- The Washington Times - Thursday, September 16, 2004

John Kerry and his running mate, John Edwards, know that one of the sharpest economic arrows in their quiver is the straightforward, indisputable charge that huge projected budget surpluses have been replaced by huge budget deficits during the Bush administration. Thus, on Tuesday, Mr. Edwards blamed the president for “the most fiscally irresponsible turnaround in our country’s history.” In a major economic-policy speech delivered Wednesday at the Detroit Economic Club, Mr. Kerry accused the president of “turn[ing] a [10-year] $5.6 trillion surplus into trillions of debt for our children.”

For more than a year-and-a-half, Messrs. Kerry and Edwards have relentlessly argued that a principal cause of this fiscal turnaround has been what they consider to be a massively disproportionate tax cut given to families making more than $200,000. Promising to offer additional tax relief to the middle class, the Kerry-Edwards campaign pledges to raise only the taxes of the 2 percent of American families that earn more than $200,000 a year.

If so much of the “fiscally irresponsible turnaround” is attributable to what Mr. Kerry called “tax giveaways to the wealthy,” then it would be reasonable to assume that re-instating these “giveaways” would go a long way toward reversing the “fiscally irresponsible turnaround.” But they don’t. In fact, they don’t even come close. Indeed, Mr. Kerry only offers the dubious promise that he would cut the deficit in half within four years. There are four major reasons why Mr. Kerry won’t reverse the turnaround.

First, the widely quoted 2002-2011 surplus projection not only did not anticipate the recession that began less than two months after Mr. Bush’s inauguration, it also assumed that revenues directly related to the stock-market bubble, which had begun to deflate a year before Mr. Bush entered office, would continue to pour into government’s coffers. Under the assumption that nearly all of the expiring tax cuts would be extended through 2011, the liberal Center on Budget and Policy Priorities (CBPP) recently calculated an $8.7 trillion fiscal turnaround over the 2002-2011 period. It attributed $3.2 trillion of this turnaround to “over-optimism about the economy and ‘technical’ factors.”

Second, September 11 intervened. Another $1.9 trillion of CPBB’s $8.7 trillion turnaround relates to “increases for defense, homeland security and international programs.” (Wasn’t it Mr. Kerry who declared 13 months ago that America should increase funding for the Iraq war “by whatever number of billions of dollars it takes to win”?)

Third, eliminating “tax giveaways to the wealthy” will generate paltry revenues relative. The Tax Policy Center, which is a joint venture of the left-of-center Urban Institute and Brookings Institution, estimates that Mr. Kerry’s tax policy would raise only $233 billion during the fiscal 2005-2009 period; and this assumes expiring tax cuts were extended.

The final reason relates to the massive spending program he proposes. Mr. Kerry is not interested in eliminating “tax giveaways to the wealthy” in order to pursue a more prudent fiscal course. He wants to spend the proceeds, and much more beyond those increased revenues.

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