Tax Gap Attack Kerry

Tax Gap Attack
Kerry, Bush Both Have Spending Increases to Explain

By Terry M. Neal
washingtonpost.com Staff Writer
Wednesday, March 24, 2004;

President Bush's campaign rolled out a curious new line of attack on Sen. John F. Kerry this week, highlighting a $1 trillion "tax gap" -- that is, the cost of his proposals and the money available to pay for them -- in the Massachusetts senator's economic platform.

"John Kerry's tax gap of $1 trillion would result in higher taxes on every American and is the wrong prescription for our economy," Bush campaign spokesman Steve Schmidt said this week. "Kerry's new government spending will put a burden on every American family."

In a nutshell, the Bush campaign says that Kerry so far has proposed about $1.7 trillion in new spending over the next 10 years while proposing to increase taxes by about $650 million by rescinding the Bush tax cuts for the wealthy.

Why is the attack curious? Because the Bush campaign accuses Kerry of doing nearly the same thing Bush did in 2000. In his campaign for president, the Texas governor went from campaign stop to campaign stop proposing hundreds of billions of dollars for new environmental, social and educational programs without ever outlining one major cut in any federal program.

Bush did all of this while proposing a $1.35 trillion tax-cut plan.

The reporters following the Bush campaign (I was one of them) pushed the candidate to explain how he planned to balance the books with huge tax cuts, massive infusions of new spending for education and social programs and no significant cuts in existing programs. The candidate's answer was always the same: The expanding economy and a predicted $4.6 trillion budget surplus would more than pay for tax cuts and spending increases. Even when it became clear in mid-2000 -- the heat of the campaign season -- that the economy was slowing down, the Bush campaign stuck by its story.

It was a smart political strategy, one that played off of a contemporary phenomenon -- the irrational exuberance of the era -- and a traditional one -- the certainty that voters will reward politicians who promise them it's possible to have everything.

Bush endeared himself to conservatives in 2000 by promising historic tax cuts. And, unlike his Newt Gingrich-era predecessors, he didn't alienate liberals and moderates with constant talk about slashing popular government programs.

As the rosy economic predictions that underscored the Bush campaign's economic platform evaporated in 2001, the president proposed even greater tax cuts while overseeing what the libertarian Cato Institute calculates to be the largest annual increases in discretionary spending since the Great Society programs of the Johnson administration in the late 1960s.

The result: a tax gap of more than $5 trillion in spending over the next decade, according to the nonpartisan Congressional Budget Office.

"While George W. Bush has claimed to support deficit reduction, his policies and plans have led us from a $5.6 trillion surplus to an expected $5.2 trillion deficit -- a $10 trillion difference," the Kerry campaign responded on Monday. "Since George Bush has said he cares about the deficit, we can only assume that there is a $10 trillion tax gap that he will charge the American people."

In other words, the Bush tax gap is bigger than our tax gap.

As good a point as this may be, the Kerry campaign will still have to answer the Bush campaign's charges.

In campaigns, both Republicans and Democrats often assume they can promise voters everything, even if it means driving up deficits because voters don't care about deficits. That has been a part of Bush's assumptions since taking office. To see Bush now warning voters to be wary of a deficit-producing politician doesn't seem consistent with his rhetoric or practices.

But of course, there's more to it than that. Bush says that Kerry will seek to finance his alleged budget shortfall by raising taxes for all people, not just the rich. The point seems to pressure Kerry to outline his budget blueprint sooner than most presidential candidates do. Kerry's reaction could help determine whether Bush or Kerry gets to define Kerry.