WASHINGTON -- The Concord Coalition today released a report on fiscal policy in the 2004 presidential campaign, concluding that neither President Bush nor Senator Kerry has a credible plan for dealing with the fiscal challenges he will face if elected. The election of 2004 will determine the first president of the looming “senior boom” - and whether that president is George W. Bush or John F. Kerry, tough choices will be required to close both the renewed short-term gap and the even larger long-term shortfall.
“Both candidates are touting expensive initiatives costing about $1.3 trillion that would make deficit reduction more difficult in the short-term and fiscal sustainability unlikely in the long-term. The policy options in their plans are very different but the bottom lines are not. Regarding the deficit, they appear to be taking alternative routes to a similar destination,” said Concord Coalition executive director Robert Bixby.
The report finds that President Bush and Senator Kerry have very different assessments of the fiscal outlook and the best ways to address it, but that their plans share some basic weaknesses:
- Neither candidate is proposing a balanced budget plan.
- Neither candidate sets aside resources for reform of the alternative minimum tax (AMT) beyond 2005.
- Neither candidate has publicly stated his assumptions for the ongoing costs of operations in Iraq and Afghanistan.
- Neither candidate assumes full extension of several routinely renewed tax breaks that are scheduled to expire.
- Neither candidate has proposed a strategy for achieving long-term fiscal sustainability.
Some excerpts from the report follow:
They both propose to cut the deficit in half by 2009. This is a retreat from the bipartisan balanced budget consensus that developed in the 1990s. While it is a plus that the candidates are promising deficit reduction -- the halfway goal they share minimizes the full magnitude of the fiscal challenges ahead. Even if the policies in their budget plans succeed in halving the deficit by 2009, deficits are on track to shoot up again after that due to rising entitlement costs. The campaign's fiscal policy debate is thus in danger of becoming fixated on a goal that is too modest and a timeframe that is too limited. thereby acknowledging that the deficit is a problem
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It is a noteworthy aspect of this campaign that both candidates see a manageable fiscal problem and a threatening crisis - in very different time frames. For President Bush, the 10-year deficit is modest and manageable. The real fiscal danger, he says, comes over the long-term as the boomers begin to retire in large numbers. Senator Kerry has expressed much more alarm about the 10-year fiscal outlook, arguing that deficit reduction is linked to fiscal stability. He expresses far less concern, however, about the unsustainable long-term situation. They are both ducking issues they don't want to face. For President Bush, it's potential tax increases. For Senator Kerry, it's potential entitlement cuts. The credibility of their respective fiscal policy plans is stretched thin because neither will put all policy options on the table.
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Getting control of a ballooning budget deficit requires two things that candidates are loath to discuss -- even if that is what they want to hear. spending cuts (when they would prefer to talk about increases) and tax increases (when they would prefer to talk about cuts). Yet the American people deserve something more from their candidates than an invitation to a free lunch
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Both candidates' proposals have back-loaded costs. The President's 5-year budget omits almost 90 percent of the 10-year revenue loss from his tax policy proposals. The cost of Senator Kerry's health care plan grows by 50 percent between 2009 and 2014. Neither candidate's tax proposals would help get the deficit under control. The choice is between large tax cuts that are unaffordable and smaller tax cuts with higher spending that are also unaffordable.
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The bottom line is that neither candidate has produced a credible set of numbers to back up his deficit reduction rhetoric.