Fiscal Responsibility, 21st Century Style

This morning the Washington post has an editorial. They’ve totaled up the various promises that Sens. Clinton and Obama have made on the stump and the bill is pretty high:

THE DEMOCRATIC presidential candidates have some big plans — with big price tags attached. By our calculations, using figures supplied by the campaigns, Sen. Hillary Rodham Clinton (N.Y.) has proposed new spending and tax breaks that would amount to almost $265 billion a year when fully implemented, while the initiatives proposed by Sen. Barack Obama (Ill.) total nearly $333 billion. Those initiatives, which would be phased in over time and which the candidates say they have identified ways of funding, don’t include billions of dollars more in one-time spending.

In addition, both candidates would extend the Bush tax cuts for those making less than $250,000 a year, at an annual cost of another $140 billion in 2012, and renew the research tax credit ($9 billion). And both say they would take steps to prevent the alternative minimum tax from sweeping in additional taxpayers, adding $50 billion or so to the annual price tag. So the deficit — even before any new spending — would be that much deeper than it would have been if the tax cuts were permitted to expire.

These numbers, moreover, don’t include some initiatives that the candidates talk about but for which they haven’t formulated specific policies. For instance, Mr. Obama’s campaign Web site says he supports closing the “doughnut hole” in the Medicare prescription drug plan, while Ms. Clinton has promised on the campaign trail to “fix” the hole. That could cost as much as $40 billion annually. Meanwhile, both Democrats put themselves into a new straitjacket at the last debate by promising that they would never raise taxes on the middle class — which they went on to define generously as those earning less than $200,000 or $250,000 a year.

Altogether, then, they are talking about additional costs to the tune of a half-trillion dollars per year, more (Obama) or less (Clinton). The total federal budget this year is about $2.9 trillion.

The figures are on the right.

John McCain doesn’t come off unscathed, either:

Mr. Obama and Ms. Clinton don’t pretend to offset the cost of extending the tax cuts or fixing the alternative minimum tax, but then, the presumptive Republican nominee, Sen. John McCain (Ariz.), would do the same and more without paying for it. As to the new spending, both candidates say they have identified “pay-fors” that would more than cover the cost of the new initiatives. But will these savings materialize? Some of those savings, for example, from undoing part of the Bush tax cuts, can be measured with certainty; others, such as wringing tens of billions of dollars in costs out of the health-care system, are gauzy and speculative; still others — doing away with corporate subsidies, say — would be politically tough to achieve.

It’s remarkable what you can do with money, isn’t? What’s lost in the stump speech promises and the undotted i’s and uncrossed t’s is that all of that money, an increase of nearly 16% to the budget, is the dislocation in the economy the big plans would cause. However they’re financed, unless, of course we irresponsibly borrow the total shortfall, we’ll be taking money from somebody and giving it to somebody else. Whatever the money would have originally been spent for won’t happen. That will include a lot of new businesses that won’t be started and plants that won’t be built and shops that won’t be opened—and a lot of people who won’t be employed with the new jobs that would be created.

Some new jobs and new businesses will be created by the new plans, to be sure. But, fundamentally, no matter how smart and well-intentioned the candidates are, I don’t believe that central planning will allocate resources as efficiently as the market would have.

What do I think should happen? Actually, I think some of the ideas that have been thrown about have been good ones. I think that the candidates should level with the American people, tell them just how much their plans will cost, how likely they are to be able to get them through the Congress, and where all the money to pay for them will come from. In short, I think they should treat us like adults.