WASHINGTON — The Concord
Coalition today released a
report on fiscal policy in the 2004
presidential campaign, concluding that neither President Bush nor
Senator Kerry has a credible plan for dealing with the fiscal challenges he will
face if elected. The election of 2004 will
determine the first president of the looming “senior boom” – and
whether that president is George W. Bush or John F. Kerry, tough choices will be
WASHINGTON — The Concord
Coalition today released a
report on fiscal policy in the 2004
presidential campaign, concluding that neither President Bush nor
Senator Kerry has a credible plan for dealing with the fiscal challenges he will
face if elected. The election of 2004 will
determine the first president of the looming “senior boom” – and
whether that president is George W. Bush or John F. Kerry, tough choices will be
required to close both the renewed short-term gap and the even larger long-term
shortfall.
“Both
candidates are touting expensive initiatives costing about $1.3 trillion that
would make deficit reduction more difficult in the short-term and fiscal
sustainability unlikely in the long-term. The policy options in their plans are
very different but the bottom lines are not. Regarding the deficit, they appear
to be taking alternative routes to a similar destination,” said Concord
Coalition executive director Robert Bixby.
The report finds that President
Bush and Senator Kerry have very different assessments of the fiscal outlook and
the best ways to address it, but that their plans share some basic weaknesses:
- Neither candidate is
proposing a balanced budget plan.
- Neither candidate sets aside
resources for reform of the alternative minimum tax (AMT) beyond 2005.
- Neither candidate has
publicly stated his assumptions for the ongoing costs of operations in Iraq
and Afghanistan. - Neither
candidate assumes full extension of several routinely renewed tax breaks that
are scheduled to expire. - Neither candidate has proposed a strategy for achieving long-term fiscal
sustainability.
Some excerpts
from the report follow:
They both propose to cut the
deficit in half by 2009. This is a retreat from the bipartisan balanced budget
consensus that developed in the 1990s. While it is a plus that the candidates
are promising deficit reduction — the halfway goal they share minimizes
the full magnitude of the fiscal challenges ahead. Even if the policies in their
budget plans succeed in halving the deficit by 2009, deficits are on track to
shoot up again after that due to rising entitlement costs. The campaign’s fiscal
policy debate is thus in danger of becoming fixated on a goal that is too modest
and a timeframe that is too limited.
thereby acknowledging that the deficit is a problem
* * *
It is a noteworthy aspect of this campaign that
both candidates see a manageable fiscal problem and a threatening crisis –
in very different time frames. For President Bush, the 10-year deficit is modest
and manageable. The real fiscal danger, he says, comes over the long-term as the
boomers begin to retire in large numbers. Senator Kerry has expressed much more
alarm about the 10-year fiscal outlook, arguing that deficit reduction is linked
to fiscal stability. He expresses far less concern, however, about the
unsustainable long-term situation. They are both ducking issues they don’t want
to face. For President Bush, it’s potential tax increases. For Senator Kerry,
it’s potential entitlement cuts. The credibility of their respective fiscal
policy plans is stretched thin because neither will put all policy options on
the table.
* * *
Getting control of a ballooning
budget deficit requires two things that candidates are loath to discuss
— even if
that is what they want to hear.
spending cuts (when they would prefer
to talk about increases) and tax increases (when they would prefer to talk about
cuts). Yet the American people deserve something more from their candidates than
an invitation to a free lunch
* * *
Both candidates’ proposals have back-loaded
costs. The President’s 5-year budget omits almost 90 percent of the 10-year
revenue loss from his tax policy proposals. The cost of Senator Kerry’s health
care plan grows by 50 percent between 2009 and 2014. Neither candidate’s tax
proposals would help get the deficit under control. The choice is between large
tax cuts that are unaffordable and smaller tax cuts with higher spending that
are also unaffordable.
* * *
The bottom line is that neither
candidate has produced a credible set of numbers to back up his deficit
reduction rhetoric.
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