Policy Memo: Point-by-Point Rebuttal of John Kerry's Economy Column in the Wall Street Journal

George W. Bush ^ | September 17, 2004

[RWR8189]

Memorandum
From: BC '04 Policy Department

This memorandum reviews and responds point-by-point to John Kerry's column about the economy that appeared in the September 15, 2004 edition of the Wall Street Journal.  It provides a quote from the Kerry op-ed and then factual responses.

Overview

John Kerry continues to dismiss the fact the President Bush inherited a tired and crippled economy that then experienced the most extraordinary confluence of shocks that has occurred in any business cycle in modern U.S. economic history.  In December of 2003, John Kerry said, " ...we haven't been creating jobs to some measure because of the overhang of the 1990s, the excess capacity that we were left with and the need to sort of burn it up.  Now, there is a huge amount of stimulus in our economy right now and we're beginning to see some of the impact of that."

Despite these challenges, the unemployment rate at 5.4% is the same as November of 1996, the unemployment rate for Hispanics and African-Americans is below the level seen in 1996, the rate of uninsured is 15.6% the same as 1996 and the rate of uninsured children is actually below 1996 levels. 

John Kerry talks about giving tax cuts to the middle class but does not include the cost of doing so in his budget.  His health care plan is a $1.5 trillion government take-over of our health care system to mold it into a European or Canadian-style program that does nothing to actually control costs but shifts them to the taxpayer.  His pledge of "Restoring America's Competitive Edge" appears weak and late coming given the President's record of doubling the NIH budget, pushing spending on science and research to historic levels, pushing universal broadband access, enacting sweeping education reforms with a strong emphasis on math and science education and funding cutting-edge energy research for hydrogen and clean coal technology.  Finally, John Kerry talks much about deficit reduction but his two page budget does not explain how raising taxes on small businesses and entrepreneurs will pay for trillions in new spending and other tax cuts, let alone deficit reduction.

State of the Economic Recovery

KERRY: "Since January 2001, the economy has lost 1.6 million private-sector jobs."

RESPONSE:

• Jobs are rebounding.  The economy lost 1 million payroll jobs in the three months after the 9/11 terrorist attacks.  In the past year 1.7 million payroll jobs have been added.  (Source: Bureau of Labor Statistics, August 2004 Employment Situation Report, 9/3/04)

"The typical family has seen its income fall more than $1,500, while health costs are up more than $3,500."

• After-tax incomes are up.  Average after-tax income has increased over $1,400 since President Bush has been in office.  At this point in President Clinton's first term it had increased about $1,200.  (Source: Bureau of Economic Analysis, July 2004 Personal Incomes and Outlays, 8/30/04)

"Today, American companies are investing less and exporting less than they were in 2000 -- the first time investment and exports have been down during any presidential term in over 70 years. At the same time, our trade deficit has grown to more than 5% of the economy for the first time ever, a troublesome and unsustainable development."

• Business investment is increasing.  In the last quarter of 2000 business investment increased a paltry 0.87% compared to the most recent quarter of this year when it was increasing 12.11%.  (Source: Bureau of Economic Analysis, non-residential fixed private investment on an annualized basis, 8/27/04)
• Exports have increased.  Adjusted for inflation, U.S. exports in the 2nd quarter of 2004 were higher at $1,112 billion than they were in the 1st quarter of 2001 at $1,097 billion.  (Source: Bureau of Economic Analysis, GDP, 8/27/04)
• President Clinton presided over the largest expansion of the trade deficit in our nation's history.  Specifically, in the eight years of his Presidency the current account deficit increased from 0.8% to 4.2% of GDP, an increase of more than 3.4 percentage points.  Under President Bush the current account deficit has increased just 0.6 percentage points. (Source: "US International Transactions, BEA, 9/14/04)
• Exports for the first six months of 2004 are once again at record levels and are on track to exceed 2000.  In the first six months of this year, Americans have exported almost $600 billion worth of goods and services and almost $31 billion in agricultural products.  (Source:  U.S. Census, Foreign trade Division, "U.S. Trade in Goods and Services - Balance of Payments Basis: 1960-2003, 6/14/2004; USDA, Economic Research Service, "FATUS Export Aggregations)
• No where does Kerry talk about expanding export opportunities.  Senator Kerry's plan for reducing the deficit is to reinstitute Super 301 reports, file more disputes at the WTO, and conduct a 120 review of all existing trade agreements.  In contrast, President Bush's plan for includes: opening new markets for U.S. exports by expanding the existing WTO multilateral trade agreement, entering into new bilateral and subregional trade agreements, and using all practical means – not just WTO litigation and cumbersome reports – to enforce trade agreements as well as U.S. trade laws.

"Over the last year, real wages are still down and even the jobs created in the past 12 months represent the worst job performance for this period of a recovery in over 50 years."

