Kerry-Edwards subterfuge

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John Kerry delivered his most important economic-policy address of the post-convention presidential campaign on Wednesday, two days after a highly respected think tank issued an authoritative analysis that obliterated the low-ball cost estimates of the Kerry-Edwards health-care proposal.

On Monday, the American Enterprise Institute (AEI) issued a report detailing how the Kerry-Edwards health plan would increase federal budget outlays by more than $1.5 trillion over a 10-year (2006-2015) period. That amount was significantly higher than the initial $890 billion estimate, which accompanied the May 16, 2003, unveiling of Mr. Kerry's plan in Des Moines, Iowa. When the $890 billion price tag proved to be politically unpalatable, Mr. Kerry's estimators finagled several hundred billion dollars in "savings" and revised the net cost downward to $653 billion.

AEI's analysis, however, found that the saving provisions of the Kerry plan were vastly overestimated and its spending provisions were even more egregiously underestimated. On the spending side of the ledger, for example, AEI found that the costs for Medicaid and the State Children's Health Insurance Program would be more than $200 billion higher. The same is true for the costs of Mr. Kerry's premium rebate provision, which would offer massive federal subsidies to employers for costs incurred by catastrophically ill patients. While the Kerry plan envisions saving nearly $200 billion through disease management and health information technology, the AEI analysis concluded that such savings would be smaller than $200 million.

On Tuesday, the day after AEI issued its report and the day before Mr. Kerry addressed the Detroit Economic Club, his running mate -- John Edwards -- blasted the Bush administration's budget policies and blamed Mr. Bush for the spate of corporate scandals that occurred in late 2001 and early 2002. Mr. Edwards charged that the president "believes he's [former Enron Chairman] Ken Lay and America is his Enron."

The day after Mr. Edwards' remarks, former Clinton Treasury Secretary Robert Rubin traveled to Detroit, where he delivered what the Associated Press called a "glowing introduction" for Mr. Kerry. As history has clearly demonstrated, the steady march from budget deficit to budget surplus on Mr. Rubin's watch was directly attributed to the stock-market bubble that developed under his nose during his tenure. Treasury coffers overflowed with capital-gains tax revenues as the broad-based S&P 500 stock index tripled from Jan. 10, 1995, when Mr. Rubin was confirmed, to July 1, 1999, when his successor was confirmed. After the Rubin-era bubble burst, capital-gains taxes plummeted, as did the surplus.

As for Mr. Edwards' Enron obsession, somebody needs to tell him that it was Mr. Rubin -- as the $40 million per year executive committee chairman of Citigroup (Enron's largest creditor) -- who improperly telephoned the Bush Treasury Department in late 2001 on behalf of Enron and his longtime friend, Mr. Lay. As Enron was hurtling toward bankruptcy, Mr. Rubin asked the Treasury Department to intervene with a credit-rating firm on Enron's behalf. To its everlasting credit, the Bush administration refused. Mr. Rubin's Citigroup was eventually exposed for its role in Enron's subterfuge, which cost its shareholders more than $50 billion.