Candidates' eyes may be bigger than nation's wallet
Paying for itHow major Democratic presidential candidates Hillary Rodham Clinton and Barack Obama propose paying for some of their proposed spending:
Roll back some of the 2001 and 2003 tax cuts for families with annual incomes above $250,000.
Begin to draw down the U.S. military presence in Iraq, costing on average $9 billion a month.
Tax polluters to pay for cleaner emissions efforts.
Obama proposes unspecified increases to corporate taxes and trying to tax profits made by U.S. corporations abroad.
To address Social Security solvency, Obama proposes lifting a cap on Social Security contributions, which aren't collected on income of more than $102,000.
Clinton wouldn't let the estate tax expire but would freeze it at 2009 levels.
Sources: Clinton and Obama campaign Web sites, campaign speeches
HOUSTON — Hillary Rodham Clinton and Barack Obama champion fiscal responsibility on the campaign trail, but both Democratic presidential hopefuls are promising massive new spending without providing details on how they'd pay for it.
The nation will face unprecedented fiscal challenges as the baby-boom generation — about 76 million Americans born from 1946 to 1964 — reaches retirement age and begins straining the federal budget as never before.
The federal budget deficit is projected to exceed $400 billion next year. Deficits are paid for by borrowing. The gross federal debt, the sum of what our government owes, is in the neighborhood of $9 trillion.
That means there's less room to borrow to deal with the growing budget pressure as boomers retire.
By 2017, Social Security is expected to begin paying more out in benefits to retirees than it collects from workers. And the number of Medicare recipients will grow from 44 million last year to 58 million over the next decade.
Increased spending on health and welfare programs for the boomers will start to crowd out other federal spending. That's why the two Democrats' mounting campaign promises raise concern among budget experts, who aren't hearing much about where the money would come from.
Clinton has proposed new spending in excess of $200 billion, much of it annual. Obama has surpassed her, promising annual spending of at least $210 billion.
Both have offered expensive plans to get to universal health-care coverage, either through incentives or by government mandate. They've proposed spending big money to help avert housing foreclosures nationwide and to help refinance mortgages for borrowers in trouble.
Both are counting on savings from reducing the U.S. presence in Iraq and rolling back some of President Bush's tax cuts, which are scheduled to expire after 2010, to pay for their new programs. Both expect that expanded use of electronic health records and other advances in medical information technology will defray some of the cost of moving to a universal health-care system.
Neither, however, has proposed a fix for the biggest near-term strain on the federal budget, the alternative minimum tax, or explained how they propose to balance the cost of their campaign promises with the looming expense of the aging baby boomers.
During a speech Tuesday night in Houston, Obama rattled off a list of promises: lower insurance premiums for all families, subsidized premiums for those who can't afford them, tax cuts for Americans who earn less than $75,000, no income tax for retirees who earn less than $50,000, inflation-linked increases in the minimum wage, a $4,000 tuition credit for every college student and unspecified investment in early-childhood education, roads, buildings and hospitals.
To pay for it, he cited without specifics higher taxes on the wealthy and corporations, billions of dollars from "polluters" to pay for alternative energy and ending the Iraq war, which is costing an estimated $9 billion a month.
"We can invest that money in rebuilding roads and bridges and hospitals right here in Houston — building schools, laying broadband lines, putting people back to work, employing young men and women in our inner cities, in our rural communities," he said to cheers.
That $9 billion in war spending, however, is largely borrowed money, much of it from China and Japan. If Obama intends to redirect war spending to domestic needs, it still would be deficit spending.
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