After 40 years of cutting costs and spending the American government has somehow avoided a conclusion that is so obvious that any child over the age of 10 would be able to give you the answer. This reminds me of the 30 year study by the American Medical Association in which they concluded that children grow in spurts rather than growing  in one continuous nicely drawn straight line. Any parent dating to the beginning of the human race has known that children grow in spurts and yet the AMA needed this study to be sure. Any child of average intelligence will tell you that it doesn’t make any difference what plans you make for taxes or spending if you don’t have any money.

The key to a stable budget for any government or any business or any person is the amount of income they deposit at the bank, and the amount of money they have at the end of the month. Government can plan higher taxes, but if there is no income or commerce to tax, there still won’t be any additional revenue. Government can plan to reduce spending, but if there is no income there can be no spending. There doesn’t seem to be any better foundation for government planning than developing policies that will increase economic activity which in turn will increase income and thus increase the amount of taxes paid to the government regardless of the rate of taxation. A quick look at the government surplus that accumulated during the economic activity under the administration of President Clinton will show that neither taxes nor spending had anything to do with the surplus. It was all about rising median income, rising employment, and therefore rising tax revenue simply because there was more to tax, not because taxes were raised or lowered.

The bottom line is that we must raise median income for the majority of Americans. And after decades of reducing spending and reducing costs by reducing labor expense we have eliminated the ability of our population to consume what we produce. Yet we maintain an economy that is based on the ability and willingness of consumers to spend. Under the self-serving theories of Wall Street we pursued policies that encouraged consumers to continue spending despite flat or declining median income.

We accomplished this miracle by giving the consumers money under the guise of credit cards, other plans of consumer credit, and of course using their homes as ATM machines, fueling a meteoric rise in debt that could never be repaid. Somehow we have managed to be surprised or at least act surprised when the time came for a credit crisis. The income that was once available for taxation and tax revenues has simply been converted to corporate income that is somehow not taxed at all. In a nutshell that is the reason for the recession, and that is the reason government has no money.

By shifting ownership from the average Joe who has no choice but to pay taxes, to the top Aristocracy who pay little or no taxes, we have cut off our noses to spite our faces. The demand that the average American pay for this shift of income and wealth, tax free, to the Aristocracy with fewer services and higher taxes is now on the table — unless it involves allowing yet another private enterprise being allowed to interpose itself and add to the bloat to take profit from a cost stream that was already too high. In my opinion you might just as well wave a red flag in front of an enraged bull.

Somehow we accepted the notion that allowing banks and non-financial institutions to get involved in the creation of money for the lending process was a good idea. Somehow it was acceptable that rates of interest that were previously regarded as crimes could be legal. Somehow we consented to plans which allowed the creation of industries that were unthinkable and unacceptable. Much of our prison system is now privatized, supported by lobbyists who want and get laws criminalizing behavior in order to keep prisons full, thus receiving about $40,000 per year per inmate. Somehow we thought it was a good idea to add private insurance companies to the delivery of medical care and yet we are surprised that the addition of a new layer of private enterprise seeking profit has resulted in higher costs.

I will not pretend to have all of the answers. But I think that some of the major answers are just too obvious to ignore. The wealth and median income of the majority of Americans must increase in order for our country to prosper. Without that you can increase taxes to 100% and you’ll still have an unworkable deficit. Reducing taxes on people who are not making any money anyway is absurd political showmanship. In order for wealth and median income of the majority of Americans to increase there are two things that must happen. The credit burden under which most Americans currently are buried must be adjusted; and their share of income received from revenue derived from the production of goods or the delivery of services must increase both at the point of production or delivery and at the point-of-sale. Without those simple directives, any other policy will amount to rearranging deck chairs on the Titanic.

This is neither radical nor revolutionary. Under the administration of Pres. Eisenhower the top tier of taxes was 90%, households were operating with one income, and overall the wealth and prosperity of the nation was rising. Thus looking at the administrations of a Republican president and a Democratic president and seeing the same result, we can conclude that we have gone astray. We had the right formula but we changed it anyway. We fixed what wasn’t broken. And now what we have is a broken system.

