- The Washington Times - Tuesday, September 21, 2004

Quick question: What is John Kerry’s economic plan? Can anyone reading this column name even one key element?

With the economy a central election issue, one would think any reasonably well-informed voter could easily answer these questions. But in fact, I doubt more than a tiny handful of professional economists or economic journalists could do so. The reason is pretty simple — there really is no plan.

Mr. Kerry has policies, of course — lots of them. The problem is they don’t hang together in any logical way that could even loosely be called a plan. They look like items chosen from a menu — one from column A, one from column B, etc. Viewed in isolation, any one of them might be defensible. But when you put them together, they often contradict each other and don’t really add up to very much.

Having a plan implies some thought went into creating a coherent set of policies linked together philosophically. It is on this basis I say John Kerry has no plan.

Mr. Kerry clearly recognizes he has failed to articulate an economic message beyond attacking George W. Bush for every ill of the economy. But even if people are inclined to agree Mr. Bush’s economic policies have been lacking, they remain unlikely to replace him unless they have reason to believe Mr. Kerry will do better. After all, he might do worse.

Last week, Mr. Kerry made an effort to present a coherent economic plan. In a Wall Street Journal article titled, “My economic policy,” he made his case. It has four key elements: create good jobs, cut middle-class taxes and health costs, restore America’s competitive edge, and cut the deficit and restore economic confidence.

Mr. Kerry’s proposal to create jobs involves reducing outsourcing by closing a tax provision he believes encourages U.S. companies to invest abroad. The $12 billion per year from this would be used to reduce the corporate tax rate slightly. He would also reinstate a failed tax credit for new jobs and crack down on imports from China and elsewhere.

Economy.com, a respected independent forecasting service, looked at these tax provisions and concluded their net job creation effect would be “very modest.” On the other hand, Mr. Kerry’s implied protectionism could be very damaging to economic growth. Renowned Columbia University economist Jagdish Bhagwati calls Mr. Kerry’s trade policy “muddled and maddening” and “the voodoo economics of our time.”

Mr. Kerry’s tax plan basically involves extending all of Mr. Bush’s tax cuts except those affecting the top 2 percent of taxpayers, whose taxes would be raised to their pre-2001 level. The revenue raised by this tax increase on America’s principal job creators would pay for a $1 trillion expansion of federal health insurance. However, Mr. Kerry says it will only cost $650 billion because he will cut $350 billion of waste and red tape.

Economy.com calls Kerry health savings “questionable.” This is a polite way of saying they are nonexistent. More than likely even beginning them would require additional spending. This means the Kerry plan will add substantially to the deficit.

Mr. Kerry’s plan for restoring America’s competitive edge involves increased government spending for research and development, tax credits to expand broadband service to rural areas, and encouraging more women and minorities to study math and science. His only proposal that might accomplish something is eliminating the capital-gains tax for long-term investments in small business startups.

Finally, we get to Mr. Kerry’s plan to cut the deficit and all he offers is his word he will do it. “Americans can trust my promise to cut the deficit because my record backs up my word,” he says. This is like Dan Rather telling us we can trust him when he says obviously forged documents are actually genuine.

Even Mr. Kerry’s own allies don’t believe him. An editorial in The Washington Post called his deficit-reduction plan “flawed” and “undercut by his fine print.” A New York Times editorial said: “It’s hard to imagine how he could combat the deficit, expand health care benefits, increase spending on education and grant middle class Americans more tax breaks simply by rescinding the Bush tax cuts for those earning more than $200,000.”

All Mr. Kerry finally has is the charge Mr. Bush did everything wrong on the economy. This may be enough for hard-core Democrats and Bush-haters. But anyone remotely open-minded will have a hard time believing Mr. Kerry will do better. He would have helped himself by proposing something bolder and more interesting. You can’t beat something with nothing.

Bruce Bartlett is senior fellow with the National Center for Policy Analysis and a nationally syndicated columnist.

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