WASHINGTON — John McCain's and Barack Obama's tax proposals would add trillions of dollars to the national debt, according to an authoritative analysis released Wednesday.
McCain would cut taxes by a total of $4.2 trillion over 10 years, largely by extending most of President Bush's temporary tax reductions, which are set to expire in 2010, according to the analysis by the Tax Policy Center, a nonpartisan operation of the Urban Institute and the Brookings Institution, two center-left Washington research centers.
With interest costs, McCain's plans would add $5 trillion to the national debt over 10 years, the center concluded.
Obama would cut taxes by a total of $2.8 trillion over that period by extending some of Bush's tax reductions and creating new ones for the working and middle classes. That figure includes the extra $284 billion the government would collect over 10 years under Obama's proposals to raise taxes on those who make more than $250,000 annually.
With interest, Obama's plans would increase the national debt by an estimated $3.4 trillion.
The debt now stands at $9.5 trillion, or $31,284.84 for every person in the United States, according to the National Debt Clock Web site. That's all the debt the government has accumulated since George Washington was president. The debt was $5.6 trillion in 2000. Simply paying interest on the debt will cost taxpayers about $260 billion this year, more than three times what the nation will spend on veterans, for example.
The campaigns disputed the findings in a sometimes-heated exchange Wednesday at the Tax Policy Center.
"You could not be further from the truth," said Austan Goolsbee, the senior policy adviser to Obama's campaign. "If this is not wrong, nothing's wrong."
He said the report wrongly made it look as though the two candidates were similar in both proposing big increases in the national debt. He said that Obama would reduce annual budget deficits and the national debt, but he wouldn't specify how that would happen.
Doug Holtz-Eakin, the senior policy adviser to the McCain campaign, countered that McCain would be able to eliminate the annual deficit by 2013 because his tax cuts would create more jobs and stir economic growth. "This is the first step to getting the deficit under control," he said. But the Tax Policy Center study said that McCain's budget deficits would offset the economic stimulus effects of his policies, resulting in no net spur to growth.
The study breaks down who'd benefit from the candidates' tax cuts and who'd pay more taxes.
Under McCain's plan, all income groups would get tax reductions:
- The middle 20 percent of income earners — those who make $38,000 to $66,000 annually — would get average cuts of $1,400 by 2012. McCain would make permanent such temporary Bush tax cuts as the child tax credit, the elimination of the so-called "marriage penalty" and lower income-tax rates.
Under Obama's plan, middle-income families would get tax cuts while the wealthiest Americans would face tax increases:
The study is the most detailed yet of the many tax proposals that the two major-party candidates have offered.
It differs from estimates that the campaigns have offered in several ways.
Most notably, the study's authors said, the candidates and their staffs measure the costs of their tax plans against a hypothetical budget future in which the Bush tax reductions have been extended and a temporary "patch" of the alternative minimum tax has been extended indefinitely.
Neither has happened.
Tallied against that imaginary scenario, the McCain proposal would cost $600 billion over 10 years, and Obama's plan would raise about $800 billion in new taxes, study authors Roberton Williams and Howard Gleckman said.
The study includes the estimated costs of proposals that the candidates have made in stump speeches without detailing their costs.
For example, McCain has proposed a simplified income-tax system. While he hasn't offered details, the Tax Policy Center used the costs from a similar proposal offered by the Republican Study Committee and estimated that a McCain plan could cost $1 trillion over 10 years.
"All told," the study said, "the 'stump version' of Sen. McCain's plan would cut taxes by $7 trillion over the 10-year budget period and cut taxes to their lowest level in 50 years."
At the same time, Obama has talked about raising Social Security and Medicare taxes on those who make more than $250,000. He hasn't offered details, but the center estimated that would mean a 2 percent tax increase.
"Such a plan would increase taxes on high-income workers by nearly $400 billion over a decade," the study said.