Printing more money and attempting to unilaterally adjust the foreign exchange system is not going to do much to raise median income or the wealth of the majority of Americans. Once again the only parties that will benefit from pursuing such policies will be the tiny fraction of wealthy Americans who frankly do not need any help. Each step we take widens the divide between the wealthiest Americans in the top one half of 1% and the rest of the country. Just the thought that there is a mayor in Michigan who was literally begging for donations to keep the city running should send shudders down any patriotic American’s back. But it doesn’t.

A quick scan of world history will tell you how this will turn out. The founders of our country were right––government exists solely by consent of the governed. They recognized that a change in government was required frequently in order to prevent disparities and oppression. They devised a system for changes in government that did not involve blood or violence. They did this because all of human history showed that such changes in government were inevitable and that without a system of laws accepted by the governed and the government, the change would be chaotic and usually involve bloodshed. It turns out that Jefferson was right. People will withstand all sorts of oppression, immorality and stupidity in their government right up until the point when they decide that they won’t stand for it anymore. On this blog and in my e-mail I already see the signs of people who have had enough. The polls and the elections strongly indicate that most people are coming to the conclusion that they have had enough.

Change is coming. The only question for government is whether it will lead or follow.

Homeowners Can Afford Those Homes and Should Stay: Largest IPO in History



Therefore, they argue, there should be no stopping the foreclosures. Here is where this writer and other contributors to the blog and the Ivory Tower collide. And here is where the Democrats are going to take a hammering if they go along with the mantra coming from this administration. Caught up in the flood of foreclosures are mostly people who at one time or another in the drama COULD afford the deal they were offered. By focusing on the inability of people to pay for a deal they didn’t know they were getting into, we are avoiding the sordid truth of the continuing fraud accomplished through foreclosure and credit bids from non-creditors.

The foreclosures MUST stop. The destruction of documents was intentional, a cover-up of a much larger fraud. Let the chips fall where they should, Mr. President, and the end of this game will be in sight. Continue on this path and we will be dealing with financial and property title chaos for decades. Ignore the obvious revenues and profits that were never reported, the transactions that were never recorded, and you sustain an untenable deficit of revenues to costs at all levels of government. The benefits flow only one way right now — to Wall Street, the members of which club are making money hand over fist while the rest of the country is mired in false debt. It’s us or them, Mr. President. Either we leave the bank oligopoly in charge of our lives or we take back that control.

The White House is ignoring the fraudulent aspect of this scheme and the further it  goes down that path, the further the disconnect from the American people. The people know it and Washington doesn’t. There was outright fraud on all end of this thing perpetrated by the banks and the question is whether, as Terry Goddard AZ AG said yesterday, whether we have “the gumption to simply pull the trigger.” How is it that the attorney general from one of the most ridiculed (unfortunately my state) states in the union understands the issue and the White House doesn’t?

This is not rocket science or conspiracy theory. The financial loan product sold to the homeowners was essentially an unregistered security sold under false pretenses. The promise was that the house was worth more than the loan and the loan would enable them to gain passive returns through continued increase in market values that were false to begin with. Everyone knew it was a false premise except the homeowner. Now the homeowner is stuck with a security investment that actually has a negative value because it leaves him investing even more in the project than the original deal — through liability in excess of the real value of the property. The risk factors spelled out even in the prospectus given to mortgage bond buyers had more information than what was given to the homeowners. If this was an IPO, which it was in actuality, the SEC would have frozen it immediately, for failure to disclose obvious risks and false premises.

