Kerry 'paygo' solution won't work

Published: October 18, 2004

So what exactly is the "paygo" system presidential candidate John Kerry promises he'll restore to control spending and reduce the deficit? Paygo rules apply to the discretionary portion of the budget and require lawmakers to find offsets for any new tax cuts or spending.

The first problem with Kerry's plan is that it won't curb spending, not when he wants to expand entitlements, which are unaffected by paygo, with a new health-care proposal that will cost more than $71 billion a year, or $650 billion over 10 years.

Kerry, according to the National Taxpayers Union, would increase net spending by $226 billion his first year alone. He would spend $71 billion on higher education tax credits, $56 billion on public works and social programs, $177 billion on health insurance tax incentives and about $25 billion on homeland security.

To pay for all of this, Kerry wants to raise $860 billion over the next decade by taxing those who make more than $200,000. The problem here is that the net effect of all of these tax proposals, including a permanent tax cut for the middle class ($361 billion), would be to reduce revenue over a 10-year period by more than $600 billion and increase deficits, according to the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution.

Not that President Bush isn't vulnerable on the budget - his first-term record on spending is a huge disappointment, especially the expensive Medicare drug bill he pushed through Congress. If re-elected, he should wield his yet-to-be-used veto to restrain non-defense increases.

As for Kerry, he supported an even costlier drug bill, undermining again the claim that he's a "deficit reducer." In fact, though the middle- class tax cuts sound good, his agenda is clear for all to see: increased spending across the board and tax hikes, leading to a bigger federal government.