McCain budget numbers don't add up, experts say

By Andy Sullivan - Analysis

WASHINGTON (Reuters) - John McCain's reputation for "straight talk" has helped him clinch the Republican presidential nomination but budget experts say his numbers do not add up.

McCain's promises to reduce wasteful spending if elected president in November would not begin to cover the costs of his proposed tax cuts, analysts say.

He also has not yet explained how he would rein in the health-care and retirement costs expected to swamp the federal budget as some 77 million people retire from the U.S. work force in the coming decades.

On top of that, a President McCain would inherit a $400 billion budget deficit, wars in Iraq and Afghanistan that cost nearly $200 billion per year and a similar bill for interest payments on the $10 trillion national debt.

Many experts said McCain's proposals would make the fiscal picture worse.

"This is one of the most fiscally irresponsible plans we've seen by a presidential candidate in a long time," said Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities.

Vague, expensive promises are not unusual on the campaign trail and the proposals put forward by Democratic candidates Barack Obama and Hillary Clinton also would likely lead to increased deficits, analysts said.

"I don't think anybody's numbers add up when they run for president," said Jared Bernstein of the liberal Economic Policy Institute. "I do fear that (McCain's) don't add up the most."

As an Arizona senator, McCain has fiercely criticized the congressional pet projects known as "earmarks," which have figured in several recent corruption scandals.

On the campaign trail, he often says he would veto any bills that contain earmarks. But the $18 billion spent on earmarks last year accounted for less than 1 percent of the federal budget, according to the watchdog group Taxpayers for Common Sense. McCain advisors say the actual figure is closer to $60 billion when spending for projects passed in earlier years is included.

COST OF WARS

Still, McCain would have a tough time cutting all of that spending because much of it would come out of the Pentagon's budget as the United States fights in Iraq and Afghanistan, said Joshua Gordon, senior policy analyst at the Concord Coalition, a centrist budget watchdog group.

McCain's spending cuts would be outweighed by his proposed tax cuts, experts say.

He angered conservatives when he opposed President George. W. Bush's income-tax cuts in 2001 and 2003 on the grounds that they favored the wealthy and were fiscally irresponsible. He now supports making them permanent, echoing Bush in saying that allowing them to expire would amount to a tax increase.

McCain also wants to slash corporate tax rates from 35 percent to 25 percent and allow businesses to immediately write off capital expenses. He has called for reforming the Alternative Minimum Tax, initially targeted at the wealthy but now snaring many middle-class taxpayers.