Up until now, the Courts and the SEC, and the agencies regulating banks had no problem with what to do in these cases. You seek to make the victims whole again. Viewed from that perspective, few if any people are living in homes they cannot afford. Rescinding the transaction with the banks who committed the fraud only reverses the money part between the homeowner and the bank. It does not reverse the transaction between the homeowner and the seller from whom he purchased the home. That leaves the homeowner with a house he or she or they can very much and easily afford. If there is an obligation still outstanding after set-offs for the fraud, predatory lending, punitive damages, attorneys and costs, I’m sure we can work something out.

Larry Hagman, star of Dallas, just won an award against Citi for $1.1 million in compensatory damages and $10 million in punitive damages. Thousands of other investors, many of whom went into those fake mortgage bonds are getting the same relief. Why? Because they put Hagman in bad investments. Why should Citi be absolved of guilt for doing the same thing to homeowners? We are treating homeowners as “qualified investors” when they are the persons with the least information, the lowest qualifications, and the least sophistication in assessing financial risks associated with a security. Mr. Obama, you are getting bad advice from people who are making bad assumptions based upon incomplete facts. Just do what we always do to fraudsters and do what we always do for their victims, and the housing market, as well as a large part of the economy will be saved.

Folks, if you do it any other way, you might as well give Madoff back the money he stole. It’s the same thing.



EDITOR’S NOTE: This is not just a paper crash, which old-timers like myself will remember from the Wall Street paper-crash of the late 1960’s. Simple logic leads to the inevitable conclusion that property rights and contracts, mortgages, notes and obligation are all about paperwork and recording. The trail is defective because it reflected the desire of the “securitization” intermediaries to have full control over every aspect of the MONEY. It reflected their total lack of concern with the actual documents. And in the end, the hedge transactions and exotic instruments they created were proof of fraud and negligence.

It was the money they were moving, not the paper. They avoided those pesky recording fees, and didn’t bother to report or pay taxes, fees or file returns on transactions in which trillions of dollars changed hands. Those deficits we are all worried about on the Federal and state level? They are all curable by simple enforcement of and collection of taxes that are due from these hidden transactions that can now be traced easily. Collection is easy and can be tied to settling the foreclosure mess and the title mess. It’s easier than you think.

Those insurance, credit default swap, and other credit enhancement techniques that were used destroyed the the nexus between the lending by the investor and the borrowing by the homeowner. They continue to try to stay in the middle keeping the investors away from direct collaboration with homeowners — because when the two sides of these transactions meet up, the numbers won’t add up and some very arrogant people whose names are well-known are going to face charges that were inconceivable as late as a month ago.

But don’t go celebrating just yet. You still need a lawyer and you still must plead and prove your claim. One thing is certain regardless of what they do, the pace of foreclosures is going to either cease or slow to a crawl.

October 8, 2010

Largest U.S. Bank Halts Foreclosures in All States


Bank of America, the nation’s largest bank, said Friday that it was extending its suspension of foreclosures to all 50 states.

The plan swept states with some of the highest foreclosure levels, including California, Nevada and Arizona, into a swelling crisis over lenders’ flawed paperwork that had been mostly confined to 23 other states that require judicial review of foreclosures.

Bank of America instituted a partial freeze last week in those 23 states, and three other major mortgage lenders have done the same. The bank’s decision on Friday increased pressure on other lenders to extend their moratoriums nationwide as well.

An immediate effect of the action will be a temporary stay of execution for hundreds of thousands of borrowers in default. The bank said it would be brief, a mere pause while it made sure its methods were in order.

But as the furor grows over lenders’ attempts to bypass legal rules in their haste to reclaim houses from delinquent owners, there is a growing expectation that foreclosures will dwindle for months as the foreclosure system is reworked.

Stan Humphries, an economist with the housing site, said what was initially cast as a problem of sloppy record-keeping is rapidly evolving into one that suggests the banks’ procedures for recording loans might not have followed the law.

“The former scenario represents a hiccup for the market, maybe a 30- to 90-day slowdown in foreclosure initiations,” Mr. Humphries said. “The latter scenario is more like hitting a wall.”

