10
Aug
2004
While the visits to Davenport last week of President George W. Bush and chief political rival John Kerry were campaign events, their simultaneous appearances provided a good opportunity to compare the two candidates' proposals.
Kerry's event on Wednesday at the RiverCenter - billed as an "economic summit" - featured business leaders both national (including Charles Phillips of Oracle, Peter Chernin of News Corporation, and Charles Gifford of Bank of America) and local (such as Linda Bloodsworth of QC Metallurgical Laboratory and Betsy Bransgard of DavenportOne). (See sidebar for a report on the Bush event.)
Kerry called his 90-minute roundtable - which was more of a collection of short speeches than a discussion - "one of the most important meetings" of his campaign. Earlier in his remarks, he said, "This really represents the type of president I'd like to be ... to sit down at a table like this all around the country."
The meeting certainly gave a more substantive view of his presidential agenda than his nomination-acceptance speech six days earlier. Unfortunately, only about 200 guests were invited by the Democratic party to see the economic summit.
Kerry's event was intended to show that the junior senator from Massachusetts is not only a friend of labor but an ally to business. Kerry's 11-person panel included two representatives of labor organizations (Tom Gillespie of the Iowa State Building Trades and Jerry Messer of the Quad-City Federation of Labor), Governor Tom Vilsack, Bransgard, and Shirleen Martin of the Eastern Iowa Training Center, but the other six run private-sector businesses: Chernin, Phillips, Gifford, Bloodsworth, Penny Pritzker of Pritzker Realty, and Owsley Brown of Brown-Forman.
Kerry's comments underscored that his priorities are also those of the business leaders he'd assembled. "Fiscal responsibility is the foundation of economic growth," he said. "There are billions of dollars in investment at our table here. These are the people ... who can tell from experience."
Kerry laid out an agenda in the areas of federal fiscal responsibility, corporate taxes, health-care costs, energy independence, and education. In all, he claimed, these initiatives would create 10 million new jobs in his four-year term.
Not surprisingly, the business leaders at the forum reinforced Kerry's agenda, even though some did not explicitly voice support for his candidacy and nobody specifically mentioned his plans. Chernin, president and COO of News Corporation (the parent company of Fox), said the federal deficit is "just plain bad for the country and bad for business." He said the United States can't fight two wars and cut taxes simultaneously.
Although health care wouldn't seem to be a natural topic for an economic forum, numerous panelists brought it up in that context. "Health-care costs are choking American business," Chernin said.
"We can't compete with other countries who have national health care," said the Quad-City Federation of Labor's Messer.
Foreign policy was another tangential topic that several panelists raised in the context of the United States economy, claiming that an isolationist approach in the "war on terrorism" has hurt trade relationships.
So what are Kerry's plans? The River Cities' Reader here explores Kerry's agenda and compares it to the promises of George W. Bush. Kerry's plans are generally more ambitious, in part because his campaign generally downplays his legislative record. Bush's proposals are more modest, but he tends to cite what he's done in his nearly four years in office rather than outline a new course for a second term.
Fiscal Responsibility
Kerry pledges to cut the federal budget deficit - estimated to be $477 billion in the current fiscal year - in half in four years and enact a "pay as you go" system. The plan involves rolling back the Bush tax cut for people earning more than $200,000. In addition to deficit reduction, removing that tax cut would also pay for his health-care and education proposals, Kerry said.
But many people remain skeptical of the assertion that Kerry can pay for both deficit-reduction and his new programs. At a Brookings Institution event in June, Leonard Burman (a senior fellow at the Urban Institute) claimed that both Kerry's and Bush's campaign agendas would increase the federal deficit. "Basically, we're talking about a trillion dollars in additions to the deficit from the proposals of both camps," he said.
Indeed, repealing the upper-income tax changes of 2001 and 2003 would only generate enough money to pay for Kerry's education and health-care proposals, according to Alan Murray (Washington bureau chief for CNBC) in the August 3 edition of The Wall Street Journal. The Kerry plan shows "at best ... a commitment to paying for the cost of new programs - not a commitment to major deficit reduction," he said.
Although he has not identified specific funds for his programs and deficit reduction beyond repealing the upper-income Bush tax cut, Kerry told the Davenport audience last week that "we've found places we think we can find the money."
Bush, meanwhile, is promising to halve the budget deficit by 2009 and wants to make his tax cuts permanent. (They're all currently set to expire by 2011.) Those tax cuts, Bush argues, act as a stimulus to the economy.
The Congressional Budget Office's latest estimates suggest that maintaining the current tax policy and keeping spending at current levels could over time erode the deficit and return the budget to a surplus by 2014.
Corporate Taxes
Kerry pledged at Wednesday's meeting to cut corporate taxes and close a loophole that provides companies an incentive to move jobs to other countries. The loophole allows companies to avoid paying taxes on income derived from foreign subsidiaries until that money is "repatriated" - or comes back to the United States.
