WEST PALM BEACH, Fla. — The next president will not be able to do much more than deal with the disaster brought on by years of financial follies. The sell-off of Bear Stearns and the collapse of Lehman Brothers changed everything. That is now plain, bailout or no bailout.
In the definitive question of the first presidential debate, moderator Jim Lehrer asked the candidates: "As president, as a result of whatever financial rescue plan comes about ... what are you going to have to give up, in terms of the priorities that you would bring as president of the United States as a result of having to pay for the financial rescue plan?" Even if the cost never reaches $700 billion, and even if the Treasury recovers some or much of it, the next president will start with a shredded budget.
Lehrer's question was not only apt; in some ways, it was the only significant question of the night. If they get the answer to that one wrong, their other answers are irrelevant.
Not to build up suspense, but they flunked. Barack Obama admitted that he might have to cut something, but listed what he won't cut, which is everything he wants to do. Energy plans might have to be phased in slowly, he finally said. Let's see, $20 billion for energy. That ought to offset $700 billion. Campaigning last week, that remained his final answer. And he'll still cut taxes for 95 percent of Americans.
John McCain was also still cutting taxes in his response. If he could get three times the growth President Bush got with the tax cuts in the first place, and keep it up, he might eventually cover the bailout. Could he? (Hint: No.) He also would end earmarks, which amount to about what Obama saves by delaying his energy program.
When the next president is sworn in, the budget that began last Wednesday will have a projected deficit of $500 billion, with or without a bailout. The deficit grows as jobs are cut, tax collections fall and more people depend on the government for survival. The government is printing money like fliers for massage parlors, so there goes the value of the dollar.
The deficit was projected by the reliable Congressional Budget Office, but that was before the largest bank failure in U.S. history was followed by the federal government taking over banks to sell them to the quickest bidder; before the feds bought us a stake in the world's largest insurance company and before the credit crunch hit Main Street. In five or 10 years, the Treasury may make something on its fire-rescue efforts, but not in the first years of the next presidential term. That $500 billion has become a low number for the existing deficit even if you never add the first dime of $700 billion.
If you add the $700 billion, which may be a high figure for one year, to the $500 billion, which has to be low, you get $1.2 trillion, which just happens to be, almost to the nearest million, the amount Congress appropriated this year for everything, including defense. We could have a deficit equal to the total of the spending bills Congress passes.
Admittedly, government arithmetic is to mathematics what a shoehorn is to a symphony orchestra, but a government really can't go on this way.
Obama can forget his health-care reform, which he admits will be costly but claims is "paid for" by higher taxes on the rich. Can he get another $1.2 billion from the rich? (Hint: No.) If he could, he could balance the budget, and then think about health care.
McCain can spend the daylight hours searching out and vetoing the dreaded earmarks, but he won't he able to work at night without money to pay the White House light bill. The next president will be consumed by the mess. If they aren't planning on that, anything else they talk about is just entertainment.
Tom Blackburn is a former member of the The Palm Beach Post's Editorial Board. His e-mail address is tom UNDERSCORE blackburn AT juno.com.