The uncertainty is putting the housing market in turmoil and causing vast confusion. Bank of America, for example, said it was not halting sales of foreclosed properties to new owners, but Fannie Mae, the giant mortgage holding company, is doing exactly that with properties it bought from Bank of America.

One real estate agent in Florida said Friday that he had six deals involving former Bank of America properties that had been at least temporarily scuttled. Representatives for Fannie, which was taken over by federal regulators after it failed two years ago, did not return calls.

Real estate agents said the extent of any disruption depended on how long the moratorium lasted, how many lenders ultimately participated — and what people in default decided to do.

“If it’s still January, February, March, and they’re not foreclosing, you’ll see a big effect,” said Jim Klinge, an agent in San Diego. “It’ll be a banker’s holiday, free rent for everybody and a lawyers’ gold mine.”

As soon as Bank of America announced its freeze in a terse press release, Senate Majority Leader Harry Reid and Edolphus Towns, the New York Democrat who leads the House Committee on Oversight and Government Reform, both pointedly asked other lenders to follow suit.

Increased pressure also came from Christopher J. Dodd, the chairman of the Senate Banking Committee, who announced a Nov. 16 hearing on foreclosures.

The other lenders, however, did not seem to be swayed.

JPMorgan Chase, which has halted foreclosures in the 23 states where they need a judge’s permission, says it is putting hundreds of lawyers and executives to work addressing what it characterizes as a “technical” paperwork problem with 56,000 mortgages with improper documentation. Officials have no plans to halt foreclosures nationwide, and believe they can fix the problems within weeks, they said.

Chase officials acknowledge they had a flawed process, but they say they have not mistakenly foreclosed on any homeowners, because the underlying information is accurate. People close to the bank say that about one-third of the properties tied to mortgages under scrutiny are vacant, in line with their assessment of the overall industry.

The average borrower that Chase has foreclosed on, these people added, has not made a payment on the mortgage for about one and a half years — a figure that they say is also consistent with the industry.

Inside Citigroup, which has not suspended foreclosures, officials said they were breathing a sigh of relief. Sanjiv Das, the head of CitiMortgage, began a review of loan servicing processes about 18 months ago in anticipation of a groundswell of foreclosures.

At that time, Citi stepped up its employee training and tightened its documentation processes, giving officials there confidence that they have sidestepped the document issue. But given the huge number of mortgages it processed and its sprawling operations, Citi — which has faced one embarrassment after another — is not publicly declaring victory.

On Friday, Wells Fargo, another big lender that has not halted foreclosures, continued to maintain that its foreclosure processes were accurate and said it was not planning to initiate a nationwide moratorium.

“As a standard business practice, we continually review and reinforce our policies and procedures,” said Vickee Adams, a Wells Fargo spokeswoman. “If we find an error or if an improvement is needed, we take action.”

Bank of America’s chief executive, Brian T. Moynihan, speaking at the National Press Club in Washington, said he did not believe the bank’s action would disrupt the housing market.

“We haven’t found any problems with the foreclosure process and what we’re saying is that we’ll go back and check our work one more time,” he said.

Not only is Bank of America watched more closely as the nation’s largest bank, it also finds itself deeper in the subprime mortgage mess. It holds $102 billion in subprime loans on its balance sheet from the period when lending standards were most lax — 2005 to 2007 — more than JPMorgan Chase, Citigroup or Wells Fargo, according to a report by Christopher Kotowski, an analyst with Oppenheimer.

Bank of America’s troubled mortgage portfolio is a legacy of its July 2009 acquisition of Countrywide, a subprime specialist that was among the financial institutions with the most troubled loans, as well as its January 2009 merger with Merrill Lynch, which was a major player in the business of taking mortgages and transforming them into securities to be sold to investors.

In addition, as the beneficiary of two capital infusions by Washington under the federal bailout, Bank of America was among the banks most dependent on Washington to help survive the financial crisis, receiving $45 billion from taxpayers. Of that, $20 billion came in emergency aid after Merrill’s losses were revealed.

