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K-STATE ECONOMICS PROFESSOR SAYS PRESIDENTIAL CANDIDATES ARE UNREALISTIC ABOUT BALANCING THE BUDGET
by Erinn Barcomb-Peterson
The presidential candidates should be careful what they promise when it comes to economic concerns, according to a Kansas State University economist.
Lloyd B. Thomas, professor and head of the K-State economics department, said he thinks it's unrealistic for either John McCain or Barack Obama to campaign on a balanced budget.
"I think both candidates are not realistic when they say they're going to balance the budget," said Thomas, whose current research includes the role of expected federal budget deficits on the level and term structure of interest rates. "In the short run, no matter whom we elect, we're going into a period of slow growth."
Regardless of who the next president will be, Thomas said the country wouldn't be able to put itself in a better financial situation without some sacrifices. Thomas said that the federal budget deficit is more than $400 billion and headed higher.
"Neither one of the candidates is being straightforward about how he's going to tackle the budget," Thomas said. "Both claim they can find and eliminate waste. Both claim they can cut taxes. But I think both of them will have to renege on their promises."
Thomas said one of the major economic problems that the next president will face is the impact of an aging population on the economy.
"The problem facing whoever gets elected is that Social Security and Medicare expenditures are going to explode the budget deficit," Thomas said. "For the next 15 to 20 years, you're going to have a surge of people reaching age 65. The president will have to renege on either the tax cuts or entitlements like Social Security. There is no way that the next president is going to come close to balancing the budget."
Thomas said that the two candidates' differences in economic policy center on what role the government should play in the financial health of the country.
"I think that Obama is more likely to take an activist role," Thomas said. "He'd be more likely to overhaul and regulate the markets. I think he's inclined to think the government can do a lot of things to help people economically.
"On the other hand, McCain favors very limited government intervention in economic life. In general, Republicans are less willing to have government regulation. Republicans think the free market is a wonderful thing and shouldn't be tampered with."
Thomas said the influence presidents have on the economy is limited in the near term but powerful. Although the president can't have much of an effect on the immediate business climate, the nation's highest position can influence how wealth is distributed.
"As the economy grows over time, almost all of the fruits of that growth is going to the top 5 percent -- those making more than $200,000 a year," Thomas said. "I think that's very dangerous to democracy."
Compared with recent presidential elections, Thomas said it seems like the economy is an issue more voters are taking an interest in this fall.
"I think those in the median income range are seeing that they're worse off than they were before," he said.