The non-partisan Committee for a Responsible Federal Budget

Obama's 'Trillion Dollar' Spending Plan

"Under Barack Obama's plan, the government would spend a trillion dollars more, even after the bailout. A trillion dollars. Who pays? You do. New taxes. New spending. New debt. Barack Obama's plan: It will make the problem worse."

Republican National Committee Ad, Septemebr 30, 2008

A new GOP ad claims that Barack Obama is planning to spend "a trillion dollars" in new government programs, such as health care and investments in green technology. John McCain has made a very similar claim. In a campaign stop Monday, in Columbus, Ohio, the Republican presidential candidate said that his Democratic rival was proposing "more than $860 million" in new spending. The Obama camp contests the claim. So what is the truth?

The Facts

There is clearly a significant philosophical difference between the two candidates on taxing and spending. Independent analyses show that McCain would raise less money in taxes than Obama, but he would also spend less. According to the independent Tax Policy Center, neither candidate does anything significant to curb the projected increase in the size of the national debt by trillions of dollars over the next decade.

The non-partisan Committee for a Responsible Federal Budget calculates that Obama has promised a total of $990 billion in new spending over his first four-year term. At the same time, he has also proposed spending cuts that amount to around $989 billion, so the net cost roughly balances out. The debt will continue to increase, more or less in line with current projections, based on keeping most of the Bush tax cuts.

"Obama has talked about a lot of new spending initiatives, but he has also talked about new ways to curb spending," said Maya MacGuineas, president of the Committee, whose detailed budget analyses are available here. "I give him points for holding the line."

A very different calculation has been made by the conservative National Taxpayers Union, which has compiled a much more detailed list of the two candidates' proposed spending plans. According to NTU calculations, Obama is proposing net spending increases of around $292 billion a year, or more than $1 trillion over four years.

The NTU Foundation tally includes many smaller spending proposals (less than $2 billion each) ignored by the Committee for a Responsible Federal Budget. Together, these campaign promises add up to tens of billions of dollars a year. But that by itself is not sufficient to explain the discrepancy between the two thinktanks. The NTU Foundation appears to be using a different methodology for some of the big-ticket items, such as health care spending. Over the next few weeks, I will attempt to compare the two sets of analyses to determine which is closer to the truth.

The NTU Foundation looks only at spending, and makes no attempt to look at the overall fiscal implications of the two candidates' tax plans. Senior analyst Demian Brady said it was unclear whether the Obama spending proposals would be financed by tax increases, or an increase in the national debt.

Jason Furman, a senior Obama economics adviser, dismissed the NTU analysis as politically "partisan." He said that the NTU was counting Obama's refundable health tax credits as extra government "spending," and ignored various spending cuts proposed by Obama. The McCain campaign did not respond for a request for comment.

The Pinocchio Test

Barack Obama has proposed a series of big new spending initiatives on the campaign trail. He has also proposed some significant spending cuts. Economists disagree about the likely fiscal impact of the Obama proposals. Even allowing for this disagreement, it is nevertheless clear that neither the Obama plan, nor the McCain plan, will put the country back on the path to fiscal health. Neither campaign is being completely honest about the economic challenges ahead. Two Pinocchios apiece.

(About our rating scale.)

Source   The Washington Post

Home
RSS Feed
Email Subscribe