- The Washington Times - Monday, September 20, 2004

Democratic presidential candidate Sen. John Kerry has been campaigning hard on the economy, charging President Bush is willing to send jobs overseas — “outsourcing” — and that he has presided over the worst job-creation record since the Great Depression.

This year’s election pits Mr. Kerry, formerly a fierce defender of free trade who has recently become a fiercer advocate for “fair trade,” against a president who has pursued free trade at every turn, including multilateral agreements in the Western Hemisphere and bilateral agreements with nations throughout the world.

It also pits two views of how the economy is performing right now.

On the campaign trail, Mr. Kerry highlights high unemployment rates in major states that are running well above the 5.4 percent national average: 6.7 percent in Michigan, 6.3 percent in Ohio, 7.4 percent in Oregon and 6.1 percent in Illinois.

Mr. Bush counters that his $1.7 trillion in tax cuts over the next 10 years have spurred an economy battered by the tech-stock collapse, the September 11 terrorist attacks, the corporate-accounting scandal and the Iraq war that has kept the financial markets in turmoil.

His administration points to a string of improving employment statistics, including 1.7 million new jobs since August 2003, and an economy growing at more than 3 percent, as interest rates remain relatively low and inflation is nowhere in sight.

With barely six weeks to go before the election, Mr. Bush will continue to push his optimistic outlook as Mr. Kerry tries to cultivate unrest among the electorate as the two candidates make a final push to sway voters.

The economy “is not as good as Bush says it is, but it’s not as bad as Kerry says it is,” said Democratic economist Charles L. Schultze, who was chairman of the President’s Council of Economic Advisers under President Carter.

“If push comes to shove, I’d say that job growth will probably pick up,” said Mr. Schultze, a senior fellow at the Brookings Institution.

The two candidates have sharply different agendas on economic policy.

Mr. Bush’s economic agenda for the next four years would make his tax cuts permanent, expand free-trade agreements throughout Central and South America, Asia and Africa, and overhaul the federal tax code to make it simpler, fairer and reduce compliance costs.

Mr. Bush touts his desire to let workers invest part of their Social Security payroll taxes in stocks and bonds to create investment wealth that they would own and control.

“It’s something government can’t take away, and it’s something you can pass on from one generation to the next,” the president said last week at a campaign rally at Shawnee State University in Portsmouth, Ohio.

He also wants to increase job-retraining assistance, as well as create grants to offer relief to economically distressed areas.

Mr. Kerry routinely berates the president’s tax-cut policies and says he would repeal parts of the across-the-board income-tax cuts, including tax-rate reductions for those who make more than $200,000 a year. He says he would use the additional revenue to cut the $422 billion budget deficit in half in four years.

Mr. Kerry, Massachusetts Democrat, says he will preserve the tax cuts aimed at middle- and lower-income taxpayers and would cut the corporate tax rate from 35 percent to 33.25 percent to spur business investment.

In a nod to environmentalists, Mr. Kerry says he will place all U.S. trade agreements under a review and seek to require that U.S. trading partners bring their labor and environmental standards up to America’s.

But no economic issue has drawn more firepower from Mr. Kerry than the practice of outsourcing jobs abroad, which polls show resonates strongly with voters in major Midwestern industrial states such as Ohio and Michigan and in Southern textile states such as North Carolina.

“Because of George Bush’s wrong choices, this country is continuing to ship good jobs overseas — jobs with good wages and good benefits,” Mr. Kerry said earlier this month at a town hall meeting in Greensboro, N.C., a state that has lost 160,000 jobs in textile and furniture manufacturing to overseas competitors.

Mr. Kerry has proposed ending the tax break on profits corporations earn from foreign plants that he says gives businesses incentives to send more jobs overseas.

“We give them a complete freebie, and when I’m president of the United States, it will take me about a nanosecond to ask the Congress to close that stupid loophole that rewards companies,” he said. “My value is good, old-fashioned four words: ‘Made in the USA.’”

The subject is a difficult one for the Bush campaign, whose strategists concede that they have not yet found a good way to deal with an outsourcing trend that a Labor Department study says accounts for only 1 percent to 2 percent of all jobs.

“Kerry’s attacks on outsourcing have no credibility, considering Kerry’s advisers have admitted his plan won’t stop outsourcing. The reality is that [Kerry’s] business supporters are outsourcing while Kerry misleadingly claims to be against it,” said Bush campaign spokesman Steve Schmidt.

Even Mr. Kerry’s top economic advisers, including former Treasury Secretary Robert Rubin, say that the impact of outsourcing on our economy is not a problem. He sees it as part of the growing trend toward free trade “that’s good for our economy.”

Sean Davis, a policy analyst at the Joint Economic Committee of Congress, says trade “overwhelmingly” benefits American workers.

“It helps keep prices down, helps to make more goods available to people here and helps to expand employment,” he said.

Still, Mr. Kerry continues to hammer away at the outsourcing issue. At one point, he called business executives who engage in outsourcing “Benedict Arnold CEOs,” a phrase that he later regretted, saying it was the work of “overzealous speechwriters.”

The Bush campaign responded with a list of 40 business leaders who have endorsed Mr. Kerry, but whose companies are major outsourcers of goods and services abroad. The list of names includes Mr. Rubin, a top executive with Citigroup, a financial services conglomerate; John Morgridge, chairman of Cisco Systems; and August A. Busch IV, president of Anheuser-Busch.

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