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Wednesday, May 05, 2004

Is Kerry too moderate?

When I first read the section of Monday's Wall Street Journal interview quoted below, my first reaction was that Kerry sounds dangerously moderate. Re-reading it today, I can't find that much to criticize. I think the case for a more balanced budget has become stronger over time, because of the retirement of the baby boomers and the coming shortfall in Medicare, and also because of the unsustainable trade deficit ($542 billion in 2003). So, I guess I can't complain that Kerry emphasizes balancing the budget.

I suppose Kerry is also right that the lesson of the 1993 Clinton health fiasco is that the best way to increase health coverage is by expanding current programs (Medicare and Medicaid/SCHIP) to cover more people, rather than a radical revamping of the whole system. At least that's what I assume Kerry is getting at (I'm going to look more closely at his health care plan and independent analyses soon).

But I still do have some complaints. The whole point of balancing the budget is to increase national savings, in order to spur investment in new factories and offices, new equipment like computers and telecommunications, more R&D, and so on. So there's no point in balancing the budget at the expense of government investment in infrastructure, scientific research, and education. Unlike Clinton, who was at pains to make this argument in 1992, Kerry seems to be running away from any talk of "investments."

THE WALL STREET JOURNAL: ...How do you locate yourself and what your party did wrong on economic policy in the past, what it has done right, what you would do differently?

SEN. JOHN KERRY: .... I have historically always been what I would call a responsible, thoughtful Democrat who respects the laws of economics, and how money works, the psychology of the marketplace, the importance of confidence and fiscal responsibility. And from the moment I arrived in the Senate in 1985, I was one of the first three Democrats in the first days, with (Senators) Fritz Hollings, and David Boren, Warren Rudman, Phil Gramm, to be an original author and sponsor of Gramm-Rudman-Hollings (bill to curb government spending). It wasn't enforced. It didn't do the job. So in '93, when Clinton came along, I was one of those who pushed hard for the deficit reduction act. And in '97 I pushed hard for the compromise (on a balanced-budget agreement).

.... So I put myself in the responsible, open up markets, continue trade, trade responsibly, but be fiscally
responsible. I think you've got to send Wall Street the right signals about your fiscal policy. I think the
marketplace needs to have confidence that you're not going down some hole that increases our reliance on foreign debt...

WSJ: When Clinton ran in '92... he gets to office and says the deficit's worse than I realized. He ends up paring back his investments, sticking with his deficit-reduction goals.... When you envision what the first year or two of a Kerry presidency would be like, who's going to be more disappointed, (former Treasury secretary) Bob Rubin or (AFL-CIO president) John Sweeney?

KERRY: I've already been pretty realistic and pared back some of my proposals. I think that's a strong indicator of what I'm going to do. I mean I've imposed self-discipline in a campaign. When have you ever heard a presidential candidate say "I'm going to impose pay-as-you-go and we're going to live by pretty strict set of fiscal rules?" Now I've even shown how I'd pay for it....

Now I don't want the Canadian health-care system. I have a free-market choice-oriented system based on market principles. But it's got very powerful incentives in it. For people to behave a certain way, and differently. I would think American business would jump up and down and welcome what I'm offering. It's an enormous reduction in the cost of doing business. It will significantly make our companies more competitive. It significantly leaves total choice to people. It's not a government mandate.

I mean, I've learned the lessons of '93. I didn't even sign on to the Clinton (health plan) in '93. I looked at it and said "Whoa. Too many boxes. Too bureaucratic. Too much government." And I worked very hard with a moderate group of people. (Senators) Bill Bradley. John Chaffee. Bob Dole.... We worked hard to come up with an alternative proposal. Had Clinton been willing to accept it, we would have had 97% of America covered last year... I don't know how much you've read of my plan... But I've tried to make it market-based and thoughtful. I haven't met a company that hasn't said "Wow, you'll take 75% of the cost of my catastrophic cases off my back, and all I have to do is pass the savings on..." I personally talk to executives everywhere I go, in New York or elsewhere. They say, "spectacular."

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