- The Washington Times - Friday, April 18, 2008

ANALYSIS/OPINION:

With the Bush administration projecting a $410 billion budget deficit in fiscal 2008 and a $703 billion increase in the gross federal debt this year, we would have appreciated some “straight talk” about a balanced budget in the 4,200-word speech that John McCain delivered Tuesday. But Mr. McCain found no room in his speech for a “balanced budget.”

His pledge to balance the budget did make an appearance in a grab-bag list of promises published on the campaign’s Web site. “John McCain will not leave office without balancing the federal budget,” the pledge stated. “He will not do it with smoke and mirrors.” Regrettably, Mr. McCain’s entire balanced-budget fiscal policy, such as it is, almost certainly is built on smoke and mirrors.

Don’t get us wrong. We love tax cuts. And we love promises to use the veto to eliminate wasteful spending, especially corruption-inducing, politically self-serving, pork-barrel earmarks. But we also understand arithmetic, and we’re concerned that Mr. McCain does not.

After voting against the 2001 and 2003 tax cuts, which are set to expire at the end of 2010, Mr. McCain wants to permanently extend nearly all of them. Instead of eliminating the estate tax, which will occur for one year in 2010, he would raise the level to which it applies to $10 million and reduce the applicable tax rate to 15 percent.

Rather than continuing to index the alternative minimum tax (AMT) for inflation to prevent tens of millions middle- and upper-middle-class households from paying it, Mr. McCain wants to “permanently repeal” the AMT, which generates more than $25 billion per year in revenue from upper-income taxpayers. He would reduce the top rate for the corporate income tax from 35 percent to 25 percent. (Worth noting: As the annual budget deficit declined by $216 billion from $378 billion in 2003 to $162 billion in 2007, annual revenue generated by the corporate tax increased by $238 billion.) Mr. McCain would further reduce corporate income tax revenue by allowing firms to immediately deduct the cost of equipment investment. He would also double the personal exemption for dependents from $3,500 to $7,000.

On the spending side of the ledger, Mr. McCain promises to (a) freeze non-defense discretionary spending for a year, (b) make wealthy seniors pay for their own drugs and (c) veto any bill containing earmarks, which, according to the 2008 Pig Book published by Citizens Against Government Waste, totaled $17.2 billion in 2008. That’s less than 2.5 percent of the projected increase in the national debt ($703 billion) this year.

His math doesn’t add up. Mr. McCain needs to provide much more detailed information about how he intends to balance the budget.


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