10/23/2008 05:12 am ET Updated May 25, 2011

When Talk Isn't Cheap: The Bailout, the Budget and Promises They Can't Keep

We're not expecting to run into Barack Obama or John McCain in the next week, and you probably won't either. But if you do, we think you should do them a favor. Just give them your best steely-eyed look and say, "You do realize you're not going to have any money to work with, don't you?"

Look, somebody's got to tell them. Right now, they're both in denial. Both told reporters this weekend that the proposed $700 billion Wall Street bailout won't affect the policy proposals they're offering, and that's just madness. Because as much as Senator Obama and Senator McCain say this election is about change, the past week's financial crisis ensures that the next presidential administration will really be about money: how bad the government's balance sheet really is, and how it gets enough money to get the job done.

To be fair, we'd argue this was true even before the Bush administration proposed its Wall Street bailout plan. Nobody in Washington seemed to want to admit it, but the federal budget was looking pretty grim even before the financial perils of Freddie Mac, Fannie Mae, and AIG started grabbing the headlines. .Just two weeks ago the Congressional Budget Office projected a $400 billion deficit for next year , and more deficits for the next ten years. And that's without factoring in the bailouts. Even if we let all the Bush tax cuts expire in 2010 -- and right now neither McCain nor Obama is endorsing that -- we still end up with deficits for the next 10 years.

The administration is now asking Congress to authorize up to $700 billion to shore up the financial system, but nobody seems to know exactly how much will actually be spent.

Want a little perspective on what $700 billion actually means? It's more than the government spent on national defense in all of 2007, including the wars in Iraq and Afghanistan. Or, if you prefer, it's ten times what the government spends per year on veteran's benefits.

And that's on top of the bailouts the government had committed to the previous week: the $85 billion the Federal Reserve will use to keep insurance firm AIG from failing, and at least $25 billion for a federal takeover of mortgage giants Fannie Mae and Freddie Mac. On the mortgage front, the Congressional Budget Office estimates it'll cost $25 billion, but the government is authorized to go up to $200 billion if needed. If we're lucky the tab could be less; if we're not lucky, the total bill for all the bailouts together could be up to $1 trillion.

No wonder that the administration's bailout plan also asks Congress to bump up the national debt limit -- how much the government is allowed to borrow -- to a staggering $11.3 trillion.

So what does this mean for Senator McCain, Senator Obama and the rest of us? Even before the financial crisis, both candidates were offering plans that were fiscally doubtful, to say the least. The nonpartisan Tax Policy Center says McCain's policies would increase the national debt by $5 trillion over the next decade, while Obama's plans would add $3.5 trillion. And neither candidate is saying much about the ballooning costs of Medicare and Social Security. They will eventually bust the budget wide open unless something is done.

It's not just a matter of the deficit ballooning over the next couple of years to deal with the mortgage crisis and the Wall Street meltdown. Over the next decade the nation's long-term financial issues are going to start building as well. Steadily, inexorably, the combination of out-of-control health care costs and an aging population are going to keep driving up Medicare, Medicaid and Social Security spending. Despite all you hear about "trust funds," the government doesn't really have a plan to deal with this. Meeting those obligations is going to start eating the federal budget alive -- and eating up the money we need to deal with other challenges.

We're not quarreling with the need for government to act to prevent a financial meltdown. Chances are letting the financial dominoes fall would be much worse for everybody than using the taxpayers' money to prop them up. But the real impact of the Wall Street crisis -- and of our government's longstanding fiscal indolence -- is that the campaign promises from Senator Obama, Senator McCain and from most candidates for Congress just don't hold water anymore. Our options just got a lot narrower, both for our leaders and for society in general.

You can talk all you want about change, but change is much easier to accomplish when you've got some money to spend on it -- or for Senator McCain, enough money to keep taxes at historic lows for everyone. There's a lot that needs to be done in our country: improving health care, fixing our schools and infrastructure, maintaining our national security, replenishing our military strength, ending the war in Iraq safely and with honor. And all of that just got much, much harder to pay for. There's so much to do, and now we have so much less money to do it with.