• Worker pay is increasing.  Real average hourly earnings are up 2.5% under President Bush, compared to an increase of just 0.4% at this point in President Clinton's first term.  (Source: "Real Earnings in July 2004," Bureau of Labor Statistics, 8/17/04, http://www.bls.gov/news.release/realer.toc.htm)
• High-paying jobs are being added.  Independent analyses by Business Week magazine and FactCheck.org show that the majority of new jobs are in industries that typically pay above the national average.  (Source: "Economy Producing Mostly Bad Jobs?  Not so fast," FactCheck.org, 8/30/04; "Another Look At Those Job Numbers," Business Week, 7/26/04, http://www.businessweek.com)

"Indeed, the total of 1.7 million jobs created over the last year is weaker than even the worst year of job creation under President Clinton, and below what is needed just to find jobs for new applicants entering the work force."

• Unemployment is down.  The unemployment rate is designed to measure the number of people who have a job versus the number of people who want one.  It counts new applicants entering the work force.  The unemployment rate has dropped to 5.4% -- well below the averages for the 1970s, 1980s and 1990s - and exactly the same rate as November 1996.  (Source: Bureau of Labor Statistics, August 2004 Employment Situation Report, 9/3/04)

Tax Relief

"Forty-three months into his presidency, George Bush's main explanation for this dismal economic record is an assortment of blame and excuses. Yet what President Bush cannot explain is how the last 11 presidents before him -- Democrats and Republicans -- faced wars, recessions and international crises, and yet only he has presided over lost jobs, declining real exports, and the swing from a $5.6 trillion surplus to trillions of dollars of deficits."

• The recession and spending on the War on Terror together account for nearly three quarters of the changes in our nation's fiscal position.  (Source: "Mid-session Review," OMB, 7/30/04)

"He then passed more deficit-increasing tax cuts that Goldman Sachs described as "especially ineffective as a simulative measure."

• The tax relief helped.  "Indeed, the economy's travails would have been substantially greater if not for the aggressive easing in monetary policy, and the fiscal stimulus provided by the President's tax cuts and surging government spending." (Mark Zandi, "Assessing President Bush's Fiscal Policies," Economy.com, 7/2004)

"When small businesses and families needed relief from skyrocketing health-care and energy costs, he chose sweetheart deals for special interests over serious plans to reduce costs and help spur new job creation."

• President Bush delivered the first prescription drug benefit under Medicare, despite what Democrats have been promising for years.  "But as we've pointed out before, millions of seniors will be financially better off when the new law takes effect in 2006. That is particularly true for millions of low-income seniors with few assets, who will be able to get their prescriptions filled for as little as $1 each with no premiums or deductibles.  Furthermore, the new law doesn't pay "billions" directly to the drug companies as the ad implies. In fact, they are payments to subsidize the cost of offering prescription drug coverage to seniors."  (www.factcheck.org, Twisted Facts and Falsehoods in Media Fund Ad, 5/14/04)
  
• John Kerry is blocking comprehensive energy legislation, which incorporates many elements of the President's national energy plan, the first proposed in over a decade.   In May 2001, President Bush warned that if Congress failed to pass comprehensive energy legislation, "energy prices will continue to rise."  Moreover, "Americans will face more and more widespread blackouts" and "our country will become more reliant on foreign crude oil, putting our national energy security into the hands of foreign nations, some of whom do not share our interests." (President Bush, Remarks to the Capital City Partnership, St. Paul, MN, 5/17/01)

"My plan would take the entire $12 billion we save from closing these loopholes each year and use it to cut corporate tax rates by 5%."

• Kerry's proposal will hurt U.S. companies.  "Raising taxes on U.S. companies that do business abroad will only make these companies less competitive, less profitable, and less likely to create new jobs at home or abroad."  ("U.S. Chamber Warns Against Misguided Tax Reforms," U.S. Chamber of Commerce press release, 3/26/04)
• Kerry's proposal will tilt the playing field in favor of foreign companies.  "Our analysis indicates that the proposed reforms would do more to benefit foreign-based MNCs [multinational companies] than to prompt US-based MNCs to relocate operations in the United States...Senator Kerry's prescription to level the tax field by ending deferral is wrong...it would actually tilt the tax field more steeply in favor of foreign MNCs [multinational companies]...[it would] damage the US competitive position in world markets."  ("Senator Kerry on Corporate Tax Reform: Right Diagnosis, Wrong Prescription," Gary Hufbauer and Paul Grieco, Institute for International Economics, 4/04)

"I have proposed a two-year new jobs tax credit to encourage manufacturers, other businesses affected by outsourcing, and small businesses that created jobs."

