Obama's promises, vision to collide with reality
By JIM DRINKARD
Associated Press
November 5, 2008
WASHINGTON (AP) -- Over a two-year campaign, Barack Obama laid out a vision for the nation's future in soaring speeches that enthralled his audiences. With his victory in the presidential election on Tuesday, those goals will collide with daunting realities.
President Obama will inherit a budget deficit that many analysts say could hit a trillion dollars for the first time in history, severely crimping any promises for tax cuts or spending on new programs. He faces a diving economy that has traumatized Americans trying to buy a home, pay for college or plan for retirement. And he'll confront the complexities of trying to extricate U.S. forces from Iraq, and a resurgent conflict in Afghanistan. A look at Obama's campaign promises and the challenges that stand in their way:
THE ECONOMY, TAXES AND DEFICITS
The promise: Retain President Bush's tax cuts for families making less than $250,000 a year and provide more relief to the squeezed middle class by creating new tax breaks for lower-income families; protect middle-class taxpayers from the Alternative Minimum Tax; exempt seniors making less than $50,000 a year from paying income taxes, expand the tax credit for college and provide incentives to encourage savings, and help pay for child care and mortgage expenses.
For the shorter term, Obama supported the $700 billion financial bailout plan passed in October and backs a second stimulus plan that would provide up to about $150 billion on top of the $168 billion package of tax rebates passed earlier in the year. It could provide tax rebates or credits, extend jobless benefits and spending on infrastructure projects like roads and bridges, as well as sending food aid to the poor and money to states to pay their Medicaid bills. Separately, Obama also proposed a $1,000 emergency energy rebate to families and penalty-free withdrawals of up to $10,000 from 401(k)s and IRA's. He also proposes a $3,000-per-employee tax credit to companies for each new job they create.
The problem: Obama's spending plans and middle-class tax relief will confront exploding budget deficits -- $438 billion this year, and growing as the down economy reduces tax revenues and increases spending on bailouts and anti-recessionary programs. The nonpartisan Tax Policy Center estimates Obama's proposals would reduce projected tax revenue by $2.95 trillion over the next decade, compared to what would happen if Bush's tax cuts were to expire as scheduled at the end of 2010.
ENERGY
The promise: A crash program to begin to wean the country off of its dependence on oil. The goal is to reduce U.S. petroleum demand by an amount equal to the 3.5 million barrels a day now imported from unfriendly Venezuela and the volatile Persian Gulf. Obama also would invest $15 billion a year over the next 10 years to spur commercial development of alternative energy -- wind, biomass and solar -- and more energy-efficient buildings and automobiles. And he wants a short-term rebate of $1,000 per couple to help with rising energy costs.
The problem: Here, too, the economic crisis throws new spending into doubt -- including Obama's alternative energy plans. The $150 billion program also is tied to Congess tackling global warming by putting a price on greenhouse gases, a prospect that faces many obstacles. The call for an energy rebate also may lose its urgency as gasoline prices have dropped by more than a third and heating oil by almost half from their peaks last summer.
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