On the federal deficit, candidates stay mostly vague

Rising entitlement costs and Iraq war expenses take a back seat to shorter-term stimulus plans.

By Peter Grier | Staff writer of The Christian Science Monitor

from the January 23, 2008 edition

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Washington - Here's some straight talk you're unlikely to hear from most presidential candidates: The next occupant of the Oval Office may have to make some very tough budget choices.

A flood of retiring baby boomers – plus rising healthcare costs – will soon send spending on federal entitlement programs soaring. Revenue won't keep pace, unless Washington allows President Bush's tax cuts to expire and stops shielding the middle class from the bite of the Alternative Minimum Tax.

Even then, Social Security and Medicare costs, piled on top of the expense of the Iraq war, could eventually cause the deficit to explode. It's a structural economic problem that most of the major candidates address only in the vaguest of terms.

"I don't think you're getting a lot of realistic rhetoric or plans from candidates overall," says Robert Bixby, executive director of the Concord Coalition, a budget watchdog group.

In their Jan. 21 debate in Myrtle Beach, S.C., Sen. Hillary Clinton and Sen. Barack Obama clashed over many things, including who would be the most fiscally responsible candidate in the Democratic race. Each charged that the other's ideas for new programs weren't fully offset by new revenues or cuts in other programs. In addition, Senator Obama took a shot at Republican orthodoxy, saying that it now included ideas such as "moving back from a balanced budget and a surplus to deficit and debt."

Candidates face enormous pressure to please voters with expensive promises that appeal to the party faithful. For Democrats, that usually means new or expanded government programs. For Republicans, it's often lower taxes.

Yet "the next President will inherit a fiscally lethal combination of changing demographics, rising health care costs, and falling national savings," according to a Brookings Institution analysis of the economic outlook facing the victor.

While the deficit has dipped to $163 billion for fiscal year 2007, the first members of the baby boom generation, born in 1946, will be eligible for Social Security this year. Over the next two decades, more than 80 million boomers will become eligible for US entitlement programs. That's about 10,000 people per day.

Thus deficits may widen again during the next administration. If Congress stops passing its annual AMT shield, and the Bush tax reductions expire as scheduled, the red ink could surpass $500 billion a year by 2016.

"Without reforms in the near term, the dramatic increases in [entitlement spending] will ultimately require substantial tax increases, major benefit reductions, or massive and unsustainable amounts of borrowing," notes the White House Office of Management and Budget in a 2008 Budget review.

At issue are the candidates' long-term fiscal plans, not their short-term stimulus package ideas for avoiding a recession.

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