August 29, 2003

Kerry's Economic Plan

I've had so much fun picking on Howard the Duck and Sen. Bob "Numbers make my head hurt" Graham (D-FL) that I haven't offered anything on Sen. John "I was a Beatles groupie" Kerry (D-MA). With the Senator offering an economic plan, that will now be rectified.

There's no need to bother reading the speech since Kerry's website has his plan laid out full of bullet-point goodness.

First, Kerry wants to "jumpstart job growth today." According to the Senator "The Bush economic approach has left states with nearly $90 billion in budget deficits, forcing lay offs, education cuts, and tax increases." Actually, state governments' problems rest with a mild recession early in Bush's term and their own overspending. The wizards at the National Bureau of Economic Research (NBER) declared the recession to have started in March 2001. President Bush was in office six weeks when the recession began. Kerry is being intellectually dishonest in blaming Bush for an economy he had no ability to affect.

In his speech Senator Kerry said, "We're not just in a temporary downturn. America is in a fight for our economic future." Once again, Kerry is being intellectually dishonest. In July the NBER wizards declared the recession to have ended in November of 2001. That means the "Bush recession" was a whole eight months long. Now, it is certainly justified to question the thinking of a panel that took a year-and-a-half to determine the end of the recession. Despite the mainstream's love for mathematics, economics is an inexact science if it can even be called such, but sometimes we're left to play the cards we're dealt.

Then there's the "unfortunate" (for Kerry) news that manufacturing is recovering. The monthly purchasing managers index for Chicago showed a fourth straight month of manufacturing expansion. Economist Andy Kish said, "This bodes well for the domestic labor market since manufacturing layoffs have been the main impediment to generating positive job growth." When you put this Chicago news together with a recent report from the Philadelphia Federal Reserve you see that manufacturing is coming back. Even if Kerry tries to pin the loss of 2.7 million manufacturing jobs on Bush, recent news has made that more difficult.

Kerry's "State Tax Relief and Education Fund" ends up being a bailout to the states for spending too much. Can you say, "moral hazard?" States would have less of an incentive to maintain fiscal discipline if they knew the feds would eventually come around and hand them some money. What Kerry's fund also is is redistribution from disciplined states to undisciplined states.

The section "Using American Ingenuity to Create a Strong Economic Future" includes controlling "rising health care costs by helping pay for catastrophic care cases." With Medicare's and Medicaid's costs rising yearly, having the government involved with funding catastrophic care looks like a money hole that will never be filled. Kerry also sees government, not private, research planning as the way to "pave the way for industries of the future." Then there is his ridiculous notion to produce "20 percent of all our electricity from renewable sources by 2020" with no mention of how to prevent local residents from stopping the installation of windmills and solar panels.

In the section "Making Four Years of College Affordable" Kerry wants to offer tax credits covering four years of college. Allowing people to keep more of their money is a good thing, but Kerry wants to make the credit refundable so those that don't pay taxes could still receive the credit. That's not a tax credit, it's a subsidy. That amounts to welfare, middle class welfare.

In the section on tax relief, Kerry would keep Bush's tax cuts for the middle class. That includes capital gains and dividend taxes. Later on in his budget balancing section the Kerry plan would boost revenues by repealing "Bush’s special tax breaks for Americans who make more than $200,000."

The Kerry economic plan amounts to soaking the rich, bribing the middle class, and micromanaging business. If you're in the middle class you might get some benefits: college tuition credits, health care subsidies, and no tax hikes; but if you happen to do well and become rich or start a business you will fall under John Kerry's watchful eye.

"Democrat Kerry Unveils Jobs, Economic Plan"