Arnold Kling  

The Budget Issue

Telephone Fees... Overspending and Obesity...

How does John Kerry reconcile his spending and tax proposals with his promise to balance the Budget? The Washington Post reports,

Kerry says he would offset the cost of those programs with cuts in federal contracting, some agriculture subsidies and "out-of-control administrative costs" in the government. Other savings would come from a revamping of the student loan program, a commission to cut "corporate welfare" and the elimination of some missile-defense and other military weapons programs. Assuming all those savings materialize, the tax cut and spending proposals could still add as much as $1.3 trillion to the deficit over a decade.

That total is close to the bottom line of Bush's plan, which could add about $1.35 trillion to the deficit.

...[President Clinton's former staff chief Leon] Panetta offered another defense of Kerry: Do not believe all that he says. In 1992, Clinton pledged to tackle the deficit with some questionable proposals, Panetta said. Once in office, he stuck to that pledge far more strictly than the myriad campaign promises he laid out, pushing through a politically painful package of tax increases and spending cuts that helped bring the government into the black for four straight years.

"I didn't believe Clinton's numbers, either, when he was running," Panetta acknowledged. "But what was passed was not what he campaigned on."

For Discussion. When it comes to the Budget, are we better off with candidates who keep all of their promises, or with candidates who will pass something other than what was campaigned on?

Comments and Sharing

CATEGORIES: Fiscal Policy

COMMENTS (15 to date)
Jervis Ninehammer writes:

We're better off with candidates who keep most of their promises, because this means they have personal integrity. Bush has failed on this count, because he pledged to keep spending down and has not done so. We'll have to see whether Kerry keeps his promises if he's elected.

Brad Hutchings writes:

Arnold, I am more and more convinced that thoughtful economists and other experts need to find ways into the ears of politicians so that they can influence them with sound thought once they are elected no matter how they manage to get elected.

Look, I have real problems with W, and they are in no way the typical problems that people have with W. Probably just the opposite... Yet as I watch this Swift Boat Veterans thing unfold, it doesn't bother me that this is the issue that the public can't get enough of despite how inconsequential it is in and of itself.

While Kerry is realing from this, we ought to be talking about how a flat tax or consumption tax would be better than the intricately coercive so-called progressive income tax. We ought to be talking about comparative advantage and making the case why outsourcing is not just localized greed en mass. We need to be making the case for immigration (even of low skilled transient labor) and free trade. Can't anyone remember 15 years ago when one couldn't buy decent fruit in the winter months? Now, with liberalized trade in our hemisphere, we get great fruit year round.

Economic theory is not going to win or lose this election. We need to recognize other things that make a difference and line up to influence the economic theory for the better whatever those things might be and whoever they put into power. We have to win the debate despite who wins the election.

Lawrance George Lux writes:

Honest Candidates do not get elected. Here is what I see economically:
1) The Budget must be balanced--within the next administration--or the Dollar will resemble the Peso.
2) The Trade deficit will have to be eliminated, by taxation of Consumers who buy foreign products.
3) Business taxes will have to be increased to balance the Budget, entailing Those here with dreams of early Retirement to sadly drift back to work.
4) The Federal Government will have to be dissected, and useless by-products eliminated. I mean a Downsizing of the Workforce of 100,000 inside the next administration.


Ian writes:

How many candidates keep all of their promises exactly?

Jason Ligon writes:


That is gloomy. Why the big hubbub on the trade deficit? The fix would be much worse than the problem. Also, raises in business taxes will just be passed to consumers as higher prices. Why the preference for that mode of taxation?

Patrick R. Sullivan writes:

"...another defense of Kerry: Do not believe all that he says."

Well you couldn't, unless you were Winston Smith.

Lawrance George Lux writes:

It is the Trade deficit which is going to destroy the Dollar even worse than the Government borrowing. Americans have to learn that they don't buy, if they don't produce. Foreign multinationals have already purchased the greatest part of what they wanted of American capital, and are currently buying Treasuries in huge amounts. When they stop buying those Treasuries, if the Government continues to spend, then the Dollar will drop through the floor. The Mexican Peso was 14:1 in March, it is now 11.25:1 and heading down. Those Treasuries hit the Open World Market in heavy numbers, then We will be down to 4:1.

