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Deficit could top $1 trillion

By Christina Bellantoni and David M. Dickson | Wednesday, September 24, 2008

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Sen. Barack Obama said the economic crisis and $700 billion government bailout may force him to delay his campaign promises, but pledged nothing would stop him from offering a middle-class tax cut.

With budget experts estimating next year's federal budget deficit could top $1 trillion, Mr. Obama acknowledged some of his big-ticket proposals - from universal health care to making college affordable - may not become reality right away if the economy continues to sag.

"Does that mean I can do everything that I've called for in this campaign right away? Probably not. I think we're going to have to phase it in," Mr. Obama said in an interview for NBC's "Today Show" taped Monday. "And a lot of it's going to depend on what our tax revenues look like."

The Democratic nominee insists his plans are already paid for with spending cuts, ending tax breaks for corporations that ship jobs overseas and withdrawing troops from Iraq. But he also told reporters Tuesday he is unsure what the nation's fiscal outlook would be if he takes the oath of office in January.

Later Tuesday, Republican nominee Sen. John McCain did not directly respond to queries from reporters about the faltering economy's potential impact on his plans.

"The way out of this is to grow our economy, cut spending, keep taxes low, make sure that there are incentives in place for jobs and businesses to grow and flourish," he said. "We need to grow the economy. And we can grow the economy, I believe, by keeping people's taxes low and stimulating businesses and economic growth, and at the same time restrain the growth of spending, which I have fought for for years and have been successful in some areas."

The Committee for a Responsible Federal Government, a bipartisan nonprofit group, estimated that the promises from both candidates would add substantially to the budget deficit.

According to the group's report issued this month, Mr. McCain's plans would add between $291 billion and $304 billion to the deficit by 2013. Mr. Obama's plans would add $139 billion to the deficit. A large portion of the McCain total is attributed to extending the Bush tax cuts, which are set to expire next year.

A hypothetical President Obama or President McCain would need to face the inevitable ballooning deficit, which experts said will likely exceed $1 trillion next year if the Bush administration's $700 billion Wall Street bailout earns congressional approval.

To date, the U.S. government has never run an annual budget deficit as high as $500 billion.