Kerry's campaign estimates that by ending the loophole, the United States will generate $12 billion a year that would be used to offset a cut in corporate tax rates of 5 percent - from 35 to 33.25 percent.
But closing that loophole could have unintended consequences, some commentators claim: pushing companies to establish headquarters in other countries. Writing in the National Review Online, conservative columnist Bruce Bartlett said, "Few other countries tax the foreign profits of their companies at all. Consequently, U.S. firms are already at a competitive disadvantage tax-wise. Kerry's plan would make the situation worse, encouraging U.S. companies to reincorporate in other countries."
Kerry has also proposed a one-year "tax holiday" that would allow companies to repatriate profits at a rate of 10 percent. That would generate $22 billion, the campaign estimates. That money would pay for a tax credit for companies that create jobs.
Bush has not outlined plans to change the corporate-tax structure, instead focusing on making tax cuts enacted in his term permanent. His plan focuses on health care, tort reform, energy policy, relaxing regulation, and creating new markets for American goods.
Health Care
Doubtlessly the biggest difference between Bush and Kerry is their approach to reducing health-care costs and increasing access. Presently, 42 million Americans - 3 million more than when Bush took office - are without health insurance, while medical costs have continued to skyrocket.
Bush's plan, through tax credits and insurance pools, would cover between 2.5 million and 5 million new people at a cost of $90 billion over a decade.
The president proposes to limit medical liability in the tort system (which Kerry opposes), allow small employers to join with other companies to create larger insurance pools, create tax credits for people who do not have access to health insurance through their employers, and allow tax deductibility for catastrophic coverage in Health Savings Accounts.
Bush's proposal is primarily a system to encourage employers to provide coverage. Under Kerry's plan, the state and federal governments would take primary roles in providing health coverage. Kerry has said he supports a single-payer health-care system but that it's politically infeasible at the present time.
Kerry's proposal targets an additional 27 million people for health-insurance coverage, primarily by working with states to provide coverage to all children and expanding government-program eligibility for the working poor. The plan would also have the federal government pay 75 percent of the cost of "catastrophic" illnesses for businesses. Furthermore, under Kerry's plan, small and large businesses would be able to join in the federal-employee health system.
The plan is estimated to cost between $653 billion and $950 billion over 10 years, according to the Washington Post.
Kerry's plan includes closing loopholes that prevent generic versions of drugs from entering the markets. Kerry also supports eliminating most punitive awards in medical-malpractice cases. (It's important to note that this is different than capping damages.)
The Democratic nominee boasted in Davenport that his plan would save families an average of $1,000 a year in lower premiums and cover 97 percent of Americans within three years.
In terms of federal-government expenditures per person per year, the plans could well be a wash. Based on its cost range, Kerry's plan would cover people at an expense of between $2,419 and $3,519 a year. Based on the range of people covered, Bush's plan would cost the federal government between $1,800 and $3,600 a year per person covered.
Bush has criticized Kerry's plan for putting so much of the burden on the federal government, which he says has boosted health-care costs because of tight regulation. He also argues that Kerry's plan doesn't do enough to address the factors that make health-care costs increase.
Energy Independence
Both Bush and Kerry profess a preference for energy independence, if for no other reason than the political benefit of supporting alternative energies that can be produced at home, such as ethanol and harnessing wind power.
Both candidates claim to want to free the United States from dependence on foreign oil. Their plans, surprisingly, have quite a bit in common, including tax incentives and credits to encourage conservation, alternative fuels, and a pipeline from Alaska to the continental United States; federal funding for energy research; and clean-coal technologies, according to the Washington Post.
Bush also proposes allowing drilling the Arctic National Wildlife Refuge, which Kerry opposes. The incumbent favors relaxing environmental regulations on old oil refineries and energy plants, in addition. The two also differ on how best to dispose of nuclear waste; Bush supports the Yucca Mountain waste repository, while Kerry has opposed it.
The Democrat has proposed measures that would go far beyond what Bush has offered, including requiring that 20 percent of the nation's energy come from alternative sources by 2020 and pushing fuel-efficiency standards as high as 36 miles per gallon.
Education
Bush boasts that the No Child Left Behind Act was his major educational accomplishment in his term, but the problem is that the program - which makes federal funding contingent on schools' performance on standardized tests - has not been fully funded. Kerry voted for No Child Left Behind, but has since criticized its implementation and proposed changes, such as using student achievement - rather than standardized tests - as the measure of a school's success or failure.
While education funding has increased under the Bush administration, states have had to pick up the tab for $6 billion to implement it. The key to the Kerry education platform is the National Education Trust Fund - to the tune of $200 billion over 10 years - to pay for the No Child Left Behind Act and other education programs.
