So You Care about the Deficit

As the liberals cry and shriek, “don’t put in on the heads of our children…” From today’s Wall Street Journal.

Two Trillion in Ten Years

July 27, 2004; Page A16

An economic platform can offer a glimpse into the ideological soul of a candidate and provide crucial information to swing voters. Bill Clinton signaled his “New Democrat” credentials in 1992 when he advocated a generous business tax break, and signaled many events to come when he immediately dropped the idea after his election. President Bush sought swing voters with an aggressive federal expansion in education spending – and then lived up to his promise. What does John Kerry’s economic platform tell us? Very little about his ideology, but a great deal about the man himself.

Mr. Kerry promises higher spending, higher taxes and overall deficit reduction. But the details do not add up.

The centerpiece of his campaign is a proposal that would increase the proportion of Americans with health insurance. But succumbing to the tendency for presidential candidates with long experience in the Senate to include almost everything they ever voted for in their campaign platform, Mr. Kerry has added an astonishingly broad grab bag of other spending proposals – 70 in all.

How much would all of these promises cost? Let’s begin with the biggest proposal. The only existing score for the health plan was provided by Kenneth Thorpe, a former Clinton official and Emory University professor. He at first placed the cost of Mr. Kerry’s health plan alone at about $1 trillion. Mr. Thorpe subsequently revised the figure downward to $653 billion to account for some rather mysterious “savings,” apparently because the health plan’s vague statements concerning prevention will yield miraculously precise lower expenses in later years.

The higher number is more reasonable. But starting with the lower number, the National Taxpayers’ Union Foundation recently estimated that Mr. Kerry’s proposals would increase government spending by $226 billion in his first year in office. That’s about $2,000 per American family, or 10% of the federal budget. While the report did not include a 10-year score, the construction of one is hardly rocket science. My own calculations suggest that the total costs of Mr. Kerry’s proposals would be at least $2 trillion from 2005 to 2014.

Mr. Kerry’s tax proposal is to renew the cuts that were provided in recent years to the so-called “middle class,” to reverse reductions provided to those with incomes above $200,000, and to introduce a new tax credit for higher education. All of the tax cuts enacted by Congress and President Bush are currently scheduled to expire, so Mr. Kerry’s tax plan actually reduces tax revenue by more than $400 billion over 10 years. If Congress extends President Bush’s tax cuts before departing this year – something only Mr. Kerry’s campaign thinks will happen – then the Kerry plan would increase revenue by approximately $800 billion.

If we put the spending and tax sides together, the first budget that Mr. Kerry will submit would increase the deficit over 10 years by a minimum of about $1.2 trillion and, more likely, by well over $2 trillion. While a few smaller proposals from Mr. Kerry raise a little more revenue, they do not go anywhere near the level necessary to close the enormous gap between spending and taxes.

This is a strange result for a party that clucks like a nest of saintly deficit hawks. Even with the economy roaring ahead, one can hardly turn on the television or open a magazine without finding some anti-Bush intellectual waxing poetically about the perils of deficits. George Akerlof, a Nobel Prize-winning economist and adviser to Mr. Kerry, warned in one interview concerning President Bush’s fiscal policy that “Past administrations from the time of Alexander Hamilton have on the average run responsible budgetary policies. What we have here is a form of looting,” adding that “now is the time for people to engage in civil disobedience.”

The Kerry plan increases the deficit a great deal more than the dividend tax reduction that aroused so much inflammatory rhetoric last year. In order to provide his army of virtuous talking heads with virtuous talking points, Mr. Kerry has proposed budget rules that, on the surface, limit the growth of government spending. But he has walled off many of his proposals. In a debate during the primaries, John Edwards, now Mr. Kerry’s running mate, said quite accurately that the Kerry plan would “drive us deeper and deeper into deficit.” Even Mr. Akerlof, no political opportunist, complained openly in the Washington Post that the Kerry message is muddled. The candidate talks about deficit reduction but protects his pet programs.

How could such an internally inconsistent plan have been constructed? One explanation may be that there are too many cooks; Mr. Kerry’s current advisory team includes 200 economists. But a more plausible explanation is that the economic platform is merely another manifestation of Mr. Kerry’s own contradictions and confusions.

In economics, at least, Mr. Kerry is not a “flip-flopper,” as the Bush campaign likes to say. If he were, his relationship to policy would be like that of Elizabeth Taylor to Richard Burton. But he does not hold a position passionately one day and then drop it for the opposite position the next day. The truth is that, right from the start, Mr. Kerry cannot make up his mind whether he is a free-spending liberal or a deficit hawk. He could not possibly reverse course on his economic plan because the current course is impossible to discern. If he backtracks on deficit reduction, he advances his health plan. His relationship to the deficit is Hamlet’s toward King Claudius: anguished and indecisive.

Because of this indecision, Mr. Kerry has failed where almost every presidential candidate before him has succeeded. Americans will depart this week’s convention with no idea what will happen to economic policy if the Democrats sweep into office in November. That may be acceptable to a Democratic base that has apparently been hypnotized by Michael Moore, but it will surely leave swing voters scratching their heads.

forgot to note that this was from todays wall street journal