TCS Daily

The Kerry Campaign's Funny Math

By Kevin Hassett - August 13, 2004 12:00 AM

When I was directing the economic team for Senator John McCain in the 2000 presidential election, the most difficult task the team had to perform was a careful score of our candidate's many proposals. The release of our plan was covered by the media at the time as an important test of McCain's candidacy. Would his organization be able to present a detailed analysis of his plans that would withstand the careful scrutiny of the talented and aggressive Bush economic team? The challenge was a difficult one. Normally, big economic bills get scored by the massive Washington scoring institutions such as the CBO or the OMB. With only a tiny fraction of the staff, we had to produce something that survived the acid test.

The stress for all of us was very high. My most vivid memory of the campaign was an elevator ride in New Hampshire that I took with the McCains the night before the plan was released. A very serious Cindy McCain paused on her way to their room, looked me in the eye and said, "Kevin, the numbers better add up." They did, but if they had not, the McCain team was convinced, the media would have had a field day with it.

One of the more curious developments in the presidential campaign is that the media has a strikingly different standard for Democratic and Republican candidates. Senator Kerry litters his stump speeches with countless proposals, but even now, has not provided voters with a careful accounting of how his plan fits together. That job has been left to others.

On the tax side, the Brookings-Urban Joint Tax Policy Center has provided a highly professional analysis of the static budgetary impact of Kerry's proposals. On the spending side, however, no similar study has been done. This omission is crucial, since a key claim by Senator Kerry is that his plan will significantly reduce the deficit. Without a careful analysis of his proposals, that claim cannot be evaluated.

To fill the gap, my AEI colleague Eric Engen and I just completed a detailed analysis of the Kerry spending proposals. To perform the analysis, we combed through Kerry's web site and public statements to assemble a list of every spending promise he has made, and then dug through the public record to find third-party cost estimates for each of his proposals. When necessary, we adjusted the period for the existing score to the 10-year budget window using standard techniques. When we could not find such cost estimates, we relied on numbers that were supplied by the Kerry campaign. When the Kerry campaign did not provide cost estimates, we set the score for that promise to zero.

Even with that generous accounting, the Kerry spending promises add up to an extraordinary amount of money. Our best estimate is that Kerry's proposals will add up to between $2 trillion and $2.1 trillion over the next ten years. Since the revenue from his tax proposals relative to the current baseline is actually negative, this implies that the Kerry proposal would increase the deficit by perhaps as much as $2.5 trillion over the next ten years.

On August 3, 2004, the Kerry campaign responded to criticisms such as this with a revised budget plan. The main difference between the first and second plans is that the campaign now claims to be able to save about $300 billion from eliminating corporate welfare. Even if we include this rather implausible savings in our estimate, the net increase in the deficit associated with Kerry's proposals is on the order of $2.2 trillion.

What would he spend the money on? According to our analysis, roughly half of this additional spending is attributable to Senator Kerry's health care proposals that would add more than $900 billion in federal outlays. Education expenditure accounts for nearly one quarter of Kerry's new spending, with almost $500 billion added over ten years. A $400 billion expansion of military personnel and benefits for veterans comprises most of the remainder of Kerry's spending plans, with the balance distributed among numerous social programs and increases in international aid.

While making all of these promises, Kerry and his surrogates repeatedly have made the claim that they will restore fiscal discipline if elected. They have also promised to adopt a "pay as you go" rule that will guarantee deficit reductions. But they do this at the same time that they promise voters the moon and the stars. It is time for them to state exactly which of Senator Kerry's promises are no longer valid, or stop all of the warm and fuzzy embraces of deficit reduction. They cannot have it both ways. Our just-released paper has highly specific scores for each of his proposals. Perhaps the Kerry team can tell us which ones are incorrect.

That will not happen for two reasons. First, the numbers are correct. Second, the media appear uninterested in the substance of his proposals, or the fact that they are catastrophically inconsistent. Perhaps, now that both the spending and tax sides have been carefully scrutinized by outside economists, the substance will begin to seep into the popular discourse. If it does, Kerry will have some explaining to do.

Kevin Hassett recently wrote "Kerry and Me" for TCS.


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