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.

The report assumes that either administration would be able to generate enough money from auctioning pollution permits in a cap-and-trade scheme to pay for its energy programs, which in 2013 would cost $100 billion under Mr. Obama and $5 billion under Mr. McCain.

The report also assumes that Mr. Obama would be able to generate enough savings from his Medicare reforms to pay for the $43 billion cost of eliminating the “doughnut hole” in the Medicare prescription-drug program in 2013. Mr. McCain gets credit for cutting health care costs by $40 billion that same year to partially fund his health care policies.

Miss MacGuineas said it was “troubling” that both candidates “spent all the savings before they got spending under control.”

Both campaigns “are very specific about where they will spend money and how they will cut taxes,” she said. But both campaigns also use “magic asterisks” to identify the spending savings they will achieve to offset the costs of their priorities.

The McCain campaign, for example, said it would reduce spending by enough to balance the budget in 2013. By its calculations, it needed $159 billion in unspecified cuts to meet that goal. According to the calculations in the report, however, those unspecified cuts would still leave the McCain administration as much as $367 billion short of a balanced budget.

“The unspecified spending cuts proposed by both candidates pose a fundamental problem for anybody trying to estimate the cost of their plans,” said James Horney, director of federal fiscal policy at the liberal Center on Budget and Policy Priorities. “Does a candidate have a better anti-deficit plan because his unspecified spending cuts are larger than his opponent’s?”

Brian Riedl, a budget analyst at the conservative Heritage Foundation, agreed with Mr. Horney. “Giving full credit for vague, unspecified savings proposed by both candidates makes the bottom line look more optimistic than it is,” he said.

Though it is five years away, 2013 still represents the short term in the budget cycle.

While both candidates are talking about fiscal responsibility, the nation’s long-term fiscal challenges “are not a centerpiece of this campaign,” Miss MacGuineas said. In fact, “long-term fiscal issues are not even close to the top of the agenda.”

“If any candidate were honest about what we need to do to fix entitlements, he probably wouldn’t be a candidate for long,” she said. “Each time McCain or Obama said something specific” about solving Social Security’s long-term problem, “he was pummeled by members of his own party.”