Bush supports school choice, while Kerry has consistently voted against it.
Kerry's event on Wednesday at the RiverCenter - billed as an "economic summit" - featured business leaders both national (including Charles Phillips of Oracle, Peter Chernin of News Corporation, and Charles Gifford of Bank of America) and local (such as Linda Bloodsworth of QC Metallurgical Laboratory and Betsy Bransgard of DavenportOne). (See sidebar for a report on the Bush event.)
Kerry called his 90-minute roundtable - which was more of a collection of short speeches than a discussion - "one of the most important meetings" of his campaign. Earlier in his remarks, he said, "This really represents the type of president I'd like to be ... to sit down at a table like this all around the country."
The meeting certainly gave a more substantive view of his presidential agenda than his nomination-acceptance speech six days earlier. Unfortunately, only about 200 guests were invited by the Democratic party to see the economic summit.
Kerry's event was intended to show that the junior senator from Massachusetts is not only a friend of labor but an ally to business. Kerry's 11-person panel included two representatives of labor organizations (Tom Gillespie of the Iowa State Building Trades and Jerry Messer of the Quad-City Federation of Labor), Governor Tom Vilsack, Bransgard, and Shirleen Martin of the Eastern Iowa Training Center, but the other six run private-sector businesses: Chernin, Phillips, Gifford, Bloodsworth, Penny Pritzker of Pritzker Realty, and Owsley Brown of Brown-Forman.
Kerry's comments underscored that his priorities are also those of the business leaders he'd assembled. "Fiscal responsibility is the foundation of economic growth," he said. "There are billions of dollars in investment at our table here. These are the people ... who can tell from experience."
Kerry laid out an agenda in the areas of federal fiscal responsibility, corporate taxes, health-care costs, energy independence, and education. In all, he claimed, these initiatives would create 10 million new jobs in his four-year term.
Not surprisingly, the business leaders at the forum reinforced Kerry's agenda, even though some did not explicitly voice support for his candidacy and nobody specifically mentioned his plans. Chernin, president and COO of News Corporation (the parent company of Fox), said the federal deficit is "just plain bad for the country and bad for business." He said the United States can't fight two wars and cut taxes simultaneously.
Although health care wouldn't seem to be a natural topic for an economic forum, numerous panelists brought it up in that context. "Health-care costs are choking American business," Chernin said.
"We can't compete with other countries who have national health care," said the Quad-City Federation of Labor's Messer.
Foreign policy was another tangential topic that several panelists raised in the context of the United States economy, claiming that an isolationist approach in the "war on terrorism" has hurt trade relationships.
So what are Kerry's plans? The River Cities' Reader here explores Kerry's agenda and compares it to the promises of George W. Bush. Kerry's plans are generally more ambitious, in part because his campaign generally downplays his legislative record. Bush's proposals are more modest, but he tends to cite what he's done in his nearly four years in office rather than outline a new course for a second term.
Fiscal Responsibility
Kerry pledges to cut the federal budget deficit - estimated to be $477 billion in the current fiscal year - in half in four years and enact a "pay as you go" system. The plan involves rolling back the Bush tax cut for people earning more than $200,000. In addition to deficit reduction, removing that tax cut would also pay for his health-care and education proposals, Kerry said.
But many people remain skeptical of the assertion that Kerry can pay for both deficit-reduction and his new programs. At a Brookings Institution event in June, Leonard Burman (a senior fellow at the Urban Institute) claimed that both Kerry's and Bush's campaign agendas would increase the federal deficit. "Basically, we're talking about a trillion dollars in additions to the deficit from the proposals of both camps," he said.
Indeed, repealing the upper-income tax changes of 2001 and 2003 would only generate enough money to pay for Kerry's education and health-care proposals, according to Alan Murray (Washington bureau chief for CNBC) in the August 3 edition of The Wall Street Journal. The Kerry plan shows "at best ... a commitment to paying for the cost of new programs - not a commitment to major deficit reduction," he said.
Although he has not identified specific funds for his programs and deficit reduction beyond repealing the upper-income Bush tax cut, Kerry told the Davenport audience last week that "we've found places we think we can find the money."
Bush, meanwhile, is promising to halve the budget deficit by 2009 and wants to make his tax cuts permanent. (They're all currently set to expire by 2011.) Those tax cuts, Bush argues, act as a stimulus to the economy.
The Congressional Budget Office's latest estimates suggest that maintaining the current tax policy and keeping spending at current levels could over time erode the deficit and return the budget to a surplus by 2014.
Corporate Taxes
Kerry pledged at Wednesday's meeting to cut corporate taxes and close a loophole that provides companies an incentive to move jobs to other countries. The loophole allows companies to avoid paying taxes on income derived from foreign subsidiaries until that money is "repatriated" - or comes back to the United States.
