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Obama’s agenda may not add up

Times Staff Writer

In more than a year of campaigning, Barack Obama has made a long list of promises for new federal programs costing tens of billions of dollars, many of them aimed at protecting people from the pain of a souring economy.

But if he wins the presidency, Obama will be hard-pressed to keep his blueprint intact. A variety of budget analysts are skeptical that the Democrat’s agenda could survive in the face of large federal budget deficits and the difficulty of making good on his plan to raise new revenue by closing tax loopholes, ending the Iraq war and cutting spending that is deemed low-priority.

Like predecessors who also had to square far-reaching promises with inescapable budget realities, they say, a President Obama might need to jettison pieces of Obama-ism.

“I don’t think it all adds up,” Isabel Sawhill, an official in President Clinton’s Office of Management and Budget, said of Obama’s spending plans.

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“There will definitely need to be a recalibration of these proposals once someone is in office,” said Sawhill, now a senior fellow at the Brookings Institution. “The fiscal situation just isn’t going to permit doing what Sen. Obama or anyone else would like.”

On Monday, Obama repeated his commitment to his agenda, as both he and his Republican opponent, John McCain, spent the day highlighting their plans to revive the economy.

McCain, appearing in Denver, said he would create new jobs and balance the budget by the end of his first term in 2013 -- a claim that has drawn skepticism because he wants to extend President Bush’s tax cuts that are due to expire.

Obama said Monday that his plan would provide more help to struggling middle-class families.

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“I think it is important for us to make some critical investments right now in America’s families,” the senator from Illinois told reporters in St. Louis, where his plane made an unscheduled stop to resolve a mechanical problem.

In remarks he had intended to deliver in North Carolina, Obama said his plan would “not only ensure the economic security of middle-class families in the long term, but also the need to give them a chance for some relief in the short term, to make sure that Americans aren’t just getting by but getting ahead.”

Among other proposals during the course of the campaign, Obama has said he would strengthen the nation’s bridges and dams ($6 billion a year), help make men better fathers ($50 million a year) and aid Iraqis displaced by the war ($2 billion in one-time spending). Last week, he pledged to give religious and community groups $500 million a year to provide summer education to low-income children.

Other proposals are more costly. Obama wants to extend health insurance to more people (part of a $65-billion-a-year health plan), develop cleaner energy sources ($15 billion a year), curb home foreclosures ($10 billion in one-time spending) and add $18 billion a year to education spending.

It is a far different blueprint than McCain is offering. The senator from Arizona has proposed relatively little new spending, arguing that tax cuts and private business are more effective means of solving problems.

The total price tag of Obama’s plans, according to his campaign, is $130 billion a year. On top of that, Obama is proposing a middle-class tax cut of about $80 billion a year.

Obama’s campaign says the new spending would be more than offset by cuts to existing federal programs and other savings.

“His plan reallocates what we’re spending today on the war in Iraq and wasteful and low-priority government programs into higher-priority investments in our future,” said Jason Furman, Obama’s economic policy director.

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Some budget experts point to the last Democratic presidency, Bill Clinton’s, as an example of the budget pressures Obama might face.

Clinton campaigned in 1992 on a platform he called “Putting People First,” which included government spending on job training and other programs to help middle-class Americans navigate the economy. But after his election, Clinton scaled back his ambitions and made deficit-cutting a priority instead, following the counsel of advisors such as Robert E. Rubin.

Clinton wound up charting a centrist course in his two terms, and declared in 1996 that “the era of big government is over.”

Rubin is now an advisor to Obama. One of the men who also wanted Clinton to cut the deficit first was Leon E. Panetta, who eventually became Clinton’s chief of staff.

Panetta predicts that Obama is in for a similar reckoning.

“I accept that all candidates throw out a lot of proposals when they’re campaigning,” Panetta said in an interview. “You have to assume that’s all part of a campaign strategy to appeal to a lot of different constituencies that are out there. But once he enters the Oval Office, he’s going to have to make some hard decisions.”

