washingtonpost.com  > Politics > Elections > 2004 Election

Democrats Vow to Cut Deficit by 50% in Four Years

By Dan Balz and Lois Romano
Washington Post Staff Writers
Wednesday, August 4, 2004; Page A04

BELOIT, Wis., Aug. 3 -- Seeking to exploit a budget deficit that has ballooned under President Bush, John F. Kerry pledged Tuesday to restore fiscal discipline in Washington as he barnstormed through small towns in southern Wisconsin.

"We have to get back to being fiscally responsible," the Massachusetts senator told an enthusiastic audience in an old hockey arena. "Here's the pledge that John Edwards and I have made: We've laid out a plan that will help us reduce the deficit in half over the first four years of our administration."


Working his way through towns in southern Wisconsin, Democratic presidential nominee John F. Kerry signs autographs and fleshes out his ticket's fiscal and legislative plans. (Laura Rauch -- AP)


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On the fifth day of his trip across the country, Kerry offered his most detailed look at how he hopes to reduce the deficit while at the same time enacting a major expansion in health care coverage, assuring middle-class Americans a continuation of the tax cuts they have received under Bush, boosting spending on education and the environment, and giving state and local governments direct assistance.

Kerry's bus caravan rolled across the southern Wisconsin border, leaving Milwaukee in the late morning, stopping here at midday and continuing on to the Mississippi River and an evening rally in Dubuque, Iowa. Along the way he visited at a cheese store and a tavern and toured a brewery in Monroe. His day was to end in Davenport, Iowa, and on Wednesday both he and the president will campaign there.

Bush's campaign has challenged Kerry on fiscal issues since the general-election campaign began in March, saying that Kerry's health care plan alone would require him to raise taxes and asserting that his spending proposals far exceed the new revenue he can raise. "When it comes to fiscal discipline, John Kerry's claims lack credibility," said Bush-Cheney spokesman Steve Schmidt.

Kerry advisers again challenged that assertion Tuesday by issuing a balance sheet that they said showed that over the next decade, his programs would generate about $365 billion more in revenue than they would require in spending. But those estimates would require significant changes in the tax code winning passage in Congress and are based on other assumptions that may prove challenging to a Kerry presidency.

Advisers said that, while Kerry is committed to reducing the deficit by returning to pay-as-you-go financing and automatic spending cuts, he would not allow that to frustrate his goal of enacting major health care reform. "He's willing to scale other things back, but on health care he believes we need to address the health care deficit as well as the budget deficit," policy adviser Sarah Bianchi said.

During a question-and-answer session here, Kerry pointed to the Clinton administration's record, saying he would restore the kinds of policies that brought about sustained economic growth and a balanced federal budget. "When Bill Clinton left office, we had a $5.6 trillion surplus. Surplus!" he said. "That has now been turned into a deficit as far as eyes can see. What's worse is there is $6 trillion of unexplained expenditures and proposals. They don't say where the money is going to come from."

Those policies, according to Kerry advisers, include restoration of caps on discretionary spending and budgets that keep the growth of discretionary spending in line with inflation, with the exception of security and education spending. Automatic cuts would come into force if spending exceeded inflation, again excluding security and education.

Kerry's health care plan would cost about $900 billion over 10 years, but when measures to cut costs are included, the price tag would fall to about $653 billion, according to estimates by Kenneth E. Thorpe of Emory University. The candidate also proposes about $200 billion in new education spending. Other major items include a cut in corporate tax rates, which would cost about $120 billion over 10 years.

To raise revenue, Kerry would roll back the income tax rate cuts for Americans making more than $200,000, repeal capital gains and dividend tax cuts enacted under Bush, and repeal the elimination of the estate tax, which Kerry's campaign said would produce about $860 billion in revenue.

Beyond repealing the Bush tax cuts, the biggest source of revenue comes from eliminating "corporate welfare" and closing tax loopholes. All together, Kerry's campaign listed $500 billion in savings over 10 years from the changes. Independent budget analysts said privately Tuesday that a Kerry administration would have trouble enacting all the changes in the tax code, given the power of special interests in Congress.

Kerry advisers outlined several other steps designed to constrain spending, including a pledge to enact a constitutionally sound line-item veto, as well as the elimination of a few small federal offices and up to 100,000 federal contractors.

Edwards took the same fiscal message to Louisiana. But local officials who introduced him in this heavily Catholic state emphasized the ticket's values. "At the Democratic convention, we decided to take back the issues of faith and family and country," Lt. Gov. Mitchell J. Landrieu told the 1,500 people who greeted Edwards in Baton Rouge.

Just before Edwards arrived at the old state capitol, the Bush campaign sent an e-mail to reporters alerting them that "more than 1,000 Bush supporters" would be on hand; 48 made it, and they shouted as Edwards spoke. "Don't worry," he quipped. "They'll stop in a minute."

Later in Alexandria, Edwards argued for reducing the government bureaucracy and accused the Bush administration of having "layered on a whole crowd of supervisory people in the government."

"We don't need any more supervisors. . . . We got to get rid of these people," he said.

But it may have been Elizabeth Edwards who got off the best line, when she was talking about how all the manufacturers in her husband's boyhood town, Robbins, N.C., are closed. "[It's] people doing the right thing and being let down by your government because they're not fighting for your job," she said to much applause.

Romano reported from Louisiana.


© 2004 The Washington Post Company