Mike Allen reports that Hank Paulson will announce a trillion dollar plan shortly.
A consequence of this, and of the crisis: Whoever is in office next year will likely have to toss his taxing and spending plans out the window.
Although both candidates have at times stressed fiscal responsibility, their specific non-health tax proposals would reduce tax revenues by an estimated $4.2 trillion (McCain) and $2.9 trillion (Obama) over the next 10 years. Both candidates argue that their proposals should be scored against a "current policy" baseline instead of current law. Such a baseline assumes that the 2001 and 2003 tax cuts would be extended and the AMT patch made permanent. Against current policy, Senator Obama's proposals would raise $600 billion and Senator McCain's proposals lose a similar amount.The point here is that McCain's plan is currently forecast to cost $1.3 trillion more than Obama's. In past analyses, I believe that number has been $1.4 trillion; it certainly has consistently been more than a trillion.