• A new jobs tax credit was tried in the late 1970s and it failed.  Even the 1979 study cited by Kerry in support of the idea concluded, "most firms either did not know of the program or were not influenced by it, a result which makes this short-run program an imperfect counter-cyclical tool."  (Source:  "New Jobs Tax Credit: An Evaluation of the 1977-78 Wage Subsidy Program,"  Perloff and Wachter, The American Economic Review, 5/79)
• Economy.com says it "Will Do Little To Lift Job Creation." "Not only are the savings from the lower corporate tax rate and jobs tax credit very small, but it is unclear whether businesses will add jobs due to the tax incentives or simply claim the credit for hiring they would have done regardless." (Mark Zandi, "Kerry's Plan," Economy.com, 7/2004)

U.S. Competitiveness

"I strongly believe that America must engage in the global economy, and I voted for trade opening from Nafta to the WTO. But at the same time, I have always believed that we need to fight for a level playing field for America's workers."

• Senator Kerry gives lip-service to engaging in the global economy while simultaneously protecting U.S. workers, but he hasn't even bothered to show up for the vote on the last 5 trade agreements.
• He was one of only three Senators not voting on the U.S.-Chile Free Tree Agreement; one of only two not voting on U.S.-Singapore; one of four on U.S.-Australia; and one of two on U.S.-Morocco. (Source:  Public Citizen, Take Action, Key Votes of the 107th Congress, http://action.citizen.org/pc/issues/votes/, Accessed 9/13/2004)
• Senator Kerry's promise to conduct a 120-day review  of our existing trade agreements exceeds the President's authority under the Trade Promotion Act - which Kerry voted for in 2002 - and threatens to launch a trade war with our trading partners who negotiated these agreements in good faith.
• But more importantly, Kerry's proposal threatens U.S. jobs by undermining existing trade agreements that expand trade for U.S. products.

"American businesses are the most competitive in the world, yet when it comes to enforcing trade agreements the Bush administration refuses to show our competitors that we mean business.  They have brought only one WTO case for every three brought by the Clinton administration, while cutting trade enforcement budgets and failing to stand up to China's illegal currency manipulation. That not only costs jobs, it threatens to erode support for open markets and a growing global economy."

• The Bush Administration's trade enforcement strategy is simple and straightforward:  We're focused not on process, but on producing real results that create opportunities for American workers and companies.  (Source:  USTR Statement, 5/25/04)
• To level the trade playing field, the Administration engages in ongoing business advocacy and regularly negotiates solutions to potential WTO cases and unfair trade practices that achieve timely and meaningful results for American companies and workers while avoiding drawn-out, costly litigation battles.  For example, the U.S. was able to resolve seven trade disputes with China in April without resort to the WTO.  (Source:  USTR, "Real Results with China," 9/09/04)
• The Bush Administration does not hesitate to pursue WTO enforcement actions when negotiations do not produce acceptable results.  For example, the United States was the first country to fle a WTO case against China – which China settled to our satisfaction in 4 months.  (Source:  USTR, "Real Results with China," 9/09/2004)
• It also vigorously pursues allegations of unfair trade.   This Administration has imposed almost as many antidumping orders against China in four years than the pervious Administration did in eight.  (Source:  USTR, "Real Results with China," 9/09/2004)

"But spiraling health-care and energy costs squeeze businesses too, encouraging them to lay off workers and shift to part-time and temporary workers."

• John Kerry opposed the creation of Health Savings Accounts (HSAs), which are helping to control health care costs.  70% of people purchasing HSA-eligible health insurance plans are paying $100 or less for their health care coverage.  (www.ehealthinsurance.com, Health Savings Accounts Fact Sheet, 5/17/04)
• John Kerry's policies will dramatically increase energy costs for businesses and consumers.  Last year, Kerry voted for the Climate Stewardship Act, which would raise natural gas prices for businesses by 79 percent, raise electricity prices by 46 percent, and raise gasoline prices by 40 cents a gallon. The average household's energy bill, including the fuel cost of personal transportation, is expected to increase by $444 dollars per year. (Energy Information Administration, Analysis of S. 139, the Climate Stewardship Act, June 2003)
• Kerry is a cosponsor of the extreme Clean Power Act, which the National Association of Manufacturers strongly opposes, principally because it would raise electricity prices by 47 percent.  The bill, according to NAM, "would adversely affect electric generation, drive up the demand for natural gas in the face of limited supplies and, in turn, negatively impact manufacturers and the overall economy." (Energy Information Administration, Fact Sheet On Analysis of S. 1844, S. 843, and S. 366; National Association of Manufacturers, letter to Sen. James Jeffords, 6/25/02)

Families

"Under my plan, the tax cuts would be extended and made permanent for 98% of Americans. In addition, I support new tax cuts for college, child care and health care -- in total, more than twice as large as the new tax cuts President Bush is proposing."