That money has been paid back, but several analysts said the company was eager to maintain good relations with the government, and emphasized that restoring the bank’s public image was a crucial factor in the action on Friday.

“What prompted Bank of America is they see the political writing on the wall, and this has clearly become a political issue,” said Guy D. Cecala, the editor of Inside Mortgage Finance. “Almost every lawmaker is calling for a national mortgage foreclosure moratorium, and given the momentum out there, they wanted to deal with it on their own terms.”

In fact, earlier this year, with a government ban on automatic overdraft fees for debit cards looming, Bank of America actually went further than its rivals and pre-emptively eliminated the overdraft option entirely. Other banks allow customers to now opt in to the program, which can result in huge charges for small overdrafts.

Another reason for Bank of America’s broader action, suggested Richard X. Bove, an analyst with Rochdale Securities, is that the attorney general of the state where it is based, North Carolina, has called on the bank to halt foreclosures there.

“It’s a pre-emptive strike,” he said. “The smartest thing to do is to get ahead of the attorneys general around the country on this.”

Eric Dash and Binyamin Appelbaum contributed reporting.

Reverse the Federal Deficit without Taxation— PRIVATE TAXATION MUST GO !!!

Every one of the facts stated here are verifiable from multiple sources and are NOT disputed. The only policy question that is relevant is WHETHER WE PUT PEOPLE OR BIG BUSINESS FIRST in our priorities. The rest is obvious. HERE ARE SOME EXAMPLES:

1. HEALTHCARE: (AT LEAST $1 TRILLION IN DIRECT AND HIDDEN FAT IN THE SYSTEM). The U.S. health care system is a wealth transfer scheme, which takes money from the pockets of ordinary citizens and puts it in the hands of a few people who do nothing to earn it. This is a PRIVATE TAX that only exists because the government has interfered on behalf of big business starting with Keiser Permanente.

          a. We spend, on average anywhere from 5 to 40 times what other countries spend on drugs for two reasons (1) we are prescribed too many drugs and (2) we pay much higher prices from the same companies that sell the same drugs in other countries.

Instead of the money going through the government to the insurers, pharmaceutical companies and medical service providers, the government mandates the money go directly to these cartels.

These companies have applied a substantial portion of their excess profits towards placement of “news stories”, advertisements and other propaganda that have convinced most Americans that the U.S. health care system, while faulty, is still better than other countries. THIS IS A LIE. Check it out using any statistic you like.

  • THE U.S. SPENDS 15.4% OF ITS GDP on heath care plus capital expenditures for equipment and buildings which brings it to around 18.5%. The amount of money spent is therefore $2,400,000,000 ($2.4 trillion dollars).
  • U.S. patients take 65% more medication than any other country on earth because only our system allows access and payment for INTERVENTION and allows nothing for for PREVENTION and MAINTENANCE. Most of these medications eventually increase the risk of death and/or other diseases. The Food and Drug Administration is staffed by and funded by Pharmaceutical company employees (either past, present or future). Access to PREVENTATIVE protocols is denied by the FDA, insurance company and the propaganda disseminated by the medical industrial cartel.
  • Not only is there sufficient funding already in the system to provide health care to every man, woman and child, along with social services that would reduce living stress and increase productivity, hope and innovation in the U.S. economy, there is actually about $400 billion dollars left over to contribute to other social programs (education, police, fire) that would make it possible for every man, woman and child at any age to be educated and trained to be competitive in the global economy. 
  • THE DEATH RATE, INFANT MORTALITY RATE, “UNNECESSARY” DEATH RATE, AND EVEN HEIGHT IS WORSE IN THE U.S. THAN, ON AVERAGE, 40 OTHER MODERN WESTERN COUNTRIES. (we have lost three years of longevity in the last 50 years and we have lost one inch of height).
  • The only rational conclusion is that by deleting private insurance as the middle man in providing access to a public need (like education, police, public libraries and fire) and enabling a single payer to negotiate reasonable prices, the problem, and the deficit caused by healthcare spending would be eliminated. 

