Donald Lambro

Obama has acknowledged that he may have to re-evaluate his tax and spending proposals to see whether any pullback may be necessary as a result of the deepening recession and its impact on the deficit and the economy.

But throughout his campaign he maintained that all of his proposals to give tax cuts to 95 percent of all taxpayers, as well as his spending plans, "are paid for," meaning their costs would be totally offset by increased tax revenues from higher taxes on the top 5 percent of income earners.

However, economists here told me his claim did not hold water, though few in the news media questioned its validity during the campaign.

"Even before these large deficit problems from the actions taken in the last year and the worsening budget outlook because of the soft economy, his numbers, like most candidates, didn't come close to adding up," Boskin said.

"To the old saying that presidents propose and Congresses dispose, you can add that all candidates suppose," he continued. "Any serious person would say he has substantially underestimated the cost of his health program and exaggerated how much revenue his tax proposals will raise. The Brookings/Urban Institute Tax Center said that he had close to a trillion dollars of tax revenues in his estimates that could not be verified."

But Cogan thinks there could be a potential budget windfall for the Obama administration in the next few years when the government will be able to sell the bank stock that Treasury Secretary Henry Paulson is receiving in exchange for the bailout funds he has been pumping into major financial institutions.

"Three years from now when the government will be selling the preferred stock that it is now acquiring, that will be a source of income for the administration," he said.

"So it would be counted as an offset to any government spending in that year and, in effect, provides an opportunity to engage in a very sizable expenditure," Cogan said.

In other words, he explained, "Obama could inherit a trillion-dollar deficit, but three years from now when the stock is sold, the budget deficit will look extremely good."

Recently, Obama dismissed the deficit's impact, saying the worsening economy demands Keynesian, pump-priming deficit spending. But in the high-stakes fiscal poker game Obama is about to enter, Paulson's preferred stock could be the ace up his sleeve.

Donald Lambro

Donald Lambro is chief political correspondent for The Washington Times.