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The Candidates’ Advisors Care More About the Deficit Than the Press Realizes

June 21st, 2008 . by economistmom

From this morning’s Washington Post (front page), Lori Montgomery writes that the candidates are making “big promises” that defy “budget realities.”  What I found interesting is that she didn’t highlight the fact that the leading economic advisors to both candidates are themselves very aware of how their candidates’ promises square with reality, and that’s why they choose their words so carefully.

The article quotes Obama advisor Austan Goolsbee:

Obama economic adviser Austan Goolsbee said the senator has identified ways to cover the costs of his proposals, starting with savings of $90 billion a year from ending the Iraq war. “All of his programs are paid for and the deficit would come down” from where it is today, Goolsbee said.

Austan is not lying.  Note that “paid for” is always a relative concept, relative to whatever baseline is in one’s head at the time, and this fiscal year’s budget deficit is expected to be in the $400-$500 billion range.  It reached $317 billion just in the first eight months.

I thought this a good time to point out that Austan Goolsbee knows that deficits matter.

But mostly I wanted to point out that in Lori’s citation of this Brookings analysis

In a new paper titled “Facing the Music: The Fiscal Outlook at the End of the Bush Administration,” University of California at Berkeley economist Alan Auerbach and two co-authors from the Brookings Institution conclude that, if spending grows at historic rates, simply keeping the Bush tax cuts and halting the spread of the AMT would drive the budget deficit to $481 billion by the end of the next president’s first term, or 2.7 percent of the economy. Subtract the cash borrowed from Social Security and other retirement funds, and it would be $796 billion, or 4.4 percent of GDP.

…she fails to note that one of those two Brookings scholars is none other than Jason Furman, Obama’s new economic policy director. 

I could cite some wise (past) words and analyses of McCain advisor, Doug Holtz-Eakin, on fiscal responsibility as well, but I’ll do that some other time.  They’re out there.

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