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$3 Trillion Price Tag Left Out As Bush Details His Agenda

Jason Furman, Kerry's economic policy director, said that Bush "wants to hide the true costs of his plan" and that taxpayers "would be shocked" to find out what he was really advocating.

"The Bush team has gotten a lot of traction with the point that the Kerry numbers and rhetoric don't add up," said Kevin A. Hassett, director of economic policy studies at the conservative American Enterprise Institute. "It behooves them now to demonstrate that theirs do."


President Bush campaigns at the Ottawa County fairgrounds in Holland, Mich. (Shawano Cleary -- AP)


Friday's Question:
It was not until the early 20th century that the Senate enacted rules allowing members to end filibusters and unlimited debate. How many votes were required to invoke cloture when the Senate first adopted the rule in 1917?
51
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In his acceptance speech in Madison Square Garden on Sept. 2, the president called for the expansion of health savings accounts, which provide tax breaks for families and small businesses; creation of new tax-preferred retirement savings accounts; and creation of lifetime savings accounts, which allow tax-free savings for tuition, retirement or even everyday expenses.

The "Agenda for America" also includes increasing testing and accountability measures for high schools and opportunity zones to cut regulations and steer federal grants, loans and other aid to counties that have lost manufacturing and textile jobs -- a clear appeal to swing states such as Michigan, Ohio, Pennsylvania and West Virginia.

Bush has also promised to "ensure every poor county in America has a community or rural health center" and "double the number of people served by our principal job training program and increase funding for our community colleges."

A number of Bush's initiatives could have a big price tag. An estimate from the Social Security actuary's office, included in the 2001 report of a Social Security commission appointed by Bush, put the cost of adding private accounts to the government retirement program at $1.5 trillion over 10 years. With inflation, the figure would now be about $2 trillion. Much of the expense comes from continuing to pay most retirees at current benefit levels, at the same time that some payroll taxes are being diverted to the stock and bond market.

Although advocates of partial privatization contend that the transition can be financed without cutting benefits or raising taxes, the estimates mean the president's agenda could cost even more than the Bush projections of Kerry's proposal. Hassett, the AEI economist, said private accounts would lower the long-term cost of Social Security. "If you pay a few trillion in transition costs over a decade, then maybe the system doesn't go bankrupt," he said.

Bush also called for making permanent his tax cuts, which the administration has estimated at $936.2 billion to $989.75 billion over 10 years. The tax cuts include elimination of the inheritance tax, reductions in the top four income tax rates, an increase in the child tax credit, reduction in the marriage penalty, and cuts to the capital gains and dividend tax rates.

Robert Greenstein of the liberal Center on Budget and Policy Priorities put the figure for extending the tax cuts at $2 trillion over 10 years and said other tax breaks Bush mentioned in his speech -- mostly related to health care -- would likely cost $50 billion to $100 billion over the next decade.

Another expensive part of Bush's agenda is the expansion of health savings accounts and creation of lifetime and retirement savings accounts. The new accounts are designed to have minimal cost in the first 10 years but have very large costs in the long run because they provide tax breaks when the money is withdrawn rather than up front.

The Congressional Research Service has estimated those two types of accounts would eventually cost $30 billion to $50 billion a year.

Peter R. Orszag, a senior fellow in economic policy at the Brookings Institution, said a conservative estimate for the cost of Bush's permanent tax cuts and Social Security accounts would be about $4 trillion over 10 years. But Bush's agenda was vague and did not include details of how he would add Social Security accounts.

"It's hard to cost out rhetoric," Orszag said.


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