The next president have to address fiscal imbalances within the government and a dramatically rising federal debt. National debt has been on a more or less steady rise since 1974 when, after a steady decline from the massive debt accumulated during WWII, it hit a low of 33.6 percent of GDP. Total national debt was more than $10 trillion at the start of fiscal year 2009.

This rising debt is driven by entitlement growth, resulting from demographic changes and rapidly rising healthcare costs. An aging population, especially in light of the retirement of the Boomers, is projected to increase Social Security payments from 4.3 percent of GDP today to 6 percent in 2030. More significantly, Medicare and Medicaid are expected to grow from just over 4 percent today, to 18.5 percent of GDP by 2082. This level will exceed the average level of federal revenues over the past 50 years. Even under the most optimistic economic growth assumptions, revenues will not come close to keeping up with this spending growth.

Guide to Tax Policy: The 2008 Presidential Election aims to make voters aware of how the candidates' tax proposals will affect the country's fiscal standing. The report gives a current overview of federal taxes and spending, reviews the challenges posed by future revenue imbalances, and details how McCain's and Obama's proposals might alter tax revenues. The guide is not intended to express a view for or against either candidate or any specific policy proposal.