Democratic Promises and Lack of Fiscal Responsibility

A few AB readers have complained that I have been very hard on John McCain’s proposed fiscal irresponsibility but rather silent on what Clinton and Obama have been saying. Only M. Jed does something constructive as he brings to my attention Who’ll Cover the Checks in the Friday edition of the Washington Post:

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.

Actually, both Democrats have talked about raising some tax rates, which the oped later briefly acknowledges. And I’d be foolish to take on face value something the WaPo calls “by our calculations”. But there is a general point that I agree with. If the Democrats are proposing increasing our commitment to Federal funded of health care, someone will have to pay taxes for this at some time. During the 2004 campaign, I recoiled whenever John Kerry said he’s cut taxes for the middleclass. At the time, the Federal fiscal budget was massively out of balance. That general fact has not changed. If the Democrats are pretending that only the very rich will have to pay higher taxes to bail out George W. Bush’s fiscal fiasco, someone should call this misleading. It is!

In early 1993, one of my expressions for what President Clinton was thinking went like this: “read my lips, much higher taxes”. It was the right thing to do for 1993 and it will be the right thing to do in 2009. So the subtitle of this oped, which is “The Democratic candidates’ tax and spending plans are costly and ambitious — and probably short on fiscal realism”, may have merit. But in my defense, their statements are not nearly as insane or dishonest as the garbage being peddled by John McCain.

Update: AB reader Brooks offered lots of links to fiscal policy discussions. One is them takes us to Howard Gleckman:

To be fair, only Clinton actually set the bar at $250,000. Obama was a lot squishier. After dancing around for a while, he finally concluded “it depends on how you calculate it, but it would be between $200,000 and $250,000.” Obama also muddied the waters a bit more by repeating an earlier campaign proposal to fix Social Security’s shortfall by increasing the payroll tax cap for those making more than about $100,000. This, to him, is apparently not a tax increase. Of course neither candidate was finished. Both have also proposed billions in tax cuts for the middle-class. Clinton would fix the Alternative Minimum Tax, cut taxes for married couples, and families with kids. Obama would do the same for seniors, homeowners, and working families. And, being Democrats, they have lots of new programs they want to spend on. Clinton has a $150 billion alternative energy program and a costly health care reform plan. Obama has his own pricey plans for health care, infrastructure, and job training. How are they going to pay for all this? Both candidates also promised to roll back the Bush tax cuts for those making more than $250,000. According to TPC estimates, that would raise about $1.2 trillion over 10 years. It sounds like a lot, but it would barely pay for AMT relief. Beyond the individual numbers, there is a bigger problem here. I’m the last guy to defend the Bush tax cuts, especially for high earners. Many of these tax breaks should be rolled back. But it is neither politically nor economically sensible to think you can solve all of the nation’s fiscal problems or pay for all your campaign promises on the backs of 3% of households. We are all in this mess, and we all need to contribute something to cleaning it up. Even those middle-class families struggling to get by on a mere quarter of a million dollars-a-year.

Well said!