Kerry's campaign estimates that by ending the loophole, the United States will generate $12 billion a year that would be used to offset a cut in corporate tax rates of 5 percent - from 35 to 33.25 percent.
But closing that loophole could have unintended consequences, some commentators claim: pushing companies to establish headquarters in other countries. Writing in the National Review Online, conservative columnist Bruce Bartlett said, "Few other countries tax the foreign profits of their companies at all. Consequently, U.S. firms are already at a competitive disadvantage tax-wise. Kerry's plan would make the situation worse, encouraging U.S. companies to reincorporate in other countries."
Kerry has also proposed a one-year "tax holiday" that would allow companies to repatriate profits at a rate of 10 percent. That would generate $22 billion, the campaign estimates. That money would pay for a tax credit for companies that create jobs.
Bush has not outlined plans to change the corporate-tax structure, instead focusing on making tax cuts enacted in his term permanent. His plan focuses on health care, tort reform, energy policy, relaxing regulation, and creating new markets for American goods.
Health Care
Doubtlessly the biggest difference between Bush and Kerry is their approach to reducing health-care costs and increasing access. Presently, 42 million Americans - 3 million more than when Bush took office - are without health insurance, while medical costs have continued to skyrocket.
Bush's plan, through tax credits and insurance pools, would cover between 2.5 million and 5 million new people at a cost of $90 billion over a decade.
The president proposes to limit medical liability in the tort system (which Kerry opposes), allow small employers to join with other companies to create larger insurance pools, create tax credits for people who do not have access to health insurance through their employers, and allow tax deductibility for catastrophic coverage in Health Savings Accounts.
Bush's proposal is primarily a system to encourage employers to provide coverage. Under Kerry's plan, the state and federal governments would take primary roles in providing health coverage. Kerry has said he supports a single-payer health-care system but that it's politically infeasible at the present time.
Kerry's proposal targets an additional 27 million people for health-insurance coverage, primarily by working with states to provide coverage to all children and expanding government-program eligibility for the working poor. The plan would also have the federal government pay 75 percent of the cost of "catastrophic" illnesses for businesses. Furthermore, under Kerry's plan, small and large businesses would be able to join in the federal-employee health system.
The plan is estimated to cost between $653 billion and $950 billion over 10 years, according to the Washington Post.
Kerry's plan includes closing loopholes that prevent generic versions of drugs from entering the markets. Kerry also supports eliminating most punitive awards in medical-malpractice cases. (It's important to note that this is different than capping damages.)
The Democratic nominee boasted in Davenport that his plan would save families an average of $1,000 a year in lower premiums and cover 97 percent of Americans within three years.
In terms of federal-government expenditures per person per year, the plans could well be a wash. Based on its cost range, Kerry's plan would cover people at an expense of between $2,419 and $3,519 a year. Based on the range of people covered, Bush's plan would cost the federal government between $1,800 and $3,600 a year per person covered.
Bush has criticized Kerry's plan for putting so much of the burden on the federal government, which he says has boosted health-care costs because of tight regulation. He also argues that Kerry's plan doesn't do enough to address the factors that make health-care costs increase.
Energy Independence
Both Bush and Kerry profess a preference for energy independence, if for no other reason than the political benefit of supporting alternative energies that can be produced at home, such as ethanol and harnessing wind power.
Both candidates claim to want to free the United States from dependence on foreign oil. Their plans, surprisingly, have quite a bit in common, including tax incentives and credits to encourage conservation, alternative fuels, and a pipeline from Alaska to the continental United States; federal funding for energy research; and clean-coal technologies, according to the Washington Post.
Bush also proposes allowing drilling the Arctic National Wildlife Refuge, which Kerry opposes. The incumbent favors relaxing environmental regulations on old oil refineries and energy plants, in addition. The two also differ on how best to dispose of nuclear waste; Bush supports the Yucca Mountain waste repository, while Kerry has opposed it.
The Democrat has proposed measures that would go far beyond what Bush has offered, including requiring that 20 percent of the nation's energy come from alternative sources by 2020 and pushing fuel-efficiency standards as high as 36 miles per gallon.
Education
Bush boasts that the No Child Left Behind Act was his major educational accomplishment in his term, but the problem is that the program - which makes federal funding contingent on schools' performance on standardized tests - has not been fully funded. Kerry voted for No Child Left Behind, but has since criticized its implementation and proposed changes, such as using student achievement - rather than standardized tests - as the measure of a school's success or failure.
While education funding has increased under the Bush administration, states have had to pick up the tab for $6 billion to implement it. The key to the Kerry education platform is the National Education Trust Fund - to the tune of $200 billion over 10 years - to pay for the No Child Left Behind Act and other education programs.
Bush supports school choice, while Kerry has consistently voted against it.
