N.Y. Times (July 12, 2008)

July 12, 2008

Editorial
There He Goes Again

This has been a week in which the stock markets lurched sickeningly downward. The treasury secretary had to swat away rumors that Fannie Mae and Freddie Mac, the pillars of the mortgage business, may be crumbling. Oil prices spiked, again. Airlines cut schedules and raised prices, again. And the best that could be said about one of the nation’s biggest companies, General Electric, was that it didn’t do worse in the second quarter than Wall Street had expected.

All of that made it more clear than ever why this nation desperately needs the next president to have a clear-eyed vision for the economy — and the federal budget in particular. And yet, the biggest news that Senator John McCain made last week was his renewal of a pledge to balance the federal budget by 2013. How? Who knows?

Mr. McCain’s main campaign promises, if fulfilled, would lead to huge budget deficits. Extending the Bush tax cuts, enacting more tax cuts of his own and staying the course in Iraq would cost hundreds of billions of dollars more, every year, than the small bore spending cuts he has specified. Mr. McCain cannot balance the budget on a crusade against pork and a one-year freeze in a sliver of federal spending. Either he has a secret plan to balance the budget or he’s blowing smoke.

It is safe to assume there is no secret plan. To balance the budget in the face of ever-increasing tax cuts would require untenable near-term cuts in Medicare, one of the biggest drivers of budget imbalance. That, in turn, would harm elderly Americans, arguably Mr. McCain’s most important constituency.

Do not misunderstand our argument. Controlling Medicare costs is essential to restoring budget health. But no politician, least of all Mr. McCain, is simply going to slash the life out of the program. Even reform of Social Security, which Mr. McCain has also promised and which also must occur to restore long-term fiscal balance, would not right the budget anytime soon. Any feasible reform (not that Mr. McCain has one) would have to phase in over decades.

Which leads us to conclude that Mr. McCain is merely talking the balanced-budget talk.

Mr. McCain and his advisers must know that his numbers do not add up. But adding up is not their point. Their point is to perpetuate the fantasy that Americans can have ever bigger tax cuts and a balanced federal budget. They cannot. The unbalanced budgets of the Reagan years and two Bush presidencies are proof.

No one — not presidents, not members of Congress, not the voters — has ever been willing, and rightly so, to starve government to the point that would make never-ending tax cuts affordable. But feeding the fantasy is easier than presenting tough choices, and it worked for Mr. McCain’s Republican predecessors.

Following in those footsteps does not, however, make a good case for his candidacy. Americans face hardship in the years to come. The demands of a tanking economy, coming on top of years of unmet needs — for health care, infrastructure repair and alternative energy, to name a few — will require the next president to spend more and to raise taxes to support that spending. A blanket commitment to cutting tax cuts while balancing the budget precludes sensible discussion of how to do that.

Longer term, the challenge is perhaps even more daunting. Saving more is ultimately the only way to dig out of the budget hole that the nation is in. That will be painful, because higher government savings, done properly, means higher taxes and restrained spending. Candidates for president do not like to be pessimistic, or even candid, really, about the economy. But a leader who wants to steer the nation through tough times should not spend the campaign telling Americans they can have it all.