Obama and McCain in denial about deficits, economists say

Reporting from Washington — Despite harsh scrutiny from economic analysts, Barack Obama and John McCain remain reluctant to admit what is becoming obvious -- that the nation's economic crisis will take a heavy toll on their ambitious tax and spending plans.

On his website, Obama says the nation's debt is a "hidden domestic enemy" that he pledges to combat. But in recent days, the Illinois senator and his economic advisors have begun to gingerly inch toward an acknowledgment that the rising costs of the Wall Street rescue plan and his promises of middle-class tax relief and other initiatives are likely to lead to a spike in deficit spending over the next several years.

During the final presidential debate, Obama repeated his analogy of using a "scalpel" to offset his spending initiatives with budget cuts. But the Democrat warned of the limited choices facing the next occupant of the White House.

Obama's chief economic advisor, Jason Furman, was more explicit during a conference call this week. "The top priority would be to avoid a deep recession," he said -- suggesting a strategy that could require costly efforts to jump-start the economy.

McCain has not budged from his insistence that he can balance the budget within four years. The Republican Arizona senator has said his plans for new corporate tax cuts would be offset by an across-the-board spending freeze.

But a growing number of economists, including some free-market-oriented experts, say the nation faces massive deficits over the next several years no matter who is elected president.

"Both candidates have a deficit problem that neither of them wants to admit," said J.D. Foster, a senior fellow at the conservative Heritage Foundation in Washington. "They're relying on an awful lot of hand-waving to get budget-neutral, but I think it's pretty clear that either of them will be constrained at least over the next two years by pressure to fix the economy."

The nonpartisan Committee for a Responsible Federal Budget estimated recently that the $700-billion economic rescue plan aimed at salvaging the troubled U.S. banking system would push the nation's deficit to more than $1 trillion in the coming fiscal year.

That would be a huge increase from the $482 billion that the White House projected this summer, which itself would be a record.

Facing such a steep wall of debt at the same time the economy is teetering would hamstring any immediate efforts to balance the budget, leading economists predict.