Jewish World Review April 9, 2004 / 19 Nissan, 5764

Robert Robb

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Consumer Reports

Fact checking Kerry's federal budget plans | John Kerry is right that the country would benefit from an honest debate about the federal budget.

Unfortunately, in his speech and proposals on Wednesday, he didn't begin one.

Now, certainly Republicans have lost any claim to be the party of fiscal discipline. Spending has been increasing twice as fast with Republicans in control of both the White House and Congress as it did under the divided government of the Clinton years.

Nor, despite renewed vows of austerity, is there any reason to believe that Republicans will mend their ways. The latest highway spending bill will require either an increase in the gas tax or a higher federal deficit.

So, there's room for a Democrat to make a credible claim to be a better fiscal steward than President Bush.

But thus far, Kerry has not made it.

Kerry would, first of all, eliminate the income tax reductions for people making over $200,000 a year. Put aside, for the moment, the economic effect that might have, or the fairness of returning to a top federal income tax rate of nearly 40 percent.

If Kerry applied all the revenue such a tax increase would produce to debt reduction, the deficit this year would still be more than $400 billion. So, increasing taxes on the rich hardly balances the budget.

Kerry, however, doesn't plan to dedicate the additional revenue to deficit reduction. He wants to spend it on education and health care.

So, in reality, Kerry's proposed deficit is the same as Bush's, just at a higher spending level.

Kerry claims to be willing to impose more spending discipline than Bush in the future. In fact, he advocated limiting the increase in federal spending to the rate of inflation.

Given that inflation is running at just one to two percent a year, that's quite a pledge.

But then, there are the exceptions. According to Kerry, the inflation cap wouldn't apply to education, homeland security, defense, Social Security, Medicare and other entitlement programs.

The exceptions add up to a whopping 85 percent of the federal budget.

Kerry also would reinstate the pay-as-you-go budget rules from the 1990s, and unlike Bush, apply them to tax cuts as well. New spending programs or tax cuts would have to be "paid for" with specified spending reductions or revenue increases, or across-the-board spending cuts would automatically kick in.

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Of course, the same exceptions apply, which means that any offsetting reductions would come from a very narrow base.

That makes it highly improbable that Kerry really would abide by his own proposed budget rules.

For example, Kerry favors extending the Bush tax cuts for those making less than $200,000 a year. Three of those — the child tax credit, the 10 percent lowest tax bracket, and eliminating the marriage penalty — expire as of this year.

Extending them, however, would cost far more than the proposed inflationary increase in the 15 percent of the budget Kerry puts on the table for offsets.

In other words, under Kerry's budget rules, unprotected programs would have to be cut below existing spending levels to retain these working class tax benefits.

It's highly doubtful that a President Kerry would actually propose that. In fact, Republicans have calculated that Kerry has already advocated spending increases of more than $1.9 trillion over the next ten years.

Kerry did highlight legislation he has cosponsored with John McCain on corporate welfare. Patterned after the base-closing process, a commission would make recommendations about eliminating corporate subsidies that Congress would have to vote up or down as a package.

It's a good idea. But even McCain estimates that it will save only tens of billions a year. That's better than pocket change, but, again, not enough to change the basic budget challenge.

Reducing the federal deficit isn't rocket science: Spending has to increase more slowly than revenues.

With the economic recovery, federal revenues are estimated to grow at an 8 percent rate over the next five years. So, even modest spending restraint can produce meaningful deficit reduction.

There's reason to doubt that Republicans are up to the task. But at this point, no reason to believe that Kerry would do better.

JWR contributor Robert Robb is a columnist for The Arizona Republic. Comment by clicking here.


04/08/04: Should the transfer of sovereignty in Iraq be delayed beyond the current deadline?
04/02/04: Kerry's tax epiphany makes some cents
03/31/04: What could have prevented 9/11
03/26/04: Knock off the high-stakes blame game
03/23/04: McCain a ‘straight talker’? Who is he kidding?
03/17/04: Bin Laden makes distinctions?
03/12/04: In the dangerous neighborhoods, cause for hope, if not yet optimism
03/01/04: Greenspan view scary, but Dems in denial

02/27/04: How not to achieve a mandate

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