Kerry’s Budget Gap
by Trevor Bothwell
12 April 2004
John Kerry’s “promise at all cost” mentality is both demoralizing and fiscally irresponsible.
John Kerry has finally
disclosed his economic plan, one that he claims will create ten million new
jobs in the United States. Combined with his campaign trail promises that
have been estimated to cost American taxpayers $1.9 trillion over just ten
years, Kerry is on track to create a historical budget gap, since he’s simultaneously
promised to cut the federal deficit in half.
John Kerry’s primary strategy for creating jobs, which is spelled out on his economic fact sheet,
would be to “eliminate all of the tax breaks that encourage companies to
move jobs overseas and use the savings to encourage companies to create jobs
in America.” This includes repealing the Bush administration’s provision
that allows corporations to defer paying taxes on profits generated overseas,
as well as the one cutting the corporate tax rate.
But Mr. Kerry has it exactly backwards. One reason American companies are
forced to operate overseas is precisely because they are already at a competitive
disadvantage due to high corporate tax rates. In short, reducing the tax
burden on corporations at home would in itself discourage them from relocating.
John Kerry also vows to lead the assault against “Benedict Arnold CEOs,”
those so-called “traitors” who engage in “outsourcing” (also known as the
free market in labor) in an attempt to remain viable in the marketplace.
You got it! The party that instantly scoffs at the slightest notion that
they’re weak on defense is first in line to question the patriotism of overtaxed
But don’t take my word for it. According to the Club for Growth’s Andrew
Roth, Stanley Works (manufacturer of tools and hardware) announced in a May
2002 press release that its shareholders approved the company’s plan to “change
its place of incorporation from Connecticut to Bermuda.” After widespread
attacks from congressional Democrats and protectionists, Stanley Works withdrew
its plans to relocate. But the point was made by then-Chairman and CEO John
M. Trani: “Our ability to compete is being undermined by the U.S. tax code,
which is archaic in today's global market, putting U.S. companies that compete
globally in an untenable position.”
John Kerry’s “promise at all cost” mentality is both demoralizing and fiscally
irresponsible. While Kerry contends that he plans to raise taxes only on
the “rich,” analysts conclude that this would merely yield $700 billion --
which still leaves a spending gap of over $1 trillion! Wherever will the
other $1.2 trillion come from?
Moreover, why is it that Democrats are rarely challenged when they invoke
the image of those detestable “rich” Americans? In classic liberal rhetoric,
anyone who makes $80,000 per year is considered “rich.” Yet after paying
the mortgage or putting the kids through school, there’s often not enough
extra cash left to play golf regularly.
Although John Kerry intensely denies plans for widespread tax increases,
might not the clear-thinking American assume that the logical outcome of
spending the kind of money Kerry proposes will be higher taxes for just about
everyone? If Kerry happens to have a different plan, he should entertain
the suggestion raised by George W. Bush’s campaign, and “submit his tax and
spending proposals to the [Congressional Budget Office] and [Joint Committee
on Taxation] for cost estimates.” That is, if he truly intends to share the
actual costs of his promises with the American taxpayers.
Regrettably, neither party has inspired much confidence when it comes to
reducing the deficit by actually cutting spending. But don’t look for help
from John Kerry and the tax-and-spend Democrats, who instinctively believe
that punishing wealth creation by raising tax rates generates more revenue
than allowing Americans to keep, and consequently spend and invest, more
of their own hard-earned money.
Everything considered, it looks like the only thing John Kerry can promise us is an economic package that just doesn’t add up.
Trevor Bothwell is the editor of The Right Report.
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