What they'll do to the budget

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By Pat Regnier, Money Magazine assistant managing editor

Sounds like you'll do okay with either guy, right? Well, here comes the spoiler: Those cuts won't come for free.

Even before the financial crisis came up, the government had been running significant budget deficits. And it will continue to do so under both the Obama and McCain plans, at least if spending comes in as the Congressional Budget Office projects.

Plus, there are even bigger fiscal challenges coming down the road, thanks to rising costs in Medicaid and, to a much lesser extent, Social Security.

Here's why that matters: The economic drag of debt can offset whatever growth you'd hope to stimulate with the tax cuts. And eventually, somebody's going to have to pay the bill. Yes, that means you - or your kids.

Says Andrew Yarrow, vice president of Public Agenda: "The sad but sort of obvious truth is that taxes will have to go up in the aggregate." Just not in this term apparently.

Both sides say they'll slash spending as well as taxes. Color the TPC's Williams skeptical. "They say they'll get rid of unnecessary spending, but most of the specific action is on the tax side," he says.

Obama needs to find fewer cuts, since his tax plan would raise $1.2 trillion more in revenue than McCain's plan over the next 10 years. And of course, he plans to get out of Iraq sooner, which should certainly save the country a few bucks.

But he also has big ambitions for government at home, which will undoubtedly cost more than he hopes. And unlike McCain, he hasn't committed to a date for balancing the budget.

"We have to recognize that [the deficit puts us] in a very deep fiscal hole," says Jason Furman, Obama's economic policy director. "We're also in a deep hole in terms of middle-class income, health care, college and a lot of the most important things in our society. We're not going to solve both those problems in Year One of an Obama administration."

Obama has acknowledged that the current financial crisis means he won't be able to push for his full agenda early in his term but hasn't said what he'd put on the back burner.

McCain talks even more about aggressive spending cuts - and he'll need them. Trouble is, there aren't a lot of easy targets: The earmarks McCain so often attacks are a tiny slice of the budget - just $18 billion vs. a $500 billion deficit. His domestic policy advisor, Douglas Holtz-Eakin, talks about reining in Social Security and Medicare spending.

Point out that these are two of the more bulletproof programs on the Hill, and Holtz-Eakin responds, "That's why you have to change the focus of Washington. Look, the people who are afraid of John McCain are the people who think he might succeed."

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