Just as a reminder and a reality check, I am offering you an article from Bloomberg dated August 2008. . .
By the way, price of gas at that time was $3.96 (up from $1.98 in 2001)
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ELECTION WATCH August 7, 2008, 5:00PM ESTtext size: TT
Why Their Economic Plans Don't Add Up
A rocky economy means the gap between campaign promises and governing realities may be larger than ever this year
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As he crisscrosses the country in his quest for the Presidency, Senator John McCain frequently repeats his vow to keep today's low income tax rates in place, take a further whack at the estate tax, and ease the tax burden on business. "I want to look you in the eye," he said at a July 30 town hall meeting at a local Caterpillar (
CAT) dealer in Aurora, Colo. "I will not raise your taxes nor support a tax increase. I will not do it."
Yet how much faith should voters put in the Arizona Republican's proposals? Or for that matter in Senator Barack Obama's bold plans to spend hundreds of billions on national health care, infrastructure, education, and energy? Put another way, how likely is it that the plans now being spelled out on the campaign trail will actually come to pass? In two words, not very.
Politics, the weak economy, and the reality of the ballooning federal budget will all limit the next President's room for maneuver. McCain's low-tax strategy could well be chewed up in a Congress that is likely to be even more Democratic than it is today. Obama's lofty plans could be undone by the hefty costs of his health-care plan and other programs. Even some Democrats may not stomach the huge expense and vast complexity of Obama's proposals.
In every election there is a big gap between what the candidates promise and what they can actually deliver. Think of Bill Clinton campaigning on middle-class tax cuts, universal health care, and infrastructure development. He spent much of his Administration cutting the deficit, not implementing big new programs. Or George W. Bush, who said he would trim greenhouse gas emissions in a move to buff his eco-credentials when facing off against Al Gore. Bush quickly abandoned that idea once the race was won.
This year that gap between promise and reality may be even larger than usual. "Whoever wins will face a big wake-up call as soon as the election is over," says Daniel Clifton, head of Washington policy research for investment group Strategas Research Partners. "Many campaign promises will need to be scuttled."
The 2009 economy will offer tough conditions for a President set on bold new policies. The next Administration will face anemic growth, sluggish employment, a housing downturn expected to continue at least through much of next year, and continued tight credit markets as the shakeout works its way through the financial sector.
And in part because of last spring's $168 billion stimulus, the federal deficit will rise to nearly $500 billion next year, almost three times fiscal 2007 levels. There's a growing sense in Washington, particularly among Democrats, that another round of stimulus or further moves to bail out the housing or financial markets could be needed. Such spending could add tens if not hundreds of billions to the deficit. In the face of that tab, the question will be whether McCain or Obama can find the money to fund many of their tax cuts and spending proposals.
Some economists think the next President will have more room to maneuver than those deficit estimates suggest. A $500 billion deficit would be about 3.6% of gross domestic product, still well below the 6% high reached in 1983. Many economists also think heavy deficit spending is the right move in a slowdown. But sustained continued deficits do still matter, especially given the looming costs of Medicare and Social Security—it's the trajectory that counts, says James Poterba, the head of the economics department at Massachusetts Institute of Technology. And "there is no question that the proposals of either candidate would dramatically worsen the fiscal situation," adds Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, a project of the New America Foundation, a think tank.
