QandO

February 20, 2004

Kerry’s general economic plan
Posted by McQ

I was reading a WaPo article yesterday that caused me to actually want to check out Kerry’s economic plan. I started with what can only be characterized as his “general” or “overall” plan (the specifics are found below all of this on his web site). Of course before you can get to the heart of it you have to endure some political nonsense:

George W Bush has chosen tax cuts for the wealthy and special favors for the special interests over our economic future.

As has been chronicled here and many other places, this recovery has been dramatically effected in a positive way by the tax cuts of George Bush. There’s simply no denying it anymore .... unless you’re a Democrat running for President. So you can somewhat forgive the “usual stuff”, but should note, its just not true. And “special favors for the special interests” is something I, if I were a campaign advisor to Kerry, would recommend he avoid like the plague unless he wants to get the plague.

The first thing John Kerry will do is fight his heart out to bring back the three million jobs that have been lost under George W. Bush. He will fight to restore the jobs lost under Bush in the first 500 days of his administration. Kerry has proposed creating jobs through a new manufacturing jobs credit, by investing in new energy industries, restoring technology, and stopping layoffs in education.

So he’ll “fight his heart out” with whom or what? The jobs were lost for a reason. See my recent post on overseas outsourcing. Most losses were in the manufacturing area. Why? Because we no longer are competitive in much of that arena. How then can jobs be restored in an area in which we’re no longer competitive? The obvious answer is to do what is necessary to BE competitive. That would entail complete restructuring of wages for one thing ... wages which would have to be at the same level as those which NOW have that area of manufacturing.

And this trend of job loss in the US that has been noted for quite some time. In one research paper entitled "Trade and Job Loss in U.S. Manufacturing, 1979-94", it was noted:

This period was also characterized by widespread permanent job loss, particularly in Manufacturing. The results are broadly consistent with the perception that imports displace some domestic jobs.

No big surprise .... yet now we seem to be engaged in rediscovering the wheel. We survived that period of job displacement by creating NEW jobs and NEW industries and we’ll survive this one as well.

Speaking of special interests do you think the AFL-CIO, who just endorsed Kerry, would buy into making wages competitive to create jobs (i.e. CUT wages to a competitive level)?. If anyone believes for one second they’d agree to cuts in wages to help regenerate dying industries, you’re just wrong.

What does that then leave as a way of regenerating these industries? Well, it leaves us with protectionism, which is precisely where John Kerry is heading. NOT a good idea, but then if you’re beholden to special interests like the AFL-CIO and the Teamsters, not many options remain, do they?

John Kerry has a plan to secure America’s economic future and ensure that workers can achieve the American dream in our changing economy. John Kerry has the courage to roll back Bush’s tax cuts for the wealthiest Americans so we can invest in education and healthcare. He isn’t afraid to crack down on corporations that are hiding their money in Bermuda to avoid paying their fair share and will end special tax giveaways to companies that ship jobs abroad. And he will defend the rights of workers, consumers and shareholders in holding corporations accountable for their actions.

Hmmm ... let’s look at these in some detail:

”...roll back Bush’s tax cuts for the wealthiest Americans so we can invest in education and healthcare”.

Of course what this means is he plans to INCREASE the taxes of whomever he determines to be “wealthy” so he can SPEND more money on a failing education system and further eroded price points in healthcare (thereby shifting even more of the real cost of healthcare to the private sector).

And yet we’ll also hear him talk about deficits ... most likely within the same breath.

... crack down on corporations that are hiding their money in Bermuda to avoid paying their fair share and will end special tax giveways to companies that ship jobs abroad.”

How awful ... an entity trying to hide “their money” (note the term: “THEIR money”) from the rapacious greed of someone like Kerry? And of course their “fair share” (whatever that means) wouldn’t be paid by them anyway. As mentioned before, corporations simply pass taxes along in the pricing of their products and thus consumers pay them. Same with ending “special tax giveaways” (which most see as INCENTIVES, but then we’re talking about a Democrat here). So Kerry is saying he’d end the tax incentives to companies which send jobs abroad thereby ending ANY incentive for them to keep the one’s they have here now. Brilliant.

”And he will defend the rights of workers, consumers and shareholders in holding corporations accountable for their actions.”

This line simply brought up a question. What rights toward that goal of holding corporations accountable for the actions do those groups not presently have or which need defending?

Hmmm ... you’re right, strictly political rhetorical boilerplate.

So, that aside ... what’s Kerry’s general economic plan in plain English? Fairly simple:

1. Raise taxes ... both individual and corporate
2. Punish businesses for “outsourcing” jobs/reward those who keep them here.
3. Increase spending (in education and healthcare at a minimum)
4. Protectionism – a nod to his special interests and one of the few options to keep jobs in non-competitive businesses.

I don’t know about you, but it sounds like business as usual for the Democrats to me. I may be wrong ... but at first blush, that’s what I see.

They say the “devil’s in the details” so I plan on looking at the details and putting my analysis up here for all to dissect. Suffice it to say, my first glance at his general plan doesn’t at all give me a warm and fuzzy feeling concerning his claim he’ll have 3 million new jobs in play after 500 days into his administration, though. But then I've never believed any President had the ability to produce jobs anyway.

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