TCS Daily


'Fuzzy Math' and 'Risky Schemes' Emerge From the Primaries

By Pete Sepp - January 30, 2004 12:00 AM

As America confronts a rising tide of red ink, some taxpayers may be hoping that at least one of the remaining Democratic Presidential candidates can calm the turbulent fiscal waters. After all, each of the White House hopefuls has disparaged recent projections of massive budget shortfalls (nearing $500 billion for Fiscal Year 2004) for their own rhetorical purposes.

John Kerry, for example, claims "this Administration has turned fiscal responsibility on its ear." Howard Dean states he will commit to "set the nation on the path to a balanced budget." Joseph Lieberman accuses White House officials of "hiding behind the war and homeland security to excuse their own fiscal irresponsibility," while Wesley Clark declares he "would restore the basic principle of responsibility to the budget process: all tax and spending proposals must be paid for without increasing the deficit."

But for all their rhetoric, will any of the Democrats actually reduce spending? Don't hold your breath. A recent study produced by the National Taxpayers Union Foundation (NTUF) indicates that if the policy agenda of any one of the seven candidates were enacted in full, annual federal spending would rise by at least $169.6 billion and as much as $1.33 trillion. This would translate to a yearly budget hike of between 7.6 percent and 59.5 percent. All of our estimates were compiled with sources such as the Congressional Budget Office and our own BillTally legislative cost-accounting database.

New Spending Proposed by Democratic Presidential Candidates

Candidate

Total Proposed Spending Increase (Annual, in Billions)

Sharpton

$1,327.01

Kucinich

$1,060.35

Kerry

$265.11

Dean

$222.9

Clark

$220.66

Edwards

$199.48

Lieberman

$169.55

Source: National Taxpayers Union Foundation calculations.

New Hampshire primary winner John Kerry, who recently fingered President Bush for turning a "$5 trillion surplus into record-setting deficits," has introduced a platform that sags with $265.11 billion of additional spending -- in the first year alone. Aside from major boosts in federal health care and education spending (both of which are soaring under Bush already), Senator Kerry would pump $30 billion more into highways -- even as his House colleagues are crafting a five-year, $375 billion transportation bill containing a 30 percent gas tax increase.

Other top contenders fare little better. Wesley Clark proposes to spend $10 billion next year on a job creation program as part of a platform of health, education, military, and other proposals adding up to $221 billion. John Edwards seeks $199.5 billion in new spending highlighted by a homeland security plan that is the most expensive of the Democratic proposals. Senator Edwards' $95 billion design for the economy, which includes $40 billion in state aid, is also the most expensive of any remaining candidate.

Given these sizeable increases, most Americans would expect truly deficit-conscious candidates to at least balance their agendas with offsetting cuts in spending elsewhere. Unfortunately, the fiscal scales would only grow more lopsided -- all told, the seven Democrats offered nearly 200 proposals to boost the federal budget, but only two ideas that would reduce outlays. Both spending cuts came from candidate Dennis Kucinich, who aims to repeal the Patriot Act and trim the defense budget.

Not that these reductions, totaling just over $60 billion, could possibly bring Kucinich's skyrocketing spending plans back down to earth. As President the Ohio lawmaker would seek tuition-free higher education, a universal pre-Kindergarten program, and other huge expansions of government -- topped off by a half-trillion-dollar "New Deal"-style public works program. The total all-inclusive cost: $1.06 trillion per year.

When speaking of the Bush tax cuts, Howard Dean claimed, "We can't afford them." Evidently Dean believes that Americans can afford nearly a quarter of a trillion dollars for spending programs, ranging from a "Fund to Restore America" ($50 billion a year for two years) to $105 billion in new health care commitments.

Dean's denunciation is not unusual. To a person, the seven candidates blame President Bush's tax cuts as a paramount cause for the deficit and call for full or partial repeal of the reductions as a panacea for America's budgetary woes. Besides, as several of their platforms boast, there are "fairer" ways to deliver tax relief to "more deserving" Americans (apparently amounting to "refundable" tax credits for those who pay little in taxes anyway).

But here is where the seven hopefuls take the sharpest detour from fiscal reality. According to the liberal-leaning Center on Budget and Policy Priorities, the projected revenue reduction in 2004 as a result of the 2003 tax cut law is $135 billion. Thus, completely reversing last year's tax act (something several candidates, including Kerry, oppose) wouldn't "pay for" the least-costly of the Democrats' agendas. Even under "static" revenue estimates from the Joint Committee on Taxation, repealing all of the tax cut laws enacted in 2001, 2002, and 2003 next year would yield an average revenue windfall of $137 billion per year between 2005 and 2013 -- still short of the "break-even" mark.

Under the most favorable circumstances, however, rolling back the tax cuts would likely never satisfy the revenue appetites of the candidates in the first place. From the infamous "luxury tax" on yachts enacted under Bush Sr. to city-level "commuter taxes," citizens and businesses have historically responded to higher tax rates in ways that lead to less revenue than government officials initially anticipated.

Such alarming potential deficits under these would-be Presidents might work to the political advantage of the White House's current occupant, were it not for the fact that federal outlays have zoomed 23.7 percent since George W. Bush took office.

There are a few signs that the Administration is now attempting to slow the spending juggernaut. NTUF Senior Policy Analyst Demian Brady estimates that Bush's policy proposals in last week's State of the Union speech would add $13.6 billion to the yearly federal spending tab -- down from $51.9 billion in his 2003 address and a fraction of the $106.6 billion the President outlined in 2002. Bush further announced that his Fiscal Year 2005 budget would hold most non-defense and non-homeland security outlays to an increase of just one percent.

Yet, these steps provide no guarantee of a less burdensome budget, since Bush has refused to veto past bills that have violated other spending limits he has proposed.

During the 2000 Presidential election, the candidates traded charges of "fuzzy math" and "risky schemes" over each other's fiscal policy proposals. Given the results of our study, many taxpayers may be wondering if such terms are applicable to the 2004 race too.

The ballots have been counted in the New Hampshire primary, but speculation continues over who will win the nod to challenge George W. Bush in the fall. One thing is certain, however: any one of the Democratic candidates' platforms would leave Americans drowning in higher taxes and deeper deficits, and so far no one has tossed out a lifeline.

Pete Sepp is Vice President for Communications and Drew Johnson is Policy Analyst with the National Taxpayers Union Foundation, the research and educational arm of the National Taxpayers Union (a non-profit citizen group founded in 1969). The group's study of the Presidential candidates' platforms, The Return of Fuzzy Math and Risky Schemes, along with the analysis of President Bush's State of the Union address, is available online at www.ntu.org.


Categories:
|

TCS Daily Archives