Under current law (assuming the tax cuts expire on schedule, the AMT is not patched) the CBO projects that debt held by the public would remain roughly constant over the next ten years, growing from $5.0 trillion in 2007 to $5.2 trillion in 2018. Because of the expiration of the Bush tax cuts and the explosive growth of the AMT, tax revenues are projected to increase from 18.8 percent of GDP to 20.3 percent over that time interval while spending is expected to fall from 20 percent of GDP to 19.4 percent, despite significant increases in mandatory spending (for Social Security, Medicare, and Medicaid). Discretionary spending (including war spending) and interest on the debt are projected to decline.
Under either Senator Obama?s or Senator McCain?s plan, however, the debt would likely continue to rise as it has over the past eight years, even under the CBO?s relatively optimistic assumptions about spending. Senator Obama?s plan would add $3.3 trillion to the national debt (including additional interest costs) while Senator McCain?s plan would add $4.5 trillion. This does not include the cost of expanding health insurance coverage and assumes that Senator McCain?s proposals phase in and phase out on schedule. It also assumes that all of the candidates? optimistic revenue offsets materialize. If any of these assumptions turned out to be unwarranted, the national debt would grow even more.
