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Deficit Doublespeak
Kerry is a tax raiser and spender, make no mistake about it.


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Massachusetts Senator John Kerry has made deficit-reduction a central economic theme of his campaign for president. In a speech at Georgetown University in early April, with former Clinton Treasury Secretary Robert Rubin at his side, Kerry blamed President George W. Bush for moving the federal budget “from record surpluses to record deficits.” He then pledged to cut the deficit in half by the end of his first term, while proclaiming that a “deficit-reduction promise from George W. Bush is not exactly a gilt-edged bond.”

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Well, as it turns out, neither is such a promise from John Kerry. Eleven days after that speech, during an interview with Tim Russert on Meet the Press, Kerry said he would break his own deficit-reduction pledge in the case of war or national emergency.

RUSSERT: In the interest of candor and clarity, you have promised to create 10 million jobs and cut the deficit in half in your first four years.

KERRY: Yes, sir.

RUSSERT: If you don’t achieve those goals, would you pledge you will not seek re-election?

KERRY: Well, it would depend on the circumstances. If I don’t because there’s a war or something terrible happens, of course I’m not going to make that pledge. [Emphasis added.]

“Something terrible” did happen to America on September 11, 2001. The unavoidable increases in government spending needed to respond to 9/11 and the subsequent global war on terrorism had a significant impact on the budget situation under President Bush. As Senate Democratic leader Tom Daschle put it at that time, “This is deficit spending once again and it’s very disconcerting to many of us. But I don’t know that there is an alternative.”

Within days of the attack, Congress appropriated $40 billion to pay for the rebuilding efforts here at home and the retaliation against al Qaeda terrorists in Afghanistan. President Bush, with the bipartisan support of Congress, then took the next necessary step in the war on terror by removing Saddam Hussein’s regime in Iraq. Congress provided supplemental funding for both the troops and for the reconstruction and rebuilding in Iraq. The president and Congress tripled the amount of spending on homeland security since 2001, and focused these resources under the new Department of Homeland Security.

As House Democratic leader Richard Gephardt cogently observed in February 2003, “We are in recession, we are at war, and that has consequences for any budget.” According to the Office of Management and Budget, about 75 percent of the increase in discretionary spending over the past three fiscal years was due to our nation’s response to 9/11 and the war. The Congressional Joint Economic Committee found that 73 percent of the downturn in the budget surplus over the last three years was the byproduct of increased government spending and the weak economy. Only 27 percent of the dissipation was caused by the Bush tax cuts.

Had there been no tax cuts, the federal government would still have run substantial budget deficits. In fact, by cushioning the economic fallout from the 9/11 attack and strengthening the economy, the tax cuts had the effect of putting a floor under the tax revenue base. Without the Bush tax cuts, the recession would have been longer and deeper, thereby producing an even larger budget deficit.

In the coming months the American people must decide which candidate for president has the more credible plan to cut the deficit. President Bush’s budget proposal for the 2005 fiscal year, with its 402 pages, provides a detailed blueprint to restrain spending and cut the deficit in half over five years. It would hold the growth of total discretionary spending to 3.9 percent and limit non-defense, non-homeland security spending to less than 1 percent. It calls for terminating 65 unnecessary programs including corporate welfare (such as the Advanced Technology Program). Most important, it proposes to make the Bush tax cuts permanent, thereby fueling the economic growth that will ultimately add tax revenue and reduce the deficit.

In an attempt to outdo the president, Sen. Kerry has proposed cutting the deficit in half in four years “by paying for every program I propose; and by rolling back the Bush tax cut for the wealthiest Americans while expanding tax cuts for the middle class.” He pledged only last week that a Kerry administration would “cut the spending level from where it is today, and we will reduce the size of government from what it is today.”

The Kerry budget plan, however, contains few details on specific government programs the senator would cut or eliminate, although it is very specific about programs he would increase. Since he declared his candidacy, Kerry has proposed 85 spending programs, 44 of which have been calculated by the Congressional Budget Office and other credible sources as costing almost $2 trillion over ten years.

In an effort to brandish his credentials as a deficit hawk, Kerry has called for the renewal of Congress’s budget-enforcement rules, which require new spending and tax cuts to be “paid for” by spending cuts or tax increases elsewhere. However, Kerry’s budget plan purposely exempts the cost of his middle-class tax cuts from these budget rules. In this way, Kerry can support tough budget-enforcement rules and avoid the tough choices required to live by them.

Journalists exaggerate the importance of deficits in an economy. A nation can theoretically have no economic growth, stagnant living standards, and 10 percent unemployment, and one would hardly say things were great simply because a budget surplus existed. Further, while some argue that increased deficits lead to higher interest rates, the evidence of recent years simply does not support this view: As the budget has moved from surplus to deficit over the past three years, interest rates have fallen significantly.

A President Kerry would harm — not help — economic growth through his tax increases. And given his almost $2 trillion spending plans, the only way John Kerry will come close to eliminating the deficit is if he raises taxes far, far higher than the $700 billion in he has already pledged by increasing taxes on the rich. It is clear that Kerry’s promise to cut the deficit is built on rhetoric, not reality.

Cesar V. Conda, formerly assistant for domestic policy under Vice President Dick Cheney, is a board director at Empower America in Washington D.C.



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