Kerry-Edwards fiscal policy

The Kerry-Edwards presidential campaign recently issued a broad outline of its budget policy, but the Kerry-Edwards arithmetic hasn’t improved on John Kerry’s numbers during the primary campaign. The first sign that they are winging it came from their assertion that they would save $300 billion over 10 years by “eliminat[ing] unnecessary corporate welfare.”

Are we to assume that John Kerry and John Edwards intend to maintain current levels of “necessary corporate welfare”? It is not that we doubt there is $30 billion per year of corporate welfare tucked away in tax loopholes and subsidies. And we share their belief that giving Sen. John McCain an ax to hack away at corporate welfare would be a good start. But wasn’t Mr. McCain the one presidential candidate in memory who had the nerve to tell Iowans that the ethanol scam was a classic example of corporate welfare? And didn’t Messrs. Kerry and Edwards embrace the ethanol rip-off in search of Iowa caucus votes? So, where’s the testosterone?

Meanwhile, when Mr. Kerry unveiled his health-care plan in May 2003, it carried a 10-year price tag of $890 billion, according to an analysis by health-care economist Ken Thorpe. The latest price tag is a mere $653 billion. That was an amazing achievement, considering that the campaign also conveniently folded in 90 percent of its $300 billion proposal for mandatory veterans health care.

The Kerry-Edwards plan calls for adding 40,000 troops to the armed forces, but the net cost apparently will be zero because the troops will be paid for by “streamlining various large weapons programs,” adopting a ” ‘systems of systems’ approach to transformation, reducing total expenditures on missile defense and further reforming the acquisition process.”

The plan also makes the unsupported claim that it will save $55 billion over 10 years by eliminating fewer than 2 percent of federal contractors and another $10 billion by freezing the federal travel budget.

Regarding revenue increases, the Kerry-Edwards campaign appears to be backing away from its promise to raise taxes on only those earning $200,000 or more. Its plan pledges to “restore top two rates,” the lowest of which in 2000 (i.e., before the Bush tax cuts took effect) began at $140,000 for married couples filing jointly. So, $70,000 income per year, per person constitutes plutocratic wealth in need of IRS shearing in the eyes of John Kerry.

Mr. Kerry promises to cut the budget deficit in half within four years. But his plan significantly overstates the revenue available from eliminating the tax relief for those earning $200,000 and more. Deficit projections by the Congressional Budget Office are based on current law, which mandates that all the 2001 and 2003 tax cuts will expire after 2010, if not before. Thus, immediately repealing tax relief for those earning at least $200,000 will yield only an additional $300 billion over the next 10 years. The Kerry-Edwards plan incorrectly, but conveniently, assumes that the tax cuts for the over-$200,000 bracket have been made permanent. In fact, on taxes alone, the Kerry-Edwards plan has a $1.2 trillion hole in it.

This is what passes for fiscal discipline in the Kerry-Edwards camp.