• John Kerry's budget plan does not include making the President's middle-class tax relief permanent.  (Source: "The Kerry-Edwards Plan to Keep Spending in Check While Investing in Priorities and Cutting Wasteful Spending," 8/03/04, http://www.johnkerry.com/pdf/pr_2004_0803.pdf)
• Kerry's tax credits exclude most Americans.  According to data from the IRS and Commonwealth Fund only 15.7% of tax filers would receive a tax cut under the Kerry plan. (Source: "Tax Statistics - Produced by the Statistics of Income Division and other areas of the Internal Revenue Service" IRS: Statistical Information Services (SIS) Office, Received 9/7/04; "Candidates' Health Care Reform Proposals Provide Opportunity For Public Debate Over How To Cover The Uninsured, Commonwealth Fund, 9/17/03, http://www.cmwf.org/publications/publications_show.htm?doc_id=221448)

"I have proposed a health plan that would increase coverage while cutting costs."

• Kerry's plan spends more money to cover people who are already insured.  Of the $1.636 trillion in new spending, $1.014 trillion or 62% is spending on people who already have health insurance.  His plan to "insure the insured" means children and families will be dropped from private coverage and added to the Medicaid program.  The price tag for Kerry's government reinsurance proposal reflects $8 billion for newly insured Americans and a $565 billion price tag, or 99% of the cost of the proposal, for people who are already covered with health insurance.  Kerry's premium subsidies spend $118 billion, or 65% of the cost, on those with health insurance. (www.aei.org, "Analyzing the Kerry and Bush Health Proposals: Estimates of Cost and Impact, 9/13/04)
  
• Kerry's plan does nothing to cut costs. "It doesn't save society any money and does nothing to restrain the American appetite for more drugs, more tests and more exams, whether or not they're worthwhile. It simply shifts some costs now paid by employers and employees to taxpayers." (The Wall Street Journal, Wessel "Kerry Health Plan Simply Shifts Costs", 5/13/04)

"It builds on and strengthens the current system, giving patients their choice of doctors, and providing new incentives instead of imposing new mandates."

• Kerry expands government-run Medicaid.  Of the 27 million newly insured in Kerry's plan, two-thirds or 18.5 million will be in the Medicaid program, which is a government run health care program.  (www.ncpa.org, "The Case against John Kerry's Health Plan", 9/04)
• More government-run health care will mean less choice.  As Medicaid programs across the country seek to reign in costs from their over-promises, they reduce access and cut costs by providing limited access to doctors and hospitals, limited numbers of prescriptions or limited access to specific drugs.  (www.heritage.org, Issues '04: Medicaid)

"My health plan will offer businesses immediate relief on their premiums. By providing employers some relief on catastrophic costs that are driving up premiums for everyone, we will save employers and workers about 10% of total health premiums."

• Kerry's government reinsurance proposal makes the federal government the final decision maker on health care.  The Kerry plan would have taxpayers assume the cost of 75% of catastrophic health care costs.  Because of the responsibility for costs above the threshold, the federal government would then determine what costs and treatments meet the threshold, reimbursement levels for those procedures, and dictate treatment decisions.
• Under the Kerry plan, there is a disincentive to reduce costs.  The real role of insurance is to spread risk over a large number of subscribers in order to pay for unexpected and catastrophic costs.  If the federal government takes over this role, then health insurance would merely become an administrative function for paying for routine health expenses. Once the threshold has been met, there will be no incentives for employers, patients, or even insurers to attempt to reduce costs. (www.ncpa.org, "The Case against John Kerry's Health Plan", 9/04)

"We will make it easier for generic drugs to come to market..."

