Social policies ride on money. Candidates' plans: $1.3 trillion

Author: Jon Kamman

Published: September 19, 2004

What could be simpler? Voters have only to choose the presidential candidate who believes in excellent health care, top-notch education and a host of other people programs that will improve the quality of their lives.

But at an affordable price.

Not so simple.

Arguments over who, President Bush or Sen. John Kerry, has the better plan to deliver the domestic goods revolve around differences of policy and practicality, but the bedrock issue is money.

Is Bush's education program, the No Child Left Behind Act, an appropriate federal intervention in schools? Evidence is mounting for and against the policies, but the main fight is over whether the effort to make schools accountable is adequately funded.

Is Kerry's plan for health-care coverage for 95 percent of the nation just exorbitant pie in the sky? What are the true costs and benefits of Bush's Medicare reforms? Can the nation afford Kerry's tax credits for college tuition?

All are money questions at a time the nation has none to spare and, it's widely agreed, shouldn't borrow more.

Trillions of dollars

Last month, a best-guess calculation of the candidates' new domestic spending proposals, coupled with their stances on tax policies, came up with almost identical price tags for Bush and Kerry, about $1.3 trillion over the next 10 years. (A trillion is a 1 followed by 12 zeroes. )

That's without factoring in the unpredictable costs and duration of the war in Iraq, which now consumes $4 billion a month.

As more details have emerged and campaign rhetoric has intensified, the candidates are hurling multitrillion-dollar cost figures at one another.

The bottom line, analysts say, is that without major changes, the figure will simply pile on top of the national debt, now nearly $7.4 trillion.

"Instead of trying to figure out a way to get on a solid financial footing now, when it's relatively easy, both of these guys obviously have made a political decision that saying, 'the gravy train is over' is not going to fly," said Len Burman, a senior fellow at the Urban Institute in Washington, D.C., and co-director of its Tax Policy Center.

"I don't think the American people are that stupid," Burman said. "Someone is going to pay back the deficits."

Born into debt

"Someone" will be future generations. Worries are escalating among economists and some voters that without substantial spending cuts, tax increases or both, the costs of today's amenities will be back-breaking in years to come.

A child born today is saddled with more than $25,000 in debt, calculated on a per capita basis.

Although no one expects the federal government to pay off the national debt, the first priority is to keep it from growing. The figures haven't been good.

This year's $2.3 trillion budget will end Sept. 30 with a $422 billion deficit, the largest in the nation's history. The deficit will swell the national debt by more than $1,400 per person. Of that, more than $500 per person is interest paid on total borrowings.

Those realities aren't uppermost in the minds of an electorate that is more concerned about war, terrorism, jobs and the economy with little more than six weeks to go before the Nov. 2 election.

For some voters, such as Mark DiCarlo, 29, of Glendale, the workday world consumes so much energy and attention that they have to leave the trillion-dollar issues to others.

Who's better?

"I'm not sure who would do better (on fiscal policy), but I know I have to go to work, I have to make my deadlines, and if I do that I'll still have a job next week," the entertainment marketing consultant said.

But for others, finances are at least an undercurrent of the election.

Marilyn Magnusson, 68, of Prescott Valley, said she knows only the basics about federal deficits: "We're deeply in debt now. I know it's bad, and I don't know if our children and grandchildren will ever get out of it."

In two of three Arizona Republic Polls since June, voters rated Kerry marginally ahead of Bush in ability to handle taxation and budget affairs. But in the latest survey, Bush took the lead, with 50 percent support to Kerry's 41 percent. Conducted Sept. 3-5, the Republic Poll had a margin of error of plus or minus 4 percentage points.

To voters like Jan Mattson, 77, of Tucson, there's no important difference between the two.

"They both come from the same source," she said.

"I hear reports that we're just that close to a complete (financial) collapse," Mattson said, "and I feel the government is being very deceptive."

Amounts in conflict

Both candidates describe plans to cut the deficit in half in four or five years but have yet to convince experts the money will materialize, even if the economy surges and tax revenues roll in accordingly.

In the meantime, both sides' cost estimates have grown so far apart as to be irreconcilable.

For example, the Bush campaign, on the basis of a study by the Washington-based American Enterprise Institute, says Kerry's programs would cost at least $2 trillion over 10 years and require tax increases on the middle class.

Kerry insists that his budget would balance far better than Bush's because he would adhere to pay-as-you-go rules. At present, new spending must be offset by cuts elsewhere in the budget. Kerry says he would also apply that principle to tax cuts, a policy that Republicans have blocked.

Kerry has backed off on some of his earliest proposals, such as nationwide day care, admitting that funding may not be available until the economy recovers. Jason Furman, his chief economic adviser, said Kerry will pursue only what he knows can be paid for.

Fight over tax cuts

The Kerry campaign says his health care and education agenda would be funded by eliminating Bush's $860 billion in tax cuts for the top 2 percent of earners, people with incomes over $200,000. Furman cites an academic study showing that his health care program would cost $653 billion. But his opponent's advisers point to another American Enterprise Institute study putting the cost at $1.5 trillion, more than twice Kerry's figure. Kerry has said his plan to extend medical coverage to 27 million uninsured people would not entail major administrative expenses.

Bush campaign spokesman Steve Schmidt derides, "Only John Kerry could . . . say with a straight face that his $1.5 trillion government health care plan contains no new bureaucracy."

On the Kerry side, spokesman Phil Singer emphasizes that Kerry's plan is projected to lower family premiums by up to $1,000 a year, offsetting expenses of setting up the program.

Furman told a Brookings Institution forum in Washington last month, "George Bush supported a tax cut when the economy was good in 2000. As the economy turned sour in 2001, he supported the same tax cut and, as the deficits got bigger, continued to support bigger and bigger tax cuts, and has never shown the courage to sacrifice his own priorities or pay for his own proposals."

Another example of the gulf between cost estimates is the Kerry campaign's assertion that the president's programs, as outlined in his acceptance speech at the Republican National Convention, would cost $3 trillion if tax cuts are made permanent and individuals flock to tax-free accounts for health spending and part of their Social Security obligations.

Bush's aides say $3 trillion is preposterous. The president proposed less than $75 billion in new spending over 10 years, they say, or a mere 2.5 percent of what the rivals calculate.

Bush's spending projections do take permanent tax cuts into account, they say, and although private-investment Social Security accounts would cut revenues in the beginning, the individuals' investments eventually would save the government billions in payouts.