Today, the Congressional Budget Office (CBO) announced that “the federal government will run a near-record deficit of $407 billion for the budget year ending Sept. 30.” These figures “are slightly worse than White House predictions released in July,” which estimated a deficit of $389 billion.
“Today’s report makes it challenging to avoid playing the dismal economist, which I generally dislike doing,” wrote CBO Director Peter Orszag. “And according to CBO’s updated economic forecast, the economy is likely to experience at least several more months of weakness.”
The record deficit is a testament to the fiscal irresponsibility of the Bush administration, which cut taxes for the wealthy while spending $858 billion on “combat and related operations in Iraq and Afghanistan since 2001, with most on the war in Iraq.” Forbes notes that “If CBO’s predictions hold true, President Bush’s goal of leaving office early next year with the federal government on a glidepath to balancing its budget by 2012 will not be realized.”
But Bush isn’t the only one with budget goals that will not be realized. Though he has repeatedly promised to balance the budget by the end of his first (or maybe second) term, Sen. John McCain (R-AZ) has an economic plan that would simply exacerbate the problem of an already exploding deficit.
As an analysis by the Center for American Progress shows, under McCain, “yearly deficits would increase sharply, beginning with $505 billion” in 2009. And as the non-partisan Tax Policy Center reported “policies [McCain] identifies, such as limiting earmarks, would offset only part of the revenue losses attributable to his tax plan.”
Ultimately, McCain’s proposals would result in the largest deficit in 25 years, unless he were to require “draconian spending cuts,” from which “critical infrastructure investments for roads, bridges, and dams may be deferred; and the national defense may suffer.”
McCain has tried to claim that he will balance the budget through cutting $160 billion in discretionary spending and $65 billion in earmarks, but he won’t identify specifically where he would make such cuts. In any case, McCain could eliminate 10 entire cabinet agencies and still not balance the budget.
With the proposals of Sen. Barack Obama (D-IL), meanwhile, it is “clear where the money is coming from: higher taxes on high-income families, ending the war in Iraq, selling the right to emit greenhouse gases, and cutting subsidies to oil and gas companies, health insurers, drug companies, and the student loan industry.”