Commentary

The Economic Policies of Bush and Kerry

This commentary was televised on Nightly Business Report, June 18, 2004.

On the road to the White House this year, President Bush and Senator Kerry share a lot of common ground on economic policy. Both candidates promise to cut the deficit in half by 2009. Both support an activist energy policy that relies on tax and spending subsidies.

And Ronald Reagan would cringe at the big spending policies that both candidates favor. President Bush increased spending on education, Medicare, and farm subsidies. Senator Kerry supports those policies. Despite the large budget deficit, both are on the campaign trail touting new spending programs ranging from health care to hydrogen fuel subsidies.

Nonetheless, there are key differences between Bush and Kerry. Bush cut income taxes in 2001 and 2003. Kerry opposed those cuts, but he now says that he supports middle-income tax cuts. Kerry would increase taxes on those earning over $200,000. But that would damage job creation because many high-income folks are small business entrepreneurs.

The starkest policy difference is on Social Security. The retirement program will go bankrupt in a few decades without reforms. President Bush wants to allow young workers to put some of their payroll taxes into personal investment accounts. Senator Kerry is dead set against the idea. He is telling campaign audiences that he will “never, never, never” allow Social Security personal accounts if elected.

That’s a policy difference that young voters need to examine carefully.

Chris Edwards is director of fiscal policy at the Cato Institute.