The Free Press, Mankato, MN

Editorials

August 30, 2008

Our View: Candidates need plans to pay for their plans

There is perhaps nothing more fundamental about good money management — by the government or by a family — than being able to pay for what you buy.

That’s why it’s disappointing that neither Barack Obama nor John McCain have realistic and credible plans to pay for the tax cuts they’re promising. McCain would like to not only extend the Bush tax cuts of 2001 to everyone, but also cut the corporate tax rate from 35 percent to 25 percent and add a few other extras at a cost estimated to be $500 billion a year, according to The Wall Street Journal.

McCain says he can provide the tax cuts and balance the budget by the end of his first term, relying on economic growth in the economy, and keeping federal spending growth to 2.4 percent, including a one year freeze on all discretionary spending, usually one-third of total budget, or about $1 trillion.

But a report from the U.S. Treasury said economic growth since the Bush tax cuts of 2001 have barely paid for 10 percent of the cost. Freezing discretionary spending seems unrealistic, given the interest groups involved in myriad programs.

Obama's tax cuts to middle class will cost $85 billion. He would pay for it by raising the capital gains tax to at least 20 percent from the current 15 percent and closing corporate tax loopholes. He would extend Bush tax cuts to those with incomes under $250,000 but he doesn’t say how he would pay for it, according to The Journal.

The nonpartisan Concord Coalition says both candidates want to exempt their tax cut ideas from Congressional Paygo rules that require any new spending or new tax cuts to be offset by other tax increases or spending cuts so as not to increase the federal deficit.

The stakes are too high for presidential candidates to be hoping good economic conditions bail them out of a federal budget situation that is growing further out of control each year. The Concord Coalition says today’s budget policies “burden taxpayers,” “raise interest expenses” make it tougher for businesses to expand and “increase our reliance on borrowing from other countries.”

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