***** April 09, 2004 CALL ME . . . IRRESPONSIBLE
John F. Kerry! We hear you have a fiscal policy <http://www.johnkerry.com/pressroom/releases/pr_2004_0407a.html>. Come on down!
[Blogging from home. Note disclaimer at left.]
In too many ways, the Kerry policy resembles the Bush policy, which I discussed here <http://maxspeak.org/mt/archives/000118.html>, among many other places. What did I say about Bush?
* Bush glosses over fiscal problems importantly of his own making by shortening the time horizon from ten to five years. Kerry does four years.
* Fixing the Alternative Minimum Tax (AMT) is a huge, imminent, inescapable responsibility. Bush evades it. The initials AMT do not appear in Kerry's budget piece.
* Kerry's language about "corporate welfare" is a close facsimile of Bush's grab-bag of perennial revenue-raising devices. Any hope that such measures could put more than a dent in deficits is unfounded moonshine.
* Both propose slower growth in domestic discretionary spending as a means of "fiscal discipline."
* The central goal of the Senator's plan is to "cut the deficit in half in four years." This resembles the claim of the President, and betters it by one year. As I've noted here with respect to the Bush budget, under optimistic baseline projections, the deficit falls by half by 2009 with no new policy changes.
On the spending side, Kerry promises to prevent any growth of non-defense/non-security spending to inflation. In other words, he would preclude any real expansion of spending (outside of education). This is a flagrant betrayal of his likely supporters, not to mention the people who voted for him in the primaries.
It's not just that we would benefit from greater efforts in the realm of job training, social services, environmental protection, urban development, and the like, as Kerry had promised. It is that such a move provides no important long-term remedy for the nation's anticipated fiscal problems. So it's not as if this is strong medicine we need. It's a cheap political play.
Some have said we should not take budget commitments in a campaign seriously. That surely puts a crimp on serious discussion of politics. Even as analysis, this is deficient. Statements during a campaign retain political force during the ensuing Administration.
I've also heard statements from the campaign that the situation coming to light is worse than they thought it was. This won't wash at all. No information has come to light since the primary contests ended that was not available in January, if not earlier. The Congressional Budget Office did a complete data dump at the end of January.
More annoying is the recollection of this refrain in November of 1992 from the Clinton transition team. They too discovered things were much worse than they had thought, before the election, and commitments in the realm of social spending would be reneged upon. How well would Kerry have done in Iowa if he had revealed that he would restrain domestic spending growth to inflation?
Prominent in the presentation is a commitment to more "middle class tax cuts." Now we've endorsed tax cuts as well, more in fact than Kerry. Specifics aside, what's the problem?
The problem is that the Gov't needs a ton more revenue by any realistic view. Denying tax cuts to taxpayers receiving over $200,000 in income is grossly insufficient. Topping that with additional cuts in corporate taxes compounds the problem.
Currently, Federal revenues are below 17 percent of GDP. The historic average exceeds 18 percent. Tax cuts are due to the working class, but stepping back, we need net revenue increases. The central educational task of all critics of the Bush deficits is to delegitimize the canard that any reversion to the tax code of 2000 is a "tax increase." Current tax levels bring untenable deficit implications. They are an invalid standard from which to measure "increases." I don't think that's too much to ask. It's not radical or complicated. It's honest arithmetic.
A more reasonable type of fiscal constraint endorsed by Kerry is a return to PAYGO. PAYGO means when you raise spending or cut taxes, you offset those policies by measures that either reduce spending or raise revenues, so the net impact on the deficit is nil. I'm not against PAYGO, but it begs a huge question, maybe the only question: from what level of taxes and spending is PAYGO appropriate?
Revenues right now are inordinately low by historic standards, and grossly insufficient in light of the budget outlook. PAYGO only makes sense if current revenue and spending levels are tenable. They're not.
The other problem with PAYGO and the general fiscal framework is that it begs the question of short-term economic stimulus. Are we aiming for balanced budgets? Do we think lower public spending does the economy good? Kerry has had better, different days on this topic <http://maxspeak.org/gm/archives/00000253.html>.
As far as fiscal policy goes, the accusation that Kerry is trying to style himself after John F. Kenney is unfair.
The real role model here is Dwight D. Eisenhower.
Posted by maxbsawicky at April 9, 2004 01:46 PM
<http://maxspeak.org/mt/archives/000311.html> ***** -- Yoshie
* Bring Them Home Now! <http://www.bringthemhomenow.org/> * Calendars of Events in Columbus: <http://sif.org.ohio-state.edu/calendar.html>, <http://www.freepress.org/calendar.php>, & <http://www.cpanews.org/> * Student International Forum: <http://sif.org.ohio-state.edu/> * Committee for Justice in Palestine: <http://www.osudivest.org/> * Al-Awda-Ohio: <http://groups.yahoo.com/group/Al-Awda-Ohio> * Solidarity: <http://www.solidarity-us.org/>
