Recent Fed and Treasury rescues of Bear Sterans, AIG, Fannie Mae, and Freddie Mac, total $900 billion in cost, according to CNBC. The federal deficit, now at $400 billion, will likely explode from the bailouts.
Sen. John McCain has proposed doubling Bush’s tax cuts, resulting in a deficit of $505 billion. On Thursday, in an interview with Tom Ashbrook, McCain adviser John Taylor said McCain could still balance the budget by 2013 after the bailouts:
Q: So has Sen. McCain changed at all his plans on tax cuts? Can you lay out these big bailouts and still have these tax cuts that he’s been promoting — the Bush tax cuts extended and more?
TAYLOR: Well you need to have tax cuts that focus on creating jobs and getting America going. … Sen. McCain wants to make sure the economy grows. He has a detailed plan to balance the budget by the end of his first term. It requires discipline to keep spending keep spending growth from being too rapid.
Listen to it:
Former Treasury Secretary and Obama adviser Lawrence Summers was incredulous, challenging Taylor to “make available a detailed budget documenting your claim that Sen. McCain will balance the budget with 2013 for external scrutiny and to show where the cuts are from.” Taylor, however, refused, claiming the ” information’s already been available to the Tax Policy Center.” In a tense exchange, Summers shot back:
SUMMERS: John, I am sorry that you are speaking in this way. And I make the challenge. The Tax Policy Center has laid out $3.4 trillion of extra deficits from Sen. McCain’s plan. Show us the spending cuts! Show someone the spending cuts!
With the $900 billion in bailouts, McCain’s plan to eliminate the deficit by 2013 is impossible without the most paralyzing of spending cuts. This problem becomes even worse for McCain after Henry Paulson’s announced yesterday a new plan to help banks offload mortgage assets costing “hundreds of billions” of dollars.
“This cripples the domestic policy priorities of the next president,” said Rep. Jim Cooper (D-TN) of Paulson’s announcement. The McCain campaign, however, seems to believe their reckless tax cuts are immune to this financial crisis.