• President Bush is already expanding access to generic drugs.  New regulations from the Department of Health and Human Services and provisions of the Medicare prescription drug bill signed into law by President Bush have already made it easier for generic drugs to come to market sooner, saving the American people $35 billion over ten years.  (www.hhs.gov, "HHS Revises Regulations and Procedures to Speed Access to Generic Drugs", 6/12/02)
• Kerry Opposes Reforms That Would Speed Drugs To Market.  Frivolous lawsuits against drug manufacturers significantly increase drug costs and prevent new drugs from coming to market. S. 2061, introduced in the Senate this year, would have sped new drugs to market and reduced drug costs by eliminating punitive damages for products that were approved by the FDA.  Kerry failed to vote on S. 2061, and has consistently voted against similar bills in the past.  (Sources: http://www.iedm.org/etudes/pharma_en.pdf; H.R. 956, CQ Vote #137: Motion Rejected 39-61: R 10-44; D 29-17; I 0-0, 5/2/95, Kerry Voted Yea; H.R. 956, CQ Vote #140: Motion Agreed To 65-35: R 24-30; D 41-5, 5/2/95, Kerry Voted Yea; H.R. 956, CQ Vote #141: Motion Agreed To 56-44: R 13-41; D 43-3, 5/2/95, Kerry Voted Yea; H.R. 956, CQ Vote #144: Passed 53-47: R 48-6; D 5-41, 5/2/95, Kerry Voted Nay; H.R. 956, CQ Vote #151: Motion Rejected 46-53: R 44-10; D 2-43; I 0-0, 5/4/95, Kerry Voted Nay; H.R. 956, CQ Vote #152: Motion Rejected 47-52: R 45-9; D 2-43; I 0-0, 5/4/95, Kerry Voted Nay; H.R. 956, CQ Vote #160: Motion Agreed To 54-44:: R 46-7; D 8-37, 5/10/95, Kerry Voted Nay; H.R. 956, CQ Vote #161: Passed 61-37: R 46-7; D 15-30, 5/10/95, Kerry Voted Nay; S. 1052, CQ Vote #212: Motion Agreed To 52-46: R 2-45; D 49-1; I 1-0, 6/29/01, Kerry Voted Yea; S. 812, CQ Vote #197: Motion Agreed To 57-42: R 6-42; D 50-0; I 1-0, 7/30/02, Kerry Voted Yea)  

"...and allow the safe importation of pharmaceuticals from countries like Canada."

• Safety should come first.  The Medicare prescription drug bill allows for the importation of drugs from Canada if they can be certified as safe.  The FDA has been unable to verify safety both now and under the previous administration. 
• The Clinton Administration determined that they could not verify safety.  "Health and Human Services Secretary Donna E. Shalala yesterday refused to implement a Republican-sponsored measure intended to reduce drug prices by allowing the reimportation of prescription drugs from abroad, concluding that it is unworkable and would not lower costs."  (www.washingtontonpost.com, 12/27/00, Kaufman "Shalala Halts Bid To Lower Drug Costs)
• How will John Kerry certify safety?  Inspections last summer by the FDA of drugs shipped from foreign countries showed that 88% of the drugs inspected contain dangerous or unapproved drugs that pose potentially serious safety problems.  (www.fda.gov, 4/27/04 testimony William K. Hubbard, Committee On Finance).

"Finally, we will require medical malpractice plaintiffs to try nonbinding mediation, oppose unjustified punitive damage awards and penalize lawyers who file frivolous suits with a tough "three strikes and you're out" rule."

• Mandatory non-binding mediation would increase costs and slow justice.  Because mandatory non-binding mediation isn't binding, it cannot prevent frivolous lawsuits from being filed.  It would actually increase costs by imposing a mandatory extra round of litigation, complete with an extra set of attorneys' fees.  And it would slow recovery for plaintiffs who have suffered real injuries.     (Source:  http://medliabilitypa.org/research/struve1003)
• Kerry's "New" punitive damages standard isn't new. The punitive damages standard that Kerry advocates would change nothing:  it is essentially identical to the common law standard for the availability of punitive damages, which is applicable in virtually every jurisdiction in the United States. (Source:  Kolstad v. American Dental Association, 527 U.S. 526, 536 (1999) ("a jury may be permitted to assess punitive damages ... when the defendant's conduct is shown to be motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others."))
• Lawyer sanctions already exist and haven't stopped the medical liability crisis.  Rule 11 of the Federal Rules of Civil Procedure already provides for sanctions against attorneys when they file frivolous lawsuits, and most states have adopted similar or identical measures.  Obviously, the threat of sanctions has not stopped trial lawyers from driving the nation's medical system into crisis. (Source:  http://www.aepronet.org/pn/vol6-no2.html)

Research & Education

"America has fallen to 10th in the world in broadband technology."

• Broadband adoption has grown 300% from December 2000 to December 2003 – from 7 million to 28 million lines.  Consumers are adopting broadband faster than they have adopted other technologies such as color televisions, wireless phones, VCRs, and personal computers. ("High-Speed Connections to the Internet Increased 20% During the Second Half of 2003 for a Total of 28 Million Lines in Service," FCC Press Release, 6/8/2004; "Promoting Innovation and Economic Security Through Broadband Technology,"  White House Fact Sheet, 3/2003)
• Over 93% of zip codes have broadband access and 99% of the country's population lives in a zip codes where a provider reports having at least one high-speed service subscriber.  (FCC, Industry Analysis and Technology Division, High Speed Services for Internet Access, Status as of June 30, 2003, 12/03)
• President Bush is working to make broadband affordable and accessible to all Americans by 2007.  He has doubled the amount of spectrum available for wireless services including Wi-Fi and Wi-Max.  He will make permanent the moratorium on Internet taxes.  (Source:  "Promoting Innovation and Economic Security Through Broadband Technology,"  White House Fact Sheet, accessed 9/12/2004)

"My plan would invest in basic research and end the ban on stem cell research."

