McCain promises to renew the full roster of Bush tax cuts enacted in 2001 and 2003 and add many more for businesses and upper income people who pay the alternative minimum tax. The Bush tax cuts expire at the end of 2010 and renewing them would soon cost well over $200 billion a year. Eliminating the alternative minimum at the same time would cost almost as much.
Obama would repeal tax cuts on wealthier taxpayers and investors but would leave most of the Bush tax cuts in place while seeking additional cuts for senior citizens, the middle class and the working poor. And he also wants lots of new spending for health care, education and many other federal programs.
"There's a total disconnect between today's report and what we're hearing on the campaign trail," said Robert Bixby of the Concord Coalition budget watchdog group.
The deficit situation confronting the next US president is reminiscent of that which Bill Clinton faced in 1993. Under Wall Street pressure, Clinton abandoned promises of tax cuts and pushed a tax-heavy deficit reduction plan through a Democratic Congress.
The administration said the deficit was being driven to an all-time high by the sagging economy and the stimulus payments being made to 130 million households in an effort to keep the country from falling into a deep recession. But the numbers could go even higher if the economy performs worse than the White House predicts.
The budget office predicts the US economy will grow at a rate of 1.6 percent this year and will rebound to a 2.2 percent growth rate next year. That's a half point higher than predicted by the widely cited "blue chip" consensus of business economists. The administration also sees inflation averaging 3.8 percent this year, but easing to 2.3 percent next year -- better than the 3 percent seen by the blue chip panel.
"The nation's economy has continued to expand and remains fundamentally resilient," said the budget office report.
