http://www.ft.com/cms/s/0/0a4fefee-89d2-11dd-8371-0000779fd18c.html
Obama concedes delay in plans
By Andrew Ward in Detroit and Daniel Dombey in Washington
Barack Obama acknowledged for the first time yesterday that the
financial crisis could force him to rein in his ambitious spending plans
as the proposed $700bn bail-out of Wall Street threatens to plunge the
government deeper into debt.
The Democratic presidential candidate hoped that much of the public
money committed to the financial sector would be recovered, but said it
was likely some of his spending plans would be delayed.
"Does that mean I can do everything that I've called for in this
campaign right away? Probably not," he told NBC's Today programme. "I
think we're going to have to phase it in."
His remarks reflected a growing realisation that the financial crisis -
and the government's costly resp-onse to it - had transformed the fiscal
landscape for the next president and thrown both candidates' economic
programmes into doubt.
The US was facing a record $480bn (€327bn, £259bn) budget deficit next
year even before recent events, and the proposed bail-out threatens to
push it to more than $1,000bn.
Both candidates would be constrained by the crisis. Mr Obama wants to
commit an additional $130bn a year to an array of new federal programmes
while cutting taxes on the middle classes by $80bn. The shopping list
includes $65bn on healthcare, $18bn on education and $15bn on green
energy initiatives.
John McCain, his Republican opponent, plans a sharp cut in corporate
taxes that could reduce federal revenues by up to $300bn a year.
In later comments at an event in Florida, the Democratic nominee
insisted that "a lot" of his spending plans would be financed by changes
to the budget elsewhere, arguing that, in times of economic difficulty,
healthcare improvements and a middle class tax cut were more important
than ever.
But he added: "It would be irresponsible of me to say I am not going to
take into account what things look like should I take office",
highlighting uncertainty over whether the US economy would recover or
"slide deeper into recession".
Mr Obama plans to help fund his proposals by raising taxes on people
earning more than $250,000 but he acknowledged this month that rate
increases might have to wait until the economy had stabilised.
He said it was still unclear how much the bail-out would cost taxpayers
and what its impact would be on the budget.
"Although we are potentially providing $700bn in available money to the
Treasury, we don't anticipate that all that money gets spent right away
and we don't anticipate that all that money is lost. How we're going to
structure that in budget terms still has to be decided," he said.
Opinion polls have so far shown Mr Obama benefiting from the crisis by
refocusing attention on the struggling economy and failures of the
Republican administration.
Copyright The Financial Times Limited 2008
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