• President Bush has increased Federal R&D funding by 44% to $132 billion in 2005 including an all-time high of $26.8 billion for basic research. He has doubled the budget for the National Institute of Health, increased funding for NSF by 30%, and increased support for nanotechnology research by 88%.  President Bush is the first president to invest in embryonic stem cell research including a recent 132% increase to $24.8 million with an additional $190.7 million for non-embryonic stem cell research.  To make research more affordable, President Bush believes the R&D Tax Credit should be made permanent.   (Source:  "Bush Administration Science and Technology Accomplishments," OSTP, 4/2004)
• The President has dedicated $1.7 billion over five years to develop hydrogen fuel cells and related technologies. The 2005 Budget includes $228 million for the Hydrogen Fuel Initiative, an increase of $69 million, or 43%, over 2004 funding, to develop the technologies to produce, store, and distribute hydrogen for use in fuel-cell vehicles, electricity generation, and other applications.  The 2005 Budget proposes tax incentives totaling $4.1 billion through 2009 to spur the use of clean renewable energy and energy-efficient technologies.  (Source:  "Bush Administration Science and Technology Accomplishments," OSTP, 4/2004)

"It would invest more in energy research, including clean coal, hydrogen and other alternative fuels."

• Kerry's clean coal funding is undercut by his support for extreme, unrealistic environmental policies that would nearly phase out coal use and destroy coal jobs.  Kerry voted for the Climate Stewardship Act last year, which would cut coal-fired electricity generation by nearly 80 percent and kill 50,000 coal industry jobs. (Energy Information Administration, Analysis of S. 139, the Climate Stewardship Act, June 2003)
• John Kerry and John Edwards killed last year's comprehensive energy bill, which includes substantial funding for hydrogen and alternative fuels.  H.R. 6 includes over $2 billion over five years for hydrogen research and technologies and establishes a renewable fuels standard (RFS) requiring 5 billion gallons of ethanol in gasoline by 2012. (Roll Call Vote #456, H.R. 6, Cloture Motion Failed, 11/21/03; Senate Energy Committee, Highlights of Energy Policy Act of 2003)

"To ensure we have more workers to compete in an innovation economy, we need more young people to not only enter but complete college, we need more young women and minorities to enter the fields of math and science, and we need to make it easier for working parents to get the lifelong learning opportunities they need to excel at both their current and future jobs."

• Kerry "has suggested rewarding states that set higher standards, by easing the yearly requirements for progress." (Emphasis added; Source:  Kate Zernike, "'No Child Left Behind' Brings A Reversal: Democrats Fault A Federal Education Plan," The New York Times, 1/12/04)
• Kerry would weaken accountability.  "Rather than judging schools on whether they improve student proficiency in reading and math, he said, they should also be measured by other indicators, like graduation rates, teacher attendance and parental satisfaction. Kerry's clear intent is to loosen the standard so that fewer schools are identified as needing improvement, even if student test scores fail to rise. ... The demand for loosening the accountability standard is based largely on the myth, now embraced by Kerry, that the law punishes schools designated as needing improvement." (Ron Brownstein, Op-Ed, "Kerry Should Listen To His Own Advice On Education Reform," Los Angeles Times, 4/5/04)

Budget & Going Back to the 1990s

"When President Bush was in New York for the Republican convention, he did not even pay lip service to reducing the deficit. His record makes even Republicans wary. From missions to Mars to a pricey Medicare bill, President Bush has proposed or passed more than $6 trillion in initiatives without paying for any of them."

• President Bush will cut the deficit in half.  By continuing the President's plan for economic growth and spending restraint, we can continue to strengthen the economy and cut the deficit in half.  The deficit will decline from 3.8% as a share of the economy in 2004 to 1.5% of GDP in 2009. (Joshua B. Bolten, "We Can Cut The Deficit In Half," The Wall Street Journal, 12/10/03)

"Americans can trust my promise to cut the deficit because my record backs up my word. When I first joined the Senate, I broke with my own party to support the Gramm-Rudman-Hollings deficit reduction plan, which President Reagan signed into law. In 1993, I cast a deciding vote to bring the deficit under control. And in 1997, I supported the bipartisan balanced budget agreement."

• John Kerry voted against Balanced Budget Amendment at least five times. (S. J. Res. 1, Roll Call Vote #24: Rejected 66-34: R 55-0; D 11-34, 3/4/97, Kerry Voted Nay; H.J. Res. 1, Roll Call Vote #158: Rejected 64-35: R 52-1; D 12-34, 6/6/96, Kerry Voted Nay; H.J. Res. 1, Roll Call Vote #98: Rejected 65-35: R 51-2; D 14-33, 3/2/95, Kerry Voted Nay; S. J. Res. 41, Roll Call Vote #48: Rejected 63-37: R 41-3; D 22-34, 3/1/94, Kerry Voted Nay; S. J. Res. 225, Roll Call Vote #45: Rejected 66-34: R 43-10; D 23-24, 3/25/86, Kerry Voted Nay)

"I will restore fiscal discipline and cut the deficit in half in four years. First, by imposing caps, so that discretionary spending -- outside of security and education -- does not grow faster than inflation. If Congress cannot control spending, it will automatically be cut across the board."

