11/04/2004

Kerrynomics

Le Wall Street Journal nous apporte une petite étude des propositions économiques de John Kerry, le nouveau héros de nos medias Européens qui luttent contre les causes réelles du terrorisme, à savoir les Etats-Unis, Aznar et Israël.  Nous savions déjà que « JFK le retour » « flip-floppait » si souvent  que savoir ce qu’il propose exactement est un véritable mystère.  Il semble pourtant avoir des propositions proches de celles de Clinton : « tax hikes for the rich, cuts for the middle class, constraints on Congressional spendthrifts. »

 

Like every candidate since time immemorial, Mr. Kerry dodges this question by promising to make government more efficient and to cut back on corporate welfare. But it strains credulity when his headline targets are the federal travel budget and Halliburton. The real answer, of course, is that everybody's taxes will have to go up.

 

Cette politique sent un peu le réchauffé.

 

Kerry as Fiscal Conservative
Following Clinton's lead, he would raise everyone's taxes.

Saturday, April 10, 2004 12:01 a.m. EDT

John Kerry says he has found the religion of fiscal responsibility. Never mind that just five months ago he reviled Howard Dean as a "balanced-budget freak" and practically accused the onetime Democratic front-runner of wanting to take away Grandma's cane by slowing the growth of Medicare. On Wednesday Mr. Kerry proclaimed his belief that the federal deficit is becoming a "cancer" on the economy.

Hold the hallelujahs. Mark this down as smart politics rather than a road-to-Damascus conversion. Mr. Kerry, advised by Clinton-era officials, has decided to run on Bill Clinton's economic record. And he's offering much the same program the man from Hope did in 1992: tax hikes for the rich, cuts for the middle class, constraints on Congressional spendthrifts.

The problem is that Mr. Kerry isn't really interested in shrinking the size of government, and that makes it impossible to get the numbers to add up. By rolling back the Bush tax cuts only on those making more than $200,000 a year, the Kerry plan would bring in $400 billion in extra revenue over 10 years, according to Jerry Orszag of the Brookings Institution. But the National Taxpayers Union scores Mr. Kerry's campaign spending pledges as costing $276.88 billion per year. So where will the money come from?

 

Like every candidate since time immemorial, Mr. Kerry dodges this question by promising to make government more efficient and to cut back on corporate welfare. But it strains credulity when his headline targets are the federal travel budget and Halliburton. The real answer, of course, is that everybody's taxes will have to go up.

Recall what happened under Bill Clinton. Originally the 10% surtax was to apply only to those making $1 million or more, but it ended up hitting people with incomes of $250,000; other tax bites continued down into the lower brackets as well.

Such tax increases, we were told, stimulated growth. The theory, articulated by then-Treasury Secretary Robert Rubin, was that lower government borrowing would make more capital available for investment. Mr. Kerry signed on to Rubinomics Wednesday: "Ultimately, as deficits drive up long-term interest rates, they will dry up investment and undermine the belief, at home and overseas, that America is worth investing in."

It's a testament to the Clinton myth that Mr. Kerry can say this with a straight face when nominal interest rates are at 40-year lows and real rates are near zero. The supposed correlation between the deficit and rates can't be found, yet even as the U.S. is awash with liquidity we're told that the deficit will starve entrepreneurs of capital. What's really in short supply is willingness to take risks, and President Bush is already remedying that with the incentive of lower marginal rates.

Mr. Kerry also falls short of the mark when he resurrects the Democratic line that the rich aren't paying their fair share. The numbers tell a different story. A study released this week by the nonpartisan Congressional Budget Office shows that the trend has been moving in the opposite direction. In 2001, the top fifth of earners paid 26.8% of income in taxes compared with 24.5% in 1984; the other four quintiles all saw their rates drop significantly. The U.S. tax system has become more progressive.

It's true that the Clinton years witnessed the elimination of the federal deficit. But that was not due, as Mr. Kerry wants us to believe, to spending caps like those he is proposing. The caps were honored in the breach, with Congress each year repealing the previously imposed limits and setting new ones.

The real savings came from a combination of factors, including a massive "peace dividend" cut in defense spending to 3% of GDP from 5%. The Republican revolution of 1994 brought cuts in other discretionary spending over the following two years. And the soaring stock market of the bubble years combined with a capital gains tax cut to create a massive revenue windfall.

The surplus did not lead to a lowering of the tax burden--quite the opposite. The Clinton tax increases and the speculative fever drove government receipts to a peak of 20.8% of GDP. The Bush tax cuts and the bursting of the bubble have brought that figure down to about 16%. If rates are left as they are, as the economy accelerates revenues should stabilize near their postwar average of 18% of GDP.

Mr. Kerry's "fiscal responsibility" would mean increasing the tax burden again, which would likely kill the recovery. And by ruling out the reform of Social Security and Medicare, he makes it inevitable that the long-term fiscal situation will deteriorate rapidly after 2008, when baby boomers start to retire. At that, the call for tax hikes will become a roar.

Mr. Bush left himself exposed to a Democratic challenge on fiscal stewardship. Since 2001 more than half of new spending has been unrelated to the war on terror. Nevertheless, Mr. Kerry's conversion to fiscal responsibility won't convince those who keep the faith.


18:38 Écrit par Kathy Schmurtz et Had | Lien permanent | Commentaires (0) |  Facebook |

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