2. CREDIT AND DEBT: The U.S. credit and monetary system is a wealth transfer scheme, which takes money from the pockets of ordinary citizens and puts it in the hands of a few people who do nothing to earn it. This is a PRIVATE TAX that only exists because the government has interfered on behalf of big business starting with the credit card associations and companies that provide network access to credit imposing interest rates that have been known and understood for centuries to result in permanent debt.

It was once called USURY. Now it is called liquidity. The laws that made it illegal to charge rates of 35% on credit cards and 400% on payday advances were changed. So now it is still a crime under natural law but not under our legislative system. It’s government backed and therefore it is a PRIVATE TAX.

  • Government spending, government subsidies to big business, and government laws allowing big business, large unregulated, to charge exorbitant interest rates has resulted in unprecedented consumer and government debt — Federal, State, local and individual — requiring SOMEBODY (either us or our children, grandchildren and great children) to pay interest amounting currently to more than $3 trillion dollars per year plus the loss of social services and safety nets that have existed for more than 50 years. 
  • All of this debt has been funded by issuing U.S. currency equivalents that are now held in foreign investment vehicles, foreign exchange reserve accounts in central banks concentrated in the hands of China, South Korea and other countries whose commitment to the sovereignty and nationals security of the United States is best questionable.
  • At least $1 trillion of interest, fees and costs associated with excess interest and/or excess debt could be eliminated from the expenditures of U.S. spenders, producing substantial capital for improvements to infrastructure, jobs, increased revenues from income taxes, sales taxes, excise taxes,etc., without raising the rate of taxation on any of these sources of revenue.
  • The Mortgage Meltdown could be stopped by a commitment to keep people in their homes, preventing abandonment of homes that are not maintained. This would stop an ever-decreasing spiral of housing prices caused by REO homes coming onto the market at rates that demand could not possibly meet, reinstate the balance sheet of lenders and thus improve their capital position, and reinstate the balance sheet of investors who were tricked into buying junk securities which, with a little help and cooperation from business, government and people could be converted into ratable securities. 
  • Devaluation of the dollar and inflation caused by devaluation would be slowed, stopped or even reversed if the U..> showed its resolve to responsible economic policies and responsible monetary management and responsible regulation of “securitization” which is merely a unregulated method of increasing monetary supply despite declining demand for the U.S. dollar.
  • Reducing the debt service BY LAW to sustainable levels that would enable debtors to eliminate their debt. Banning advertisements that encourage consumers to buy goods and services they don’t need, or could wait to buy through savings, would convert a debt economy to a solid foundation of  savings economy. like many other countries in the world.
3. OIL, COAL and GAS: The average American family spends more than $800 per month in direct costs on fuel related services and probably another $600 per month in indirect costs associated with delivery and production. This is apart from Federal, State and local spending related to various social services and maintaining government facilities. In other words, we can safely say that at $15,000 per year comes out of the pocket of each taxpayer. This means we are spending $1.5 trillion in fuel costs plus the cost of vacation and business travel and sundry other matters.   OF THIS AMOUNT,WINDFALL PROFITS TO OIL COMPANIES AND OTHER MIDDLE MEN AMOUNTED LAST YEAR TO APPROXIMATELY $700 BILLION.
  1. If the Clinton years showed us anything, it was that by encouraging entrepreneurship, which produces 80% of our jobs the entire country is lifted. 
  2. Another thing Clinton proved is that by increasing the number of people in social services (police, fire etc) we increase employment, tax revenues and economic activity.
  3. The other thing Clinton proved unwittingly is that treaties like NAFTA are inherently unworkable because they are used by big business to side-step the advances in product safety, worker safety and benefits that America spent the better part of 100 years inventing and maintaining. 
  4. Thus we end up subsidizing slavery in other countries, and reducing the quality of products and services to American citizens. 
The money is already there in the “budget” when you include the PRIVATE TAXATION items. There are many more examples. If we can stop tripping over our ideological divides, the graft paid by big business and elect people who start with the premise “first do no harm”, the country could be thriving again. 



