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Westerners may not be the only ones who know how to rig markets
Deficit issue to figure in debate;
Budget watchers blast both candidates
By William L. Watts
CBS.MarketWatch.com
Wednesday, October 13, 2004
http://cbs.marketwatch.com/news/story.asp?guid=%7BA6997469%2D0925%
2D4189%2D93D0%2D69E75A587C8E%7D&siteid=mktw
WASHINGTON -- Who is the bigger spendthrift?
President Bush and Democratic challenger John
Kerry will undoubtedly try to pin that label on each
other when they meet for a final and crucial debate
in Tempe, Ariz., Wednesday night.
But budget watchdogs say neither candidate has a
lot to brag about when it comes to plans to put the
nation's fiscal house in order.
Kerry has blasted Bush for a swing from budget
surplus to deficit over the course of his first term.
Bush has argued that the turn was inevitable given
the short-lived 2001 recession, the bursting of the
stock market bubble, and the aftermath of the Sept.
11, 2001, terror attacks.
Kerry and his supporters argue that Bush's tax cuts
were wrongly weighted toward the wealthiest
taxpayers, failing to provide an adequate stimulus
and setting up long-term structural deficits.
"The president was handed a $5.6 trillion surplus,
ladies and gentlemen.That's where he was when he
came into office," Kerry said in last Friday's
presidential debate, referring to 10-year budget
projections by the Congressional Budget Office. "We
now have a $2.6 trillion deficit.This is the biggest
turnaround in the history of the country."
Bush and his allies argue that the surplus projection
seen when they entered office was never realistic.
And they contend that the tax cuts shored up the
economy, and that by controlling spending they
can cut the budget deficit in half in five years.
"Because we cut taxes on everybody ... the recession
was one of the shortest in our nation's history," Bush
said last Friday.
Both candidates dancing around the issue
Critics have scoffed at plans outlined by both Bush
and Kerry to lower the tide of red ink. Neither
candidate has offered a detailed plan to bring the
budget into balance. Kerry has vowed to cut the
annual shortfall in half over four years.
"The bottom line is that neither candidate has
produced a credible set of numbers to back up his
deficit reduction rhetoric," concluded a briefing paper
released by the Concord Coalition, a bipartisan group
that lobbies for balanced budgets.
While fiscal policy should take a "prominent role" in
the campaign, "it cannot be said that either President
Bush or Senator Kerry has a credible plan for dealing
with the fiscal challenges he will face if elected. Both
candidates are touting expensive initiatives that would
make deficit reduction more difficult in the short term
and fiscal sustainability unlikely in the long-term,"
the report said.
Kerry has called for repealing President Bush's tax
cuts for Americans earning more than $200,000 a
year, while extending other income tax cuts that were
aimed at the middle class while providing additional
breaks -- measures that the Concord Coalition
estimates would reduce revenues by $498 billion
over 10 years.
Meanwhile, Kerry's spending plans for health care,
education, and other areas would boost spending
by $771 billion over the same period, adding a total
of $1.27 trillion to the deficit over 10 years.
But the Bush outlook is slightly worse. Extending all
his existing tax cuts and his new tax proposals would
reduce revenues by $1.244 trillion under the coalition's
estimates. Spending would rise by $82 billion, not
including transition costs tied to Bush's renewed call
for allowing the creation of individual Social Security
accounts. Bush would see debt rise by a total of
$1.33 trillion over the next decade.
Stanley Collender, a veteran budget analyst with
Financial Dynamics, said the budget issue is more
problematic for Bush.
"The question is will Kerry be able to get the president
to try to defend something that's very difficult to defend,"
Collender said.
Kerry's budget plan for reducing the deficit "is as
questionable as the president's is," Collender said,
noting that both will likely be able to cut the deficit in
half only due to surplus Social Security revenues that
will evaporate in the subsequent decade.
"The difference is that the president has a track record
and Kerry will be able to criticize it, as opposed to the
president talking in generalities about what Kerry might
do going forward," Collender said.
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