The Weekly Standard
03/09/2004
A Real Choice
by Irwin M. Stelzer
John Kerry and George W. Bush offer voters two very distinct economic
futures for America.
http://www.weeklystandard.com/Content/Public/Articles/000/000/003/828vtnej.a
sp
ALL OF THOSE DISENCHANTED FOLKS who have been staying away from the voting
booths because they say that all politicians are the same, so why bother
voting, no longer can claim that excuse. GWB and JFK (get used to it, that
now refers to John Fitzgerald Kennedy's initialsake) may both be millionaire
Yalies, but that's where the similarities end. Kerry remains comfortable in
the liberal, upper-crust New England background in which he was reared when
not in an overseas boarding school, while Bush long ago decided that the
hard-scrabble life of Crawford, Texas is more agreeable--suitably softened
by family money and connections, of course.
From which flows a series of policy differences that promise to make America
a very different place if Kerry succeeds Bush, then it will be if the
president remains in the White House. This is no race between Tweedledee and
Tweedledum.
BUSH STYLES HIMSELF a war president, with all the implications that has for
both foreign and domestic policy. He is willing to spend blood and treasure
on a long-term war on terror that he says must be fought if America is to be
secure, and on an effort to build Iraq into a model democracy that will be a
beacon for other Middle Eastern nations. In domestic terms, that means
spending more on defense and curtailing outlays on domestic programs, if
necessary.
Kerry sees things differently. During his 19 years in the senate, he has
voted against funding every new weapons system proposed by the military,
including many now in use in Iraq and Afghanistan. More recently, after
having first voted to approve military action against Saddam Hussein, he
shortly thereafter voted against the $82 billion his congressional
colleagues approved to fund the military and nation-building effort in Iraq.
Like many of his liberal Democratic colleagues, Kerry would allocate more to
entitlement programs and less to the military. And within those entitlement
programs, his preference is for government rather than private sector
management. So he would modify Bush's recently passed prescription drug
program for seniors to make government purchasing more central to efforts to
control drug prices. That's bad news for drug companies, and, in the longer
run, for those who might benefit from current research and development
programs.
On the fiscal front, whoever takes the oath of office on January 20, 2005
will inherit a major problem: a runaway federal deficit. When Franklin D.
Roosevelt took the oath in 1933, he faced a crisis and the nation knew he
faced a crisis--an awareness that gave him considerable freedom to make such
changes as he thought necessary. Bush or Kerry will face a different
situation--a generally contented electorate.
It is highly likely that on January 21 the nation will be in the midst of a
period of fairly-to-very rapid growth. All signs point to a continuation of
the boom in home construction, a pretty good year for the auto industry,
good times for manufacturers, a recovering jobs market (a forecast that I
confess is increasingly a triumph of hope over experience), and inflation at
unthreatening levels. Interest rates may be a bit higher, but are unlikely
to have risen to levels that cause consumers undue pain while servicing
their debt. Even the trade deficit might well have turned down, as the
weaker dollar makes imports more expensive and exports more competitive.
All of which makes it more likely that Bush will continue to reside at 1600
Pennsylvania Avenue than that Mrs. Kerry will be engaged in the delicious
task of eliminating all traces of Texas from the White House. That is,
unless a series of disasters in Iraq--or an extraordinarily large turnout by
aroused, anti-Bush Democrats--tips the closely balanced scales in Kerry's
favor.
No matter: Either man will face a budget deficit running at close to, or
perhaps more than, 5 percent of GDP, and a plan to reduce it, submitted by
Bush earlier this year, that is so unrealistic as to have few defenders,
even in his own party. Worse still, the next president will preside over the
first wave of retirement of the baby boomers, who will want their social
security pensions. Not to mention an aging population that, along with
expensive new discoveries in the medical sciences, is certain to drive up
health care costs.
HERE WE CAN EXPECT profoundly different reactions. Bush is wedded to
preserving the tax cuts he quite properly introduced to stimulate a slowing
economy. White House sources say that, if reelected, the president will give
no ground on such issues as eliminating inheritance taxes and preserving
child credits. No change there. But a major reform of the tax system is
already being designed by White House staffers, with the goal of removing
disincentives to work and invest. Such changes as lowering the corporate
income tax rate are seen by the president's economists as essential to the
rapid economic growth that will increase the flow of cash into the Treasury.
So it is to supply-side reform that Bush will turn in his hunt for money to
fund his tax cuts, the war, the prescription drug program, and even the
first steps on the long road to Mars.
