Deinonychus antirrhopus

John Kerry and Deficit Reduction

This election the Democrats have picked up their usual theme of deficit reduction. John Kerry has come out strong on this one with a number of statements (click here, here, here, and here just for some examples). However, there is a problem.

The problem is that Kerry wants to spend, spend, spend,

John Kerry said, “If I am President, I will rollback the Bush tax breaks for the wealthiest Americans so we can invest in education, health care, and the skills of our workers.

On top of that Kerry wants to give the middle class tax cuts!

But I want to give the middle class a tax cut, not a tax increase. Too many middle class people are getting pummeled everywhere they turn – more bills to pay, a higher cost of living.

Now, how much this tax cut costs in terms of tax revenue depends on your definition of "middle class". For example, if you say middle class is every household making $29,000 to $56,000 there is only about $116 billion in tax revenue you can cut for these people. Further, given the structure of our tax code, if you give these people tax cuts (i.e., a cut in their rate) you'll also be giving that tax cut to the wealthy.¹ So what is the net effect of the tax hike plus the tax cut? A tax hike on those making over $200,000 will undoubtedly raise revenue, but by how much? $100 billion? $150 billion? How much will the middle class tax cut be? Also, what is the upper limit for "middle class"? As usual with John Kerry we get zero in the way of an answer. He wont even tell us any numbers on repealing the tax cut for those making over $200,000/year (at least that I could find).

So the problem I have is believing that the deficit is going to be cut in half by 2008. And what does cutting the deficit in half mean? Does it mean half of what the 2008 deficit is projected to be or half the 2004 or 2005 deficit? If it is the 2008 deficit that means Kerry has to cut the deficit by about $130 billion that year. That is a big cut and given that many of the Bush tax cut measures will have expired by then, there wont be much room to blame it on that. Further, given the expiration of these tax cut provisions, I'm not sure how much extra money will be gotten from repealing parts of Bush's tax cut. Add in all the extra spending, spending in areas that usually end up costing a great deal more than the initial estimates indicate and I just don't believe Kerry on this score.

The only hope for reigning in the deficit if Kerry gets elected (and this might be the best way to reign in the deficit) is for Kerry to be President and the Congress to remain firmly in the hands of the Republicans. Yep, gridlock. Not only in the hands of Republicans, but they actually increase their hold on both houses, making it virtually impossible that Kerry will be able to get much of anything done. That is for Kerry to be a "miserable failure".