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Update on the Federal Deficit

August 4, 2008 · 3 comments

John McCain and Barack Obama both promise to be fiscally responsible and not raise taxes on the middle class if elected president. It’s a tall order no matter who wins… the current White House has released information about the country’s economic status and it’s not good news.

Last week, the White House estimated that the deficit will hit a record $482 billion deficit for the 2009 fiscal year. The crazy part is that does not include an additional $80 billion in costs related to the war in Iraq. That brings the country’s total debt to $9.5 trillion. (For more on the difference between debt and deficit, see my prior post)

What does that mean? For one, the US is paying a lot more interest and less principal (sound familiar?) to service its debt. According to The Concord Coalition, the US paid $200 billion in debt interest last year alone.

Paying off the debt – as well as the interest – will be a huge task for the next president. According to the Tax Policy Center, both candidates will add to the deficit. Estimates are that, if the plans stay as contemplated (which you can bet that they won’t), over the next 10 years, McCain will increase what we owe by $5 trillion, Obama by $3.4 trillion. Those numbers don’t include the costs of health care proposals or Social Security/Medicare, both of which are substantial issues for either candidate.

There has to be a “give” somewhere – continuing to increase spending and promising to cut revenue (taxes) isn’t likely to work. That’s a lesson that I learned the hard way in college… Why can’t Bush, McCain and Obama get it?

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1 Urbie August 4, 2008 at 11:04 am

Kelly,

Since GWB became essentially a non-entity (roughly as of the 2006 election, when his own party deserted him like rats off a sinking ship), it’s been a non-stop feeding frenzy on the part of BOTH parties in Congress. Neither party has shown any fiscal responsibility whatsoever — for practical purposes, there’s no one in the White House, so it’s all about bringing home the bacon/pork/fat/whatever. One hopes that, just as only a Republican could go to China, only a Democrat can balance the budget. That proved to be the case with Clinton, and as this election is Obama’s, provided he doesn’t blow it or get Swift-Boated, we may see a return to lower deficits. Frankly, though, I doubt it — I think the best combination, for deficit reduction, was a Democrat in the White House with Republicans controlling Congress. And that’s out of the question, at least for this election cycle.

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