Politics & Policy

Kerry’S Secret Economic Plan

And why it must stay secret.

What do Richard Nixon, Bill Clinton, and King Henry IV of England have in common? Surprisingly, the answer is John Kerry.

During his race for the White House in 1968, Richard Nixon claimed that he had a “secret” plan to end the Vietnam War. Recently, one of Sen. Kerry’s economic advisers let it slip that Kerry too has a secret plan.

The slip-up occurred during a BusinessWeek online interview with Robert Rubin. The interviewer asked:

Kerry has said he would roll back the tax cuts on the wealthy to pay for his spending programs. But if he wants to fix the deficit problem, won’t he have to raise other taxes as well?

The former Treasury secretary replied:

I don’t think you can make proposals to try to dig out of this hole until you’ve gotten elected and until you’ve organized effectively across both parties and both houses. If you start to put out proposals now, they would be vigorously attacked, and they would in effect become tainted so they couldn’t be used.

In other words, Kerry needs to win the election before he can say what he truly would do as president. So what is Kerry unwilling to reveal prior to the election that would cause him and his agenda to be “vigorously attacked?” Given that Kerry cast 98 votes for tax increases throughout his Senate career, it doesn’t take much imagination to figure out what Kerry has in mind. As Sen. Hillary Clinton recently said, “We’re going to take things away from you on behalf of the common good.”

Indeed, Kerry’s approach to fiscal policy is strongly reminiscent of Bill Clinton’s. Campaigning for the White House in 1992, Clinton promised to fund an array of new “investments,” reduce the budget deficit, and enact a middle-class tax cut. Less than one month after assuming office, Clinton abandoned the tax cut and proposed what the late Sen. Patrick Moynihan aptly characterized as “the largest tax increase in the history of public finance in the United States or anywhere else in the world.” At Clinton’s urging, the 103rd Congress ultimately imposed higher income taxes, higher payroll taxes, higher gasoline taxes, and higher taxes on Social Security benefits.

Much like Bill Clinton in 1992, John Kerry has promised to fund new “investments,” reduce the budget deficit, and enact tax cuts for the middle class. And like Bill Clinton’s numbers in 1992, John Kerry’s numbers simply do not add up. (Hence the need for a secret plan.)

According to the nonpartisan National Taxpayers Union, John Kerry has proposed spending cuts that would save $300 billion over ten years. While that may look impressive at first glance, it represents a mere 1 percent reduction in projected federal outlays over that period. And let’s not forget that Kerry has also proposed spending increases totaling $2.56 trillion — that is roughly $8.50 in spending increases for every dollar of spending cuts. On net, Kerry’s spending proposals would boost federal spending $2.26 trillion over the decade. The era of “big government” may be over, but Kerry stands ready to usher in an era of “huge government.”

Kerry’s proposal to raise taxes on those earning over $200,000 a year would generate hundreds of billions of dollars for the Treasury’s coffers. His other proposed tax increases would generate billions more. Yet these tax increases would offset only a fraction of Kerry’s new spending. Far from balancing the budget, Kerry would balloon the budget deficit. (Hence the need for a secret plan.)

Even Sen. John Edwards, Kerry’s choice for vice president, voiced concern about this earlier in the year. He said, “Sen. Kerry has consistently said that he can pay for all the things that he’s proposing and substantially reduce the deficit — I think I’ve heard him say cut it in half — in his first term. Well, the Washington Post today just analyzed his proposals, and it’s the same old thing. Here we go again. In fact, in fact, he overspends, in terms of being able to pay for all of his proposals, he overspends by $165 billion in his first term, which means he would drive us deeper and deeper into deficit.”

But given Kerry’s voting record in the Senate, none of this should be surprising. Even Rep. Bernie Sanders — an independent from Vermont and the only self-declared socialist in Congress — received higher ratings from the National Taxpayers Union than John Kerry did in ten of the past twelve years.

What does any of this have to do with King Henry IV? Shortly after assuming the English throne in 1399, Henry faced a series of costly rebellions. With his financial situation growing more tenuous, the embattled King demanded: “You have gold and I want gold; where is it?” Perhaps now we know where John Kerry got his secret plan.

– J. Edward Carter is an economist in Washington, D.C. PLEASE SEE EDITOR’S NOTE

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