The Return of Big Government (Oh great!)

By James Pethokouki
From US News & World Report
Posted April 11, 2008

Here's a little straight talk: Whether you pull the lever (or fill in the oval or touch the screen) for Hillary Clinton or Barack Obama or even John McCain in November, you're probably still going to end up in 2009 with a push for Big Government of the sort not seen in a generation. More taxes. More regulation. More spending. "It's going to be like watching That '70s Show," says Daniel Clifton, political analyst at Strategas Research Partners, which provides research to institutional investors.

Certainly there are some gaping policy differences between the White House contenders that will determine just how big Big Government gets. Both Clinton and Obama want to make national health plans available to all—partially paid for by rolling back the 2001 and 2003 Bush tax cuts for wealthier Americans. McCain prefers a more market-driven approach and wants to keep all the tax cuts on income and investments.

But all three candidates are in favor of a "cap and trade" regulatory system to reduce carbon emissions suspected of causing global warming and to nudge the economy toward energy independence. It's an approach that could serve as a de facto $100 billion-a-year tax, since companies having trouble meeting government limits may be forced to bid for pricey carbon permits. And all three candidates will have to confront a Social Security system whose cash flow turns negative in 2017. Almost any politically feasible compromise would require higher payroll taxes—an option McCain says he's steadfastly against—as part of the mix. And it would be tough for any politician to ignore America's rickety infrastructure, which may require a nearly $2 trillion overhaul. "We're talking about government playing a different role than it has over the past decade or two," says analyst Sherle Schwenninger of the New America Foundation, a centrist think tank.

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