Kerry sees things differently. He has promised to raise taxes on "the rich,"
which probably means all those earning $200,000 per year or more. That will
produce a bit more revenue, but hardly what is needed to stanch the flood of
red ink and prepare the government to meet its enormous unfunded obligations
to the army of retirees--especially since Kerry plans to spend some of that
new-found cash on expanding the welfare state. A portion of the budget gap
will be filled by cuts in military expenditures, especially if Kerry is as
successful as he claims he will be in transferring some of America's burden
as world policeman to the United Nations and other multilateral
organizations. Remember: Republicans are already joining Democrats in
calling for a cut in Bush's proposed Pentagon budget. The remaining
shortfall will be covered by tax increases.
If you doubt that, recall that even the first president Bush, he of the
famous, "Watch my lips, no new taxes," finally succumbed to the pressures of
the Washington tax-raisers, as did Bill Clinton in the early days of his
administration. Kerry, who is advised by Clinton's Treasury secretary, Bob
Rubin, and a host of other Clintonistas who pride themselves on having
delivered repeated budget surpluses, will not shy from a tax rise,
especially one that he can blame on the mess he inherited from his
predecessor.
WHICH LEAVES ANOTHER POLICY AREA that will be affected in a major way by the
new occupant of the White House: Bush is by instinct a free trader who has
been forced to give ground to agricultural and industrial protectionists in
key electoral states. Having been reelected, unable to run again, and with
no need to prepare the ground for a 2008 run by his vice president, Dick
Cheney, Bush can push his program of negotiating bilateral trade agreements
and a new worldwide trade-opening agreement. Indeed, if rumors that Bush's
Trade representative, Bob Zoellick, will become Treasury secretary are true,
free trade may be the signature policy of a second Bush term.
Not so for Kerry. In order to fend off a primary challenge by protectionist
John Edwards, and to win trade union support, Kerry abandoned his long-held
support for free trade. He plans a skeptical review of the North American
Free Trade Agreement (for which he once voted), to end negotiations for
bilateral agreements, to tax companies that invest in factories abroad, and
to treat severely the "unpatriotic" companies and their traitorous,
"Benedict Arnold" executives who outsource and otherwise seek the
efficiencies available in an open, globalized market.
There you have it: Bush with his war-on-terror priorities, Kerry more
interested in funding his domestic agenda. Bush to press for supply-side
reforms of the tax system, Kerry to raise taxes. Bush to press ahead with
his free-trade agenda, Kerry to rein in trade-opening deals.
Some presidential campaigns have presented voters with an echo rather than a
choice. Not this one.
03/09/2004
A Real Choice
by Irwin M. Stelzer
John Kerry and George W. Bush offer voters two very distinct economic
futures for America.
http://www.weeklystandard.com/Content/Public/Articles/000/000/003/828vtnej.a
sp
ALL OF THOSE DISENCHANTED FOLKS who have been staying away from the voting
booths because they say that all politicians are the same, so why bother
voting, no longer can claim that excuse. GWB and JFK (get used to it, that
now refers to John Fitzgerald Kennedy's initialsake) may both be millionaire
Yalies, but that's where the similarities end. Kerry remains comfortable in
the liberal, upper-crust New England background in which he was reared when
not in an overseas boarding school, while Bush long ago decided that the
hard-scrabble life of Crawford, Texas is more agreeable--suitably softened
by family money and connections, of course.
From which flows a series of policy differences that promise to make America
a very different place if Kerry succeeds Bush, then it will be if the
president remains in the White House. This is no race between Tweedledee and
Tweedledum.
BUSH STYLES HIMSELF a war president, with all the implications that has for
both foreign and domestic policy. He is willing to spend blood and treasure
on a long-term war on terror that he says must be fought if America is to be
secure, and on an effort to build Iraq into a model democracy that will be a
beacon for other Middle Eastern nations. In domestic terms, that means
spending more on defense and curtailing outlays on domestic programs, if
necessary.
Kerry sees things differently. During his 19 years in the senate, he has
voted against funding every new weapons system proposed by the military,
including many now in use in Iraq and Afghanistan. More recently, after
having first voted to approve military action against Saddam Hussein, he
shortly thereafter voted against the $82 billion his congressional
colleagues approved to fund the military and nation-building effort in Iraq.
Like many of his liberal Democratic colleagues, Kerry would allocate more to
entitlement programs and less to the military. And within those entitlement
programs, his preference is for government rather than private sector
management. So he would modify Bush's recently passed prescription drug
program for seniors to make government purchasing more central to efforts to
control drug prices. That's bad news for drug companies, and, in the longer
run, for those who might benefit from current research and development
programs.
On the fiscal front, whoever takes the oath of office on January 20, 2005
will inherit a major problem: a runaway federal deficit. When Franklin D.
Roosevelt took the oath in 1933, he faced a crisis and the nation knew he
faced a crisis--an awareness that gave him considerable freedom to make such
changes as he thought necessary. Bush or Kerry will face a different
situation--a generally contented electorate.
