Kerry’s Budget Gap
By Trevor Bothwell (04/10/04)
John Kerry has finally disclosed his economic plan, one that he claims will create 10 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 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 American firms.
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 widespread tax increases, might not the clear thinking American assume that the logical outcome of spending the kind of money Kerry proposes ultimately 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.
(Printer friendly version) Email: Trevor Bothwell
