Event Summary: Assessing the Merits and Costs of the Candidates’ Domestic Agendas

June 23, 2004

In an effort to get to the substance of the presidential campaign, a Brookings panel this morning took a magnifying glass to the domestic policies of both Senator John Kerry and President George W. Bush. The panelists verdict: the health-care, education, and economic agendas of both candidates aimed for the political center, and the differences between the two were mostly minor and designed to appeal to the candidate’s base. Panelists also agreed that flaws exists in the agendas of both candidates, with neither adequately addressing the larger issue of fiscal responsibility.

Although Bush and Kerry have different approaches to the economy, both Bush and Kerry would increase the federal deficit, according to the Urban Institute’s Leonard Burman. Kerry wants to repeal tax cuts for people who earn more than $200,000—something Bush rejects—but supports Bush’s middle class tax cuts.

“The two plans, in terms of their overall affect on the budget, are not that much more different,” Burman said. “Basically, we’re talking about a trillion dollars in additions to the deficit from the proposals of both camps.”

Kerry has proposed an education trust fund of $200 billion spread over ten years to pay for education reforms and new programs, but his call for $30 billion over ten years to increase teacher salaries would not result in serious raises, according to Brookings Senior Fellow Tom Loveless.

Bush, according to Loveless, is “hanging his hat” on the No Child Left Behind Act, an sweeping education reform initiative that was passed in 2002 and that holds schools accountable for overall student performance. The Act, which enjoyed widespread popularity immediately after its passage (Kerry voted in favor of the bill, although he since become an outspoken critic of its implementation and what he sees as its lack of funding), has seen its support dwindle in recent months. Failing schools are beginning to feel the impact of the penalties prescribed by the Act, and political opponents and many educators have questioned whether the administration is committed to providing schools with enough resources to carry out the bill’s provisions.

Such criticisms of the No Child Left Behind Act, according to Loveless, will work in Kerry’s favor in November, but he reminded panelists that the importance of education as a campaign issue would be trumped by the economy and the situation in Iraq.

“All George Bush really wants to do on education is hold serve,” Loveless said. “If Bush can just continue to push No Child Left Behind and hold it as the centerpiece of his domestic agenda, than he can neutralize the Democrats on this issue and make it a winning issue for him.”

Panelists agreed that the candidates’ health-care proposals provided voters with the greatest choice, and Kenneth Thorpe, a professor at Emory University, suggested that the issue would figure prominently in the campaign. Thorpe said that Kerry’s proposal would provide health insurance to roughly 95 percent of the population by expanding Medicaid and the State Children’s Health Insurance Program (SCHIP), and by also using the tax system and federal law to encourage greater health care enrollment among businesses and individuals. Thorpe praised as innovative a Kerry proposal that would have the federal government assume partial responsibility to pay for the health care coverage for workers with catastrophic illnesses. To qualify for the program, businesses would have to extend health coverage to all their workers. He added that Kerry “provides a very simple way of enrolling low-income and moderate income adults and children in the Medicaid and SCHIP.”

Bush’s plan, which Thorpe estimates would cover 85 percent of citizens, would use a refundable tax credit and create tax deductions for expensive private health plans. But Thorpe said that Bush’s plan to reduce health care costs through his medical malpractice reforms would only cut those costs by .5 percent.

Jack Meyer, president of the Economic and Social Research Institute, said both Kerry and Bush needed to refine their health-care proposals. “The overall problem is that Senator Kerry and his advisors may not have always selected the best means to get to good ends,” Meyer said. He noted that Kerry’s plan to rearrange federal and state responsibility for health care coverage “is very complicated and it’s going to set off some concern in the states.” Meyer said Bush’s $1,000 tax credit for individuals was too small. The President, Meyer said, should “scale up his set of plans, get a bigger vision, and a bolder plan.”

Putting aside the particulars of each candidate’s domestic agendas, panelists were close to unanimity in their contention that the United States’ burgeoning federal deficits were not seriously being addressed by either candidate. Both Bush and Kerry have called for a freeze on discretionary spending outside of homeland security and defense, but Kerry would exempt education and allow for such spending to be adjusted for inflation.

Brookings Senior Fellow Isabel Sawhill said that the Administration’s budget is “based on unrealistic assumptions on the cost of war, the need to fix the alternative minimum tax, and other issues.” In addition, Sawhill said Bush’s continued push for tax cuts and his “miserable record on curbing spending” didn’t bode well for deficit reduction.

She was critical of Kerry as well, noting that his revenue savings would likely be dwarfed by his proposed additional spending on both education ($200 billion) and health care ($700 billion). Moreover, Sawhill said, these price tags “are probably on the low side.”

Sawhill said that the time had come for serious fiscal responsibility and that failure to address the deficit could result in “a financial catastrophe.”

Bruce Bartlett, a senior fellow at the National Center for Policy Analysis, agreed. “I don’t know where, when, or how it’s going to happen,” Bartlett said, “but at some point there will be a wake up call…If the fiscal situation is as bad as I think it is, the time may be coming that we need to start seriously considering thinks like a value-added tax.”

Representatives from both campaigns were on hand to defend their candidate’s plans. James C. Capretta, an adviser for the Bush campaign, applauded President Bush’s “laser-like focus” on job growth and said that his spending plans “show restraint.”

“I don’t think Senator Kerry fully accounts for all of the promises he made throughout his campaign,” Capretta said, arguing that there was a one trillion dollar gap between Kerry’s proposals and revenue projections.

Kerry’s Economic Policy Director Jason Furman rejected Capretta’s estimates, saying that Kerry has promised to abide by Pay-As-You-Go (PAYGO) budget rules and “will pay for all of his proposals.” Furman said Bush’s tax cuts provided the greatest insight into the differences between the two candidates. “They have dramatically failed to work,” Furman said. “There’s no evidence that the tax cuts are working and that we should be continuing them as a centerpiece of our macroeconomic strategy.”

In many respects, the discussion over the discrepancy between the two candidates’ plans was somewhat of a moot point, given the difficulties both would likely encounter in Congress.

“Neither candidate would be able to achieve his objectives in full or anything approaching it in full,” said Brookings Senior Fellow Thomas Mann. “We would operate politically in a much narrower policy arena.”