners now to pay for the servicing of our debt.

With no innovation and job creation, the citizenship will not be able to keep up with the tax burden. In March I wrote the President the ONLY way to avoid depression and possible black swan event of an economic collapse was to innovate in energy and RIGHT NOW with $150B subsidy, $100 B being handled by responsible regional banks and $50 B going into the Small Business Administration. We are seeing all the bailouts of future capital deployment going to the corrupt to further squander at taxpayer expense.

2008 Jul 25 01:43 PM

[scottm1207:]

AS long as congress spends like drunken sailors, and refuses to junk the current entitlement ponzi schemes, nothing will change.

And did this group use static or dynamic analysis? Me thinks uhbama's plans to increase taxes will temporarily increase tax revenue until the taxpayers revolt at being fleeced, and either end their economic activity that the government relys upon, or they shelter their income from taxes as always happens when the marxists bludgeon them with irrationally high taxes.

2008 Jul 25 09:39 PM

[scottm1207:]

Or should that be, relies upon? LOL

2008 Jul 25 09:40 PM

[Steven Hansen:]

i have never seen a president's spending plan implemented. will it be different this time?

2008 Jul 26 05:53 AM

[sbenard:]

Yesterday, CNBC gave a running total of the entire tab for government interventions and bail-outs since Aug last year. The tab?

$1.43 TRILLION!

2008 Jul 26 11:00 PM

[xsuddensam:]

Everyone is wasting their breath. It was stupidity, corruption and greed that drove our nation into borrowing itself into oblivion. Now, all we can do is keep borrowing.

It's exactly like making minimum credit card payments with a cash advance from another credit card. Eventually, there's no where to go.

GOLD. GOLD. GOLD.

Like I've said before, if you don't have any, get some. If you have some, keep it.....and don't let anyone hold it for you (ETFs). Don't trust anyone with your gold.

2008 Jul 27 04:44 AM

[Jason Rines...:]

That is an additional stage when the taxpayers revolt, it's called property confiscation.


On Jul 25 09:39 PM Scott M wrote:

> AS long as congress spends like drunken sailors, and refuses to junk
> the current entitlement ponzi schemes, nothing will change.
>
> And did this group use static or dynamic analysis? Me thinks uhbama's
> plans to increase taxes will temporarily increase tax revenue until
> the taxpayers revolt at being fleeced, and either end their economic
> activity that the government relys upon, or they shelter their income
> from taxes as always happens when the marxists bludgeon them with
> irrationally high taxes.

2008 Jul 28 05:52 PM