Remember when Joshua Levs was at WABE, the local National Public Radio (NPR) affiliate? I do. I don’t know Josh beyond saying hello on those very rare occasions when I see him, but I wonder if he ever listens to his old employer's station. If he did, maybe on Sunday when he was narrating a little segment on CNN about the presidential candidates’ tax plans he would have mentioned the impact of their plans on the national deficit. The deficit is not a sexy topic. Americans have come to take the deficit for granted. It's that constantly dripping faucet that you get used to and then never bother to fix. But, if we don’t fix it, we're not likely to regain any kind of long term stability, regardless of who's in the White House. NPR, one of the few news outlets that reports on the deficit, offered interesting interviews about it with Rich Wolf, USA Today’s Washington correspondent, on July 28, and David Wessel, Wall Street Journal economics editor, on Aug. 13.
According to those guys and the Tax Policy Center—the same source Levs used for his segment—neither candidate's plan will reduce the deficit, but Republican John McCain's plan will not increase the deficit as much as Democrat Barack Obama's. Why? Because we can’t significantly cut taxes AND reduce the deficit. Someone has got to pay the tab. Right now, during an economic downturn, most gurus agree that letting the deficit widen is a wise short-term thing to do. We have to spend to stimulate the economy, and we'll have less to spend if we're taxed more.
Another approach would be cutting government spending, something that McCain is talking about, but without specifics. Taking in more revenue and cutting spending, in combination, would probably be the quickest way to dispatch the deficit. And in the long term, just about everybody agrees that we have to do that. Having a hulking deficit means borrowing too much from foreign lenders. The problem isn't that they're foreign, and it's not that we don't welcome their cash (we're all kinda grateful the Arabs bailed out Citi for us), the problem is that when we are paying them back, or only paying on the interest, the money we pay them could be put to better use as American capital for American businesses. Another problem is that it becomes more difficult for us to borrow at reasonable interest rates, since the lenders know we’re strapped and willing to accept their terms.
Yet another problem is that our foreign policy can become compromised by the money we owe to foreign lenders. We have nothing to gain from foreign loans except short term fixes. Barrack Obama’s tax plan will cut taxes for some segments of America by 5 percent. McCain’s will cut taxes by 3 percent across the board, with more tax relief for the upper end of the income spectrum. But, because McCain’s cut is not as deep as Obama’s, there’ s a little more money coming in to government to service the deficit. It’s only a little more, but every bit counts.
We talk a lot about making the right decisions for our children’s future in this election, but that rings hollow when we don’t talk about the deficit. Both candidates should be devising plans to deal with it. In the meantime people concerned about the future of the American economy will choose the lesser evil, and when it comes to the deficit, the lesser evil is John McCain.