Grow up, and talk like an Economist. Kerry or Bush would need no defense, if their economic policies fit within any rationale framework. Bush is going into the Campaign not mentioning about $100b of Deficit. He does not mention the drop in Tax revenues collected since the June drop. He does not mention that his own Staff has revised the Cost of the Proscription bill upwards twice already, and if they are to keep it within the forecast, will have to delay implementation until 2009.

Kerry will not admit there will be no Savings for further Spending, and that Services will have to be cut. He will not admit that only way to balance the Budget is to freeze Spending. He will not reimpose the Business taxes of the 1990s to fund the excess Spending.

Do not say that either are honest, for the very words are a Joke. lgl

Kelvin 2.7 writes:

Rationalizing the tax system with a consumption tax or a VAT makes sense from a macro economic perspective, but will never happen while members of Congress sell their votes to the highest bidder. The number of honest politicians in Washington could be counted on the fingers of both hands. However, this does not mean that American politicians are more dishonest than their foreign counterparts. Likewise, the question should be which currency will provide the ultimate hedge against dollar weakness.

Mcwop writes:
Kerry will not admit there will be no Savings for further Spending, and that Services will have to be cut. He will not admit that only way to balance the Budget is to freeze Spending

Dead on. I might add for anyone to balance it the rich need to get rich - and fast.

David Thomson writes:

George W. Bush leaves much to be desired regarding economic matters. However, John Kerry almost certainly would be far worse. It’s a matter of the lesser of evils. The current incumbent of the White House also doesn’t make up fantasies about spending Christmas 1968 in Cambodia. President Bush is a more trustworthy individual.

William Woodruff writes:

A great question to propose. Yes we are better off with candidates whom keep all of their promises.
However, not a single one of the two major candidates are willing to tell the American people the truth about the necessary belt tightening and change required to right this enormous vessel.

Honest politicians are similar to the proverbial pot of gold at the end of the rainbow. Lovely to envision, yet impossible to find.


Dez Akin writes:

We're most assuradly not better off with candidates that keep their promises, because they certainly wouldn't get elected if the promised to pursue good policy, and we don't want someone promising populist policy to keep promises if they get elected. The electorate is not that savvy.

As to the notion that Kerry would be worse than Bush on economic matters with respect to budget deficits, that might be distantly plausible if we had a Democrat congress, but we don't and so it takes off like a lead balloon.

Dave Sheridan writes:

In a perfect world, a candidate who means to stick to his promises is preferred, but we live on Earth. Bush has been a spendthrift domestically, which is a big problem. The argument for Kerry, even for fiscal conservatives, is exactly that he won't be able to keep his promises, given a likely continuing Republican majority in both houses of Congress. Gridlock may be a rational vote. If, as some have suggested, voters tend to vote their hopes, and not their rational expectations, a promise-everybody-everything platform has some real ballot box appeal. (see this, for example) What would help the public (but may not help the candidate) would be a statement of priorities. If, for example, once in office and it's obvious that something has to give, will a candidate promise to hew strictiy to his budget promise, or to his spending promise, or neither?

Tom Kaminski writes:

It seems to me that George Bush actually kept most of his campaign promises. I do not recall his saying that he would keep spending down--remember the surplus? No one was talking about limiting spending. I recall 3 promises: to cut taxes; to pass education reform; and to deal with the high cost of drugs for seniors. Bush also generally seemed like a free trader, and I believe he said that he wanted to expand free trade agreements. In this last point he has failed--and the steel tariffs, etc. are major violations of principle. But overall it seems to me that he kept more promises than most presidents. And quite frankly, I don't approve of two of those--federal school funding and the new drug entitlement. As for the larger question--is it better to keep or not keep promises--truth is always preferable to the cynical manipulation of public sentiment. tk

mrkmyr writes:

The question misses the point. Whatever a Presidential candidate promises, they do not have to the power to enact it unilaterally.

If Kerry is faced with a Republican congress. It is unlikely they will go along with all of Kerry's spending proposals. In return, he will refuse to make big tax cuts permanent.

Clinton did not just propose less spending, he had to compromise with congress.

Bush does not have the luxury of blaming the other party for a lack of fiscal rectitude.

Whould we be better off with candidates who keep their promises? We would be better off with an electorate that didn't vote for the person who lies to them (or realizes there is no free lunch).

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