Impact of Candidates’ Tax Plans on National Debt Worsens
The Tax Policy Center has updated its analysis of the fiscal impact of the tax proposals of Presidential candidates Senators John McCain and Barack Obama. In both cases, the impact on the national debt would be greater than under the Center’s previous model.
Senator Obama’s plan as described by his economic advisers would increase the debt by about $3.4 trillion by 2018; Senator McCain’s plan would increase it by $5.0 trillion.
And the health proposals and campaign promises not in the official descriptions could increase the costs still further. This compares with increases of $3.3 trillion and $4.5 trillion respectively in the Center’s previous analysis.
Both candidates claim, however, that they will reduce spending below the Congressional Budget Office’s baseline projection used by the Center, which would shrink the deficits.
Although both candidates have at times stressed fiscal responsibility, their specific non-health tax proposals would reduce tax revenues by an estimated $4.2 trillion (McCain) and $2.8 trillion (Obama) over the next 10 years.
These numbers are down slightly from $4.5 trillion and $3.3 trillion estimated earlier. Both candidates argue that their proposals should be scored against a “current policy” baseline instead of current law. Against current policy, Senator Obama’s proposals would raise $800 billion ($700 billion earlier) and Senator McCain’s proposals lose $600 billion, unchanged from earlier.
The Center notes that details on many parts of the plans are lacking so estimates are based on assumptions.
The new analysis adds a ”very preliminary” estimate of the economic impact of the candidates’ health plan proposals. Under the Center’s assumptions, if the plans took effect in 2009, the McCain plan would cost about $1.3 trillion over ten years and the Obama plan would cost about $1.6 trillion.
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