Record $482 Billion '09 Deficit Forecast

Neither McCain nor Obama has been particularly mindful of the budget deficit. McCain has proposed to extend all of Bush's first-term tax cuts, which expire in 2011, and add hundreds of billions more, mostly for business. The nonpartisan Tax Policy Center, run jointly by the Urban Institute and the Brookings Institution, estimates the cost of McCain's tax policies at $3.6 trillion over the next decade.

Obama's own proposals -- to extend Bush's tax cuts for taxpayers earning less than $250,000 and to cut other taxes for the working poor and middle class -- would cost $2.7 trillion over 10 years, the Tax Policy Center said. Obama would spend an additional $130 billion a year on health care, renewable energy, education, infrastructure and other programs.

Obama economic adviser Jason Furman said yesterday that all those costs would be more than offset by savings from ending the war in Iraq, by repealing some of Bush's tax cuts, and by slicing subsidies for high-income farmers, private insurers in Medicare and banks in the student loan program, among other cuts.

He insisted that yesterday's new deficit figures would not affect Obama's campaign promises.

"He absolutely not only can do what he's promised to do, but must do what he's promised to do," Furman said.

Budget analysts and economists were skeptical.

The new numbers "are going to constrain what either of them can do, both in terms of spending and in terms of tax cuts. At least I hope that's the case," said Leonard E. Burman, director of the Tax Policy Center and a former Treasury official. "We know we're leaving our children all these unfunded liabilities. Piling on hundreds of billions in additional deficits just seems grossly irresponsible."

Both presidential candidates used the new budget forecasts to bash Bush's fiscal legacy, with McCain taking the biggest swing. The presumptive Republican nominee called the 2009 deficit "a sad legacy."

"There is no more striking reminder of the need to reverse the profligate spending that has characterized this administration's fiscal policy," he said.

But neither candidate seemed eager to shift gears. Harvard University economist Martin Feldstein, a McCain adviser, said the surge of red ink is tied to cyclical developments -- the economic stimulus checks and the slowing economy -- and not permanent changes.

"So I don't think it has implications going forward," he said.

Obama met in Washington with an all-star cast of economic advisers and experts, including O'Neill, billionaire investor Warren Buffett, former Bush Securities and Exchange Commission chairman William H. Donaldson, former Federal Reserve chairman Paul A. Volcker, Google chief executive Eric E. Schmidt, and Robert E. Rubin and Lawrence H. Summers, who were Treasury secretaries under President Bill Clinton. All have endorsed Obama except O'Neill, who said he remains neutral in the presidential race.

Afterward, Obama advisers made it clear they see the need now to rescue the economy, with new spending and tax cuts, as separate from the long-term issue of the national debt.

"Of course fiscal rectitude was on the table," said Jared Bernstein, a senior economist at the liberal Economic Policy Institute, who was at the meeting. "But the key word with Barack Obama is 'balance.' "