The New York Times

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April 27, 2008

3 Candidates With 3 Financial Plans, but One Deficit

The Republican and Democratic presidential candidates differ strikingly in their approaches to taxes and spending, but their fiscal plans have at least one thing in common: each could significantly swell the budget deficit and increase the national debt by trillions of dollars, according to tax and budget experts.

The reasons reflect the ideological leanings of the candidates, with Senator John McCain proposing tax cuts that go beyond President Bush’s and the Democrats advocating programs costing hundreds of billions of dollars. But for fiscal experts concerned with the deficit, both approaches are worrisome.

With the national debt soaring to $9.1 trillion from $5.6 trillion at the start of 2001, in part because of the Iraq war and Mr. Bush’s tax cuts, a crucial question about the candidates to succeed him is “whether they are helping to fill the hole or make it deeper,” said Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan organization that advocates deficit reduction. “With the proposals they have on the table, it looks to me like all three would make it deeper.”

Representatives of all three campaigns disputed such assessments, questioning the accounting methods analysts used to calculate the growing debt and saying they could enact their plans without making matters worse.

Mr. McCain’s plan would appear to result in the biggest jump in the deficit, independent analyses based on Congressional Budget Office figures suggest. A calculation done by the nonpartisan Tax Policy Center in Washington found that his tax and budget plans, if enacted as proposed, would add at least $5.7 trillion to the national debt over the next decade.

Fiscal monitors say it is harder to compute the effect of the Democratic candidates’ measures because they are more intricate. They estimate that, even taking into account that there are some differences between the proposals by Senators Hillary Rodham Clinton and Barack Obama, the impact of either on the deficit would be less than one-third that of the McCain plan.

The centerpiece of Mr. McCain’s economic plan is a series of tax cuts that would largely benefit corporations and the wealthy. He is calling for cutting corporate taxes by $100 billion a year. Eliminating the alternative minimum tax, which was created to apply to wealthy taxpayers but now also affects some in the middle class, would reduce revenues by $60 billion annually. He also would double the exemption that can be claimed for dependents, which would cost the government $65 billion.

“High tax rates are driving many businesses and jobs overseas — and, of course, our foreign competitors wouldn’t mind if we kept it that way,” Mr. McCain said, laying out his economic plan this month in Pittsburgh. “We’re going to get rid of that drag on growth and job creation.”

On the expenditure side, Mr. McCain has called not only for continuing an open-ended deployment of troops in Iraq, but also for spending $15 billion annually to expand the Army and the Marine Corps and to improve health care for veterans, among other programs.

Mr. McCain’s advisers have said the new tax cuts would be paid for by eliminating earmarks and making large spending cuts, but they have not identified specifics. And they have spoken vaguely about making entitlement programs like Social Security and Medicare less costly for the government. Mr. McCain’s chief economic adviser, Douglas Holtz-Eakin, said the campaign had simply presented its vision of what the tax code should look like and noted that some of the proposals would be phased in.

“I think what they ought to do is remember that the proposals are going to engender economic growth, which is the best thing you can do for near-term budget improvement,” Mr. Holtz-Eakin said, adding that Mr. McCain believed spending restraint was possible.

That vision for the tax code includes making permanent the Bush tax cuts, set to expire in 2010, which Mr. McCain once opposed in part because they were not accompanied by sufficient spending cuts.

“I voted against the tax cuts because of the disproportionate amount that went to the wealthiest Americans,” Mr. McCain said in 2004. “I would clearly support not extending these tax cuts in order to help address the deficit.”

In 2001 and 2003, Mr. Bush pushed through Congress tax cuts totaling nearly $2 trillion. The first set lowered income and estate taxes, and the second focused mostly on capital gains and dividends.

