In his first two years as president, George W. Bush set a trap. He pushed through tax cuts so big that they would inevitably force Democrats into a series of no-win arguments during this election year. Democrats could dedicate themselves to undoing the budget damage Bush had caused by favoring tax increases and spending restraint. Or they could ignore the issue of fiscal balance and propose popular programs.
Either way, Democrats risked getting trashed and tearing each other apart. The first option offers voters little to cheer (tax increases and fewer programs) while the second opens the party to charges that it's engaging in its own form of fiscal irresponsibility.
The trap is working marvelously, even if the bad news in Iraq has pushed the budget mess off the front pages. True, competing Democratic factions are so eager to defeat Bush that they are largely holding their tongues. But the party's deficit hawks and its advocates of new programs are not happy with each other, and both are trying to pull Sen. John Kerry in their direction. Kerry has no choice but to finesse the problem.
With an eye to fiscal balance, Kerry has proposed taking back Bush's tax cuts for Americans earning more than $200,000 a year, while leaving the rest in place. He has also scaled back some of his own proposals, notably (and unfortunately) a plan that would pay the college costs, pegged at state university levels, for young Americans who gave at least two years of military or civilian service to the country.
But Kerry has not abandoned all of his initiatives. He is still committed to his program to expand health care coverage, which he estimates will cost $650 billion over 10 years. Kerry is expected to make a big push on health care over the next month. The issue speaks to the economic anxieties of a broad swath of Americans who feel their incomes are being cut by stagnating wages, shrinking benefit packages and rising medical costs.
The party's deficit hawks I've spoken with are largely forgiving of Kerry's decision not to propose even more deficit reduction. They know he has to tiptoe around -- or leap over -- the Bush fiscal trap. As it is, Republicans are pretending that Kerry's commitment to raising taxes on the wealthy is a tax increase on everybody, which it is not.
In the meantime, the wing of his party that favors more expansive government worries that Kerry's proposals, constrained as they are by Bush's numbers, won't be big enough to excite swing voters.
The internal Democratic argument suggests an odd turn in politics. Once upon a time, Republicans claimed to be the party of fiscal responsibility. But Ronald Reagan and now George W. Bush have made the Republicans the deficits-be-damned party, and it falls to Democrats -- and the unusual Republican, such as this president's father -- to clean up after them.
During a campaign, Kerry will never be able to come up with a fully satisfactory set of trade-offs between taxing and spending. But he can challenge Bush to be honest about his own plans.
Republicans have predicted that Bush will try removing all taxes on investments. He is already committed to creating private accounts within Social Security, which are costly in the short term. Will Bush offset these costs with a consumption tax, or will he just let the deficit get even bigger? Any deficit hawk who whines that Kerry isn't doing enough to reduce the red ink should be brave enough to ask Bush these questions. So should the press.
Republicans can be counted on to trot out their stale talk about "big-government liberals." Kerry should not be as fearful as Democrats usually are of telling a simple truth: that government is sometimes the only instrument available to solve problems that markets cannot.
It's urgent that the country get a handle on its health care system, and reduce the barriers to upward mobility and higher education. Government will have to act, but continuing deficits will paralyze government and cripple our imaginations. Only by making this larger case can Kerry escape the trap Bush has set and prepare the ground for a presidency that is about more than just cleaning up someone else's budget mess.