It is highly likely that on January 21 the nation will be in the midst of a
period of fairly-to-very rapid growth. All signs point to a continuation of
the boom in home construction, a pretty good year for the auto industry,
good times for manufacturers, a recovering jobs market (a forecast that I
confess is increasingly a triumph of hope over experience), and inflation at
unthreatening levels. Interest rates may be a bit higher, but are unlikely
to have risen to levels that cause consumers undue pain while servicing
their debt. Even the trade deficit might well have turned down, as the
weaker dollar makes imports more expensive and exports more competitive.
All of which makes it more likely that Bush will continue to reside at 1600
Pennsylvania Avenue than that Mrs. Kerry will be engaged in the delicious
task of eliminating all traces of Texas from the White House. That is,
unless a series of disasters in Iraq--or an extraordinarily large turnout by
aroused, anti-Bush Democrats--tips the closely balanced scales in Kerry's
favor.
No matter: Either man will face a budget deficit running at close to, or
perhaps more than, 5 percent of GDP, and a plan to reduce it, submitted by
Bush earlier this year, that is so unrealistic as to have few defenders,
even in his own party. Worse still, the next president will preside over the
first wave of retirement of the baby boomers, who will want their social
security pensions. Not to mention an aging population that, along with
expensive new discoveries in the medical sciences, is certain to drive up
health care costs.
HERE WE CAN EXPECT profoundly different reactions. Bush is wedded to
preserving the tax cuts he quite properly introduced to stimulate a slowing
economy. White House sources say that, if reelected, the president will give
no ground on such issues as eliminating inheritance taxes and preserving
child credits. No change there. But a major reform of the tax system is
already being designed by White House staffers, with the goal of removing
disincentives to work and invest. Such changes as lowering the corporate
income tax rate are seen by the president's economists as essential to the
rapid economic growth that will increase the flow of cash into the Treasury.
So it is to supply-side reform that Bush will turn in his hunt for money to
fund his tax cuts, the war, the prescription drug program, and even the
first steps on the long road to Mars.
Kerry sees things differently. He has promised to raise taxes on "the rich,"
which probably means all those earning $200,000 per year or more. That will
produce a bit more revenue, but hardly what is needed to stanch the flood of
red ink and prepare the government to meet its enormous unfunded obligations
to the army of retirees--especially since Kerry plans to spend some of that
new-found cash on expanding the welfare state. A portion of the budget gap
will be filled by cuts in military expenditures, especially if Kerry is as
successful as he claims he will be in transferring some of America's burden
as world policeman to the United Nations and other multilateral
organizations. Remember: Republicans are already joining Democrats in
calling for a cut in Bush's proposed Pentagon budget. The remaining
shortfall will be covered by tax increases.
If you doubt that, recall that even the first president Bush, he of the
famous, "Watch my lips, no new taxes," finally succumbed to the pressures of
the Washington tax-raisers, as did Bill Clinton in the early days of his
administration. Kerry, who is advised by Clinton's Treasury secretary, Bob
Rubin, and a host of other Clintonistas who pride themselves on having
delivered repeated budget surpluses, will not shy from a tax rise,
especially one that he can blame on the mess he inherited from his
predecessor.
WHICH LEAVES ANOTHER POLICY AREA that will be affected in a major way by the
new occupant of the White House: Bush is by instinct a free trader who has
been forced to give ground to agricultural and industrial protectionists in
key electoral states. Having been reelected, unable to run again, and with
no need to prepare the ground for a 2008 run by his vice president, Dick
Cheney, Bush can push his program of negotiating bilateral trade agreements
and a new worldwide trade-opening agreement. Indeed, if rumors that Bush's
Trade representative, Bob Zoellick, will become Treasury secretary are true,
free trade may be the signature policy of a second Bush term.
Not so for Kerry. In order to fend off a primary challenge by protectionist
John Edwards, and to win trade union support, Kerry abandoned his long-held
support for free trade. He plans a skeptical review of the North American
Free Trade Agreement (for which he once voted), to end negotiations for
bilateral agreements, to tax companies that invest in factories abroad, and
to treat severely the "unpatriotic" companies and their traitorous,
"Benedict Arnold" executives who outsource and otherwise seek the
efficiencies available in an open, globalized market.
There you have it: Bush with his war-on-terror priorities, Kerry more
interested in funding his domestic agenda. Bush to press for supply-side
reforms of the tax system, Kerry to raise taxes. Bush to press ahead with
his free-trade agenda, Kerry to rein in trade-opening deals.
Some presidential campaigns have presented voters with an echo rather than a
choice. Not this one.