• Kerry claims faulty offsets, such as $55 billion for cutting 100,000 federal contractors.  Kerry does not explain how the work would be done in their absence.  These workers perform tasks that somebody must do, unless Kerry actually identifies and eliminates the programs where they work.  Another example of Kerry's faulty offsets is his claim to save $10 billion by freezing the federal travel budget at its current level, but the President's 2005 budget already projects that travel spending will decrease. (Source: "Object Class Analysis," OMB, February 2004)

"Second, I will reinstitute the "pay as you go" rule, which requires that no one propose or pass a new program without a way to pay for it."

• Under President Bush's Budget, non-security discretionary spending already increases by less than 1%: education, veterans, health, income security and justice spending account for 63% of the remainder.  It is unlikely Senator Kerry will cut these programs.  Unless he is willing to consider massive tax increases on the middle class or a significant paring of his existing campaign promises, Senator Kerry will be in violation of his own PAYGO proposal and add more than $1.8 trillion to the debt over the next ten years.  (Source: "An Analysis of the President's Budgetary Proposals for Fiscal Year 2005," CBO, March 2004;  "Policy Memo: Questions On Kerry's Budget," BC'04, 8/3/04)

"Third, I will ask for Congress to grant me a constitutionally acceptable version of line-item veto power and to establish a commission to eliminate corporate welfare like the one John McCain and I have fought for."

• Senator Kerry voted to over-ride President Clinton's use of the line-item veto, increasing spending by $287 million.  Congress enacted a line-item veto law that was later invalidated by the Supreme Court.  However, before the Supreme Court struck down that law, Kerry had the opportunity to support a Democratic President's use of that veto.  On October 6, 1997, President Clinton cancelled 38 provisions in the Military Construction Appropriations Act, saving $287 million.  On February 25, 1998, Kerry voted to over-ride the President's line item veto of this spending. (Source: Clinton's veto message:  http://thomas.loc.gov/cgi-bin/query/D?r105:1:./temp/~r105Byybss: vote analysis:  http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=105&session=2&vote=00013)

"Every day on the campaign trail, I explain how I pay for all my proposals."

• Kerry's own running mate John Edwards disagrees. "Senator Kerry has consistently said that he can pay for all the things that he's proposing and substantially reduce the deficit, I think I've heard him say cut it in half, in his first term. Well, The Washington Post today just analyzed his proposals, and its the same old thing. Here we go again. In fact, in fact, he overspends, in terms of being able to pay for all of his proposals, he overspends by $165 billion in his first term, which means he would drive us deeper and deeper into deficit." (Sen. John Edwards, CBS/The New York Times Democrat Presidential Candidates Debate, New York, NY, 2/29/04)
  
• A recent study from economists at the American Enterprise Institute found that Kerry's spending would increase the deficit by over $2 trillion over the next 10 years.  (Source: "An Analysis of the Ten-Year Costs of Senator Kerry's Spending Proposals," Eric Engen and Kevin Hassett, American Enterprise Institute, 8/12/04, http://www.aei.org/publications/filter.,pubID.21053/pub_detail.asp)

"By rolling back the recent Bush tax cuts for families making over $200,000 per year, we can pay for health care and education."

• The tax increase is bigger than Kerry says.  Although John Kerry says his tax hike will hit just people earning more than $200,000, his campaign documents reveal it would actually be a tax increase for the top two individual income tax rates starting at $147,000 for singles.  (Sources: "The Kerry-Edwards Plan to Keep Spending in Check While Investing in Priorities and Cutting Wasteful Spending," 8/03/04, http://www.johnkerry.com/pdf/pr_2004_0803.pdf; IRS 2004 Tax Rate Schedule)
  It would be a job-killing tax hike for small businesses.  Increasing the top two individual income tax rates would include a tax hike on about 900,000 small business owners and entrepreneurs – the very people who are creating jobs.  (Source: White House backgrounder, http://www.whitehouse.gov/infocus/economy/index.html)
• Kerry's tax increase just goes to more government spending, not deficit reduction.

"By cutting subsidies to banks that make student loans and restoring the principle that "polluters pay," we can afford to invest in national service and new energy technologies."

