Lost in all the media lunacy over pigs and lipstick were the economic projections released by the CBO this week. So instead of talking about the latest McCain campaign smear or repeating Sarah Palin’s lie about the Bridge to Nowhere for the 1,000th time, let’s discuss an actual issue, the economy. I know this election isn’t supposed to be about issues, but it might be a nice diversion.

From the Washington Post:

“A weak economy and a sharp increase in government spending will drive the federal budget deficit to a near-record $407 billion when the budget year ends later this month, and the next president is likely to face a shortfall in January of well over $500 billion, congressional budget analysts said yesterday.

This year’s deficit will be more than double last year’s $161 billion, and it will rise from 1.2 percent of the gross domestic product to nearly 3 percent.”

To make matters worse,  these numbers don’t take into account the government bailout of Freddie Mac and Fannie Mae, which could add as much as $200 billion to that figure.

So how do our 2 presidential candidates intend to tackle this growing deficit monster? Senator Obama wants to allow the Bush tax cuts to expire on those making over $250,000 a year, increasing revenue to the Treasury. Senator McCain wants to cut taxes further, making the deficit even larger.

Here is a chart showing the projections of what the effect of McCain’s plan could be:

McCain’s solution to the deficit problem is to eliminate earmarks and reduce spending, offsetting the reduction in revenue that further tax cuts would bring. Although both of these sound good to the ear of the average taxpayer, the facts are that neither one is a feasible solution to the problem.
By most estimates, earmarks accounted for approximately $16 billion in 2007. Even if they are completely eliminated, which is highly unlikely, the effect on the deficit would be the equivalent of spitting in the ocean and hoping to make the tide rise.

Cutting spending is a similar situation. It is a familiar campaign promise by Republicans, but the question is, what do you cut? Senator McCain is short on specifics.

The facts are that 80% of the federal budget is spent on three things–entitlements, defense, and interest on the debt. These three accounted for $2.3 trillion out of a $2.8 trillion budget in 2007. That means all discretionary spending totals $500 billion. These are dollars spent on things like education, transportation, veteran’s benefits, agriculture, science and technology, energy, and the environment.

So which of these does Senator McCain intend to eliminate? Again, no specifics have been given.

Since McCain is not going to reduce defense spending, to the contrary, he will more than likely increase it, and since interest payment on the debt is fixed, that leaves entitlements, specifically Social Security and Medicare.

These two make up 36% of total federal expenditures. To make any serious reduction in government spending, McCain would have to make drastic cuts in one or both. I haven’t heard that promise from his campaign, have you? Not likely you will, either.