A deficit no matter who wins?

No matter whom voters send to the White House in January, the next president likely will finish his first term with a budget deficit of about $300 billion if Congress passes all of his tax and spending proposals, a budget watchdog group reported Thursday.

In the first comprehensive analysis that reviews the budget policies of Sen. Barack Obama and Sen. John McCain from both the spending and taxing sides of the ledger, the Committee for a Responsible Federal Budget (CRFB) estimated that Mr. Obama’s policies would transform the current base-line budget surplus of $70 billion for 2013 into a budget deficit of $317 billion. The 2013 fiscal shortfall in a McCain administration would range between $275 billion and $367 billion.

The budget deficit for fiscal 2008, which ends Sept. 30, will be $389 billion, according to White House projections.

“What we found isn’t great,” said Maya MacGuineas, president of the committee.

The report, “Promises, Promises: A Fiscal Voter Guide to the 2008 Election,” analyzes each candidate’s budget proposals involving four main categories: taxes, health care, energy and other spending and savings.

The report used the Congressional Budget Office’s “current law” base line, which assumes the 2001 and 2003 tax cuts will expire as scheduled at the end of 2010. The CBO base line does not provide for an annual patch for the alternative minimum tax (AMT), nor does it fully fund the Iraq and Afghanistan wars.

CBO’s “current law” base line projects a $70 billion surplus for fiscal 2013.

Both campaigns prefer to use a “current policy” base line, which assumes the tax cuts are permanent and fully extended and the AMT is permanently patched.

The “current policy” base line “would leave a big hole in the budget,” Miss MacGuineas said. The CRFB analysis used CBO’s base line because neither candidate could divert from it without congressional approval.

Even though the committee’s analysis ignored their mutually preferred base line, both campaigns were quick to react to the report.

“The new study confirms that all of Barack Obama’s new proposals are fully paid for and reduce the deficit” from today’s level, said Jason Furman, economic policy director for the Obama campaign. “It also shows that all the gimmicks in the world are not nearly enough to balance the budget under Senator McCain’s plan.”

Douglas Holtz-Eakin, senior policy adviser to the McCain campaign, said the study “is missing the most important ingredients to reduce the deficit,” which include job creation and economic growth. “We have a plan to increase jobs. Obama has a plan to damage job growth.”

Measured against CBO’s base line, fully extending the Bush tax cuts would cost $294 billion in 2013. Except for reinstating a much smaller estate tax that would generate $10 billion in 2013, Mr. McCain would extend the Bush tax cuts in their entirety.

By raising the capital gains and dividend tax rates from 15 percent to 20 percent for those earning more than $250,000 and by reinstating an estate tax much larger than Mr. McCain’s, Mr. Obama would effectively extend only $174 billion of the $294 billion in tax cuts for 2013. The presumptive Democratic nominee would use this $120 billion tax increase from the wealthy to fund numerous tax cuts and tax credits aimed at working- and middle-class families.

Both candidates would patch the AMT in 2013 at a cost of $107 billion.

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