• John Kerry wants to reinstate the Superfund tax on businesses, which applies even if a business is not responsible for polluting a site.  "It is certainly a broad-based tax that captures everyone... whether they had been responsible for specific pollution or not." (EPA Administrator Whitman, EPW Committee hearing, Feb. 26, 2003)
• The National Association of Manufacturers said the Superfund tax would be a "tax increase on many industries."  "More than 40% of the Superfund taxes are levied on nearly all businesses (except for the very smallest) via the Corporate Environmental Income Tax.  Thus, the Superfund Tax, if enacted, would be a tax increase on many industries--many of which NEVER polluted or caused any contamination!" (National Association of Manufacturers, press release, March 11, 2004)
• The current lender-rate formula underestimates a fair market return.  To compensate for that underestimate, lenders rely on occasionally earning more than the calculated rate.   The lender rate formula has been adjusted downward several times in the past decade and further reduction may prompt some lenders to leave the Federal Family Education Loan (FFEL) program. (Source: "Budget Options," CBO, March 2003)

"My new rules won't just apply to programs I don't like; they will apply to my own priorities as well."

• Kerry's budget plan does not include making permanent the President's middle-class tax relief that Kerry claims to support.  Some of the tax relief expires at the end of this year, and if it does, next year a family of four making $40,000 will suffer a $900 tax hike.  (Source: Treasury Department, press release, 4/9/04)

"Cleaning up President Bush's fiscal mess will not be easy, but to ensure a strong and sustainable economic future we have to make the tough choices to move America's growing deficits back in the right direction.  On Nov. 2 we will have a national shareholders meeting. On the ballot will be the choice to continue with President Bush's policies or return to the fiscal sanity and pro-growth polices that proved so successful in the 1990s. You will choose."

• The CEO Economic Index rose to a new high of 101.7 compared with 96.5 in June.  CEOs "expect the U.S. economy to remain on course for steady growth, with projections for further increases in hiring plans, gains in capital spending and a robust level of expected sales.  ‘America's CEOS believe that the U.S. economy is fundamentally healthy, and see capital spending, sales, and employment continuing to grow steadily over the next six months,' said Hank McKinnell, chairman of Business Roundtable.  ("New CEO Survey Shows Continued Strengthening of Business Conditions," Business Roundtable Press Release, 9/1/2004)
• An online survey of 1,335 business owners showed 85 percent were either "somewhat" or "very" optimistic that the economy will grow in the next two to three years.  And three out of four said President Bush's policies would be better for their business in terms of jobs, taxes, legal reform and the overall economy.  ("U.S. Chamber Survey Shows Economic Optimism, U.S. Chamber of Commerce Press Release, 9/7/2004)
• "The Small Business Optimism Index for July hit 105.9 (1986=100). The figure continued a 16-month string of readings at 100 or above. Comparably high readings last occurred in 1984, anticipating the start of the 1980s expansion. This string of readings above 100 is unprecedented in the 30-year history of the NFIB surveys and continues to signal that 2004 will be the best economy in twenty years."  (William Dunkelburg and Lara Chamberlain, "NFIB Small Business Economic Trends," NFIB, 8/2004)
• The Consumer Confidence Index in August increased more than 20% over the last year rising from 81.7 to 98.2.  Confidence increased in eight of the last twelve months.  (Source: The Conference Board 8/31/04) 
• Consumers view both the current and longer term economic outlook more favorably than they did at this same point in the Clinton Administration. According to the University of Michigan, consumer optimism continued to expand in August.  (Source: University of Michigan, August 2004)
• "The latest ABC News-Money magazine poll shows that Americans are rating their personal finances better than they have in more than two years."  ("Motown, Money, McCurry," ABC News The Note, 915/2004)

[Lyford]

bump for later.

[Jaded]

"Finally, we will require medical malpractice plaintiffs to try nonbinding mediation, oppose unjustified punitive damage awards and penalize lawyers who file frivolous suits with a tough "three strikes and you're out" rule."

Did Jean-Fraude check with the Breck Boy on this one? Talk about biting the hand that feeds ya.

[CyberCowboy777]

Now that is some reading!

Very informative....... I think I print a few dozen and start handing them out. God knows the press won't cover it.

[King Prout]

bfl

[CyberCowboy777]

Washington State Ping List

This is all known Washington State FReepers and interested parties as of 9/16/04 - 313 FReepers

If you want on or off this ping list Freepmail me.

[Alex Murphy]

Bump for reference

[P.O.E.]

Facts don't make for good tv. Trash talking, on the other hand,is a staple. I don't expect this rebuttal to make the airwaves.

[jcb8199]

Good post.

[AFPhys]

* The recession and spending on the War on Terror together account for nearly three quarters of the changes in our nation's fiscal position.

This point by point is very well thought. There is not much that is missed, though the rebuttals are a bit weak in a couple places that could have been better defended.
/