Obama’s staff thinks that ending the Iraq war would free up money -- at least $90 billion a year -- that could be redirected to the new government programs. But it is unclear when that would occur. Obama has not given a clear date by which the Iraq war might end. On Thursday, he said he remained committed to withdrawing combat troops in 16 months. At a debate in September, he would not commit to pulling all U.S. troops out of Iraq by 2013.

Some budget experts say even a speedy end to the war would not give Obama much money for new programs.

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“You cannot justify a longer-term commitment to a program based on a one-time saving on the war in Iraq,” said Stuart Butler, who studies domestic policy at the Heritage Foundation, a conservative-leaning think tank.

In addition, replenishing the military and rebuilding Iraq and Afghanistan are certain to become expensive priorities once the fighting stops, said Alice Rivlin, who directed the Office of Management and Budget for several years under Clinton.

“Savings from the Iraq war will not be all that great,” she said.

Other new sources of revenue in Obama’s plan include about $80 billion a year from closing tax loopholes and $100 billion from a variety of cuts in spending and revised government procurement rules.

The nonpartisan Tax Policy Center examined Obama’s plans to eliminate tax loopholes and said it could not confirm the projected savings.

“If you look at official revenue estimates, the numbers come out to be less than half of what they say they’re going to raise,” said Len Burman, director of the center and a former Treasury official in the Clinton administration, referring to Obama’s campaign staff.

McCain has cited similar proposals to free up revenue as part of his plan to balance the budget by 2013, saying he would cut pork-barrel spending and other “wasteful” programs. He says that winning the wars in Iraq and Afghanistan would generate savings that could be plowed into deficit reduction.

Unlike McCain, Obama says he could recoup about $100 billion a year by rolling back the Bush tax cuts for families earning more than $250,000 annually -- but some analysts question that too.

Those tax cuts are set to expire at the end of 2010, so repealing them a couple of years earlier would hardly result in a windfall that could be used as a continuing funding source, they say.

The Obama campaign responds that tax cuts, once enacted, are usually renewed and do not expire. Therefore, they say, Obama can legitimately claim to be recouping money for other purposes by scaling back the tax cuts.

Obama has not identified new revenue sources or spending cuts to pay for some of what he wants to do.

His $10-billion fund to reduce home foreclosures, for example, is part of a $50-billion plan to stimulate the economy through increased government spending. Paying for the program through spending cuts would defeat the point of the stimulus, the campaign says.

Also complicating his plans, Obama would inherit a budget deficit projected at more than $400 billion. Another burden is the rising cost of Medicare and other entitlement programs. In this environment, new programs may prove unaffordable.

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peter.nicholas@latimes.com

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(BEGIN TEXT OF INFOBOX)

Obama’s to-do list

Healthcare

His plans: To expand access to health insurance and make coverage less expensive.

Cost: $50 billion to $65 billion a year

How he woulld pay for it: By rolling back President Bush’s tax cuts for people making more than $250,000 a year.

Energy

His plans: To curb global warming, develop renewable energy sources and reduce dependence on foreign oil.

Cost: $150 billion over 10 years

How he woulld pay for it: By auctioning off pollution credits.

Early education and K-12

His plans: A multi-pronged program to increase Head Start funding, expand access to preschool, improve teacher training, and recruit skilled math and science teachers.

Cost: $18 billion a year

How he woulld pay for it: By delaying NASA’s Constellation space exploration program, cutting federal procurement costs, selling off surplus federal property and ending the Iraq war, among other things.

Science

His plans: To double federal funding for basic research as an antidote to what he calls an anti-science bias under President Bush.

Cost: $5 billion a year

How he woulld pay for it: Through a combination of cuts in federal “earmarks,” subsidies to student loan providers and changes in federal procurement procedures.

Foreign assistance

His plans: To increase foreign aid with a view toward reducing global poverty.

Cost: $25 billion a year

How he woulld pay for it: By ending the Iraq war.

Community assistance:

His plans: To put more money into Community Development Block Grants to provide housing and jobs for low- and middle-income people.

Cost: $1.2 billion a year

How he would pay for it: Through a combination of cuts in federal “earmarks,” subsidies to student loan providers and changes in federal procurement procedures.

Sources: Times reporting; Obama campaign


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