The McCain campaign does not figure the costs of extending the tax cuts into its deficit projections, although the Congressional Budget Office estimates that it would cost an extra $2.2 trillion over the next decade.

When Mr. McCain outlined his tax cut plan, he backed away from his pledge to balance the budget during his first term, but said that he would do so by the end of his second term. And in an interview last Sunday on “This Week With George Stephanopoulos” on ABC, Mr. McCain said he would push ahead with his tax cuts even if Congress did not approve his spending cuts.

Some conservative economists say that increased deficits in the short run are an acceptable tradeoff for tax cuts that they say will promote economic growth in the long run. And many liberal economists say that some of the Democratic spending proposals, like addressing the affordability of health care or improving education, are long-overdue investments that pay off handsomely even if they entail more red ink.

Mr. Obama and Mrs. Clinton have acknowledged that their various new programs would be costly but have outlined how to pay for them. But some fiscal monitors say they may be relying on overly rosy projections of how much savings their proposals would actually yield.

Mrs. Clinton has calculated that her universal health care plan would cost about $110 billion a year, while Mr. Obama’s somewhat more modest proposal would cost up to $65 billion annually, his advisers say. Both candidates have also talked of new government incentives and investment to encourage the development of alternative sources of energy, which would cost about $15 billion a year.

The Democratic candidates have suggested that they could finance these and other programs by allowing parts of the Bush tax cuts to expire. That, however, ignores projections of the Congressional Budget Office, which has already assigned those savings to deficit reduction.

In other words, unlike Mr. McCain, both Democrats say they would revoke the Bush tax cuts for the wealthy. “At a time of war and economic hardship, the last thing we need is a permanent tax cut for Americans who don’t need them and weren’t even asking for them,” Mr. Obama said.

But they would retain those reductions meant to benefit poor and “middle-class” families, which they defined as the 97 percent or so of the population that lives on less than $250,000 a year, and they would count the estimated $50 billion generated by higher taxes on the wealthy as new revenue.

“Remember, you can only use this money once,” said Mr. Bixby of the Concord Coalition, “and with all the Bush tax cuts scheduled to expire, that money is already scheduled to come into the Treasury. But on the campaign trail, this has become a source of new spending.”

Mrs. Clinton’s aides have been perhaps the most specific in explaining how they would offset the costs of their proposals, and her campaign speaks of moving toward balanced budgets. “We’re not going into debt for the war in Iraq and tax cuts for the wealthiest of Americans,” Mrs. Clinton has said, “but instead we are taking care of the needs of our people at home.”

Regarding gas taxes, Mr. McCain has proposed a one-time “tax holiday” for the summer. Mrs. Clinton also calls for suspending it in a new advertisement in Indiana, while Mr. Obama says that is a “bad idea” but opposes any increase in the tax.

On the spending side, Mr. Obama has argued that ending the Iraq war is one way to pay for some of the new programs, including creating a national infrastructure investment bank and increasing the foreign aid budget. But such savings, which Mrs. Clinton does not count on, would not immediately make their way into the Treasury, and some experts say it is not clear whether they would be sufficient to finance all the programs Mr. Obama has enumerated.

Mr. Obama has talked of spending that money on a variety of initiatives whose costs amount to about one-third of the war’s estimated annual cost of $150 billion. “It is clear that there ought to be some distinction between a candidate who says a withdrawal should start immediately and a candidate who says let’s maintain the war at the highest level,” said Austan Goolsbee, Mr. Obama’s senior economic adviser.

The fiscal outlook has been made even murkier by the explicit “no new taxes for the middle class” pledge that both Democratic candidates made at their debate in Philadelphia this month, exempting taxpayers making $250,000 a year or less from new levies.

Hearing such a promise “makes you very sad,” said Len Burman, director of the Tax Policy Center. “First of all, we don’t have enough revenue coming in to pay our bills.” In addition, he said, the notion that all the revenue that would be lost in a middle-class tax freeze can be made up by higher taxes on the wealthy “is not tenable.”

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