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Bush Says Kerry Will Raise Taxes $900 Billion; Kerry Says That’s False

Attack ad revives question of whether Kerry's numbers add up.


Summary

In its first attack ad to hit the airwaves, the Bush campaign accuses Kerry of proposing to raise taxes by $900 billion. Kerry denies that. And Bush’s ad fails to mention that Kerry’s “new government spending” would provide health insurance to more than 26 million who don’t have it now.

But Kerry’s ambitious health-care plan that would indeed cost an estimated $895 billion over 10 years. And Kerry has also promised to cut the current $500-billion federal deficit in half. Can he pay for all that while raising taxes only for the wealthy? Those numbers don’t quite add.

Analysis

Bush unveiled an ad March 11 that claims Kerry plans to pay for “new government spending” by raising taxes $900 billion. The Kerry campaign calls that number “completely false.” Neither side is exactly right. We’ll try to put this in context.

Bush-Cheney ’04 Ad:
“100 Days”

Bush: I’m George W. Bush and I approve this message.

Announcer: A President sets his agenda for America in the first 100 days.

John Kerry’s plan: To pay for new government spending, Raise taxes by at least $900 billion.

On the War on Terror: Weaken the Patriot Act used to arrest terrorists and protect America.

And he wanted to delay defending America until the United Nations approved.

John Kerry: Wrong on taxes. Wrong on defense.

Bush Spin

Naturally enough, Bush’s ad leaves out that the “new government spending” it mentions would benefit millions of Americans who lack health insurance. According to a study by Emory University professor Kenneth Thorpe, which the Bush campaign’s own background material cites as a credible authority, Kerry’s plan would provide coverage for 26.7 million who currently have no coverage.

The ad also goes too far when it says “Kerry’s plan” is to raise taxes by at least $900 billion. Kerry has never endorsed such a figure, and his campaign spokeswoman Stephanie Cutter issued a statement accusing the Bush campaign of using “weapons of deception and distortion” and saying “The $900 billion ad is completely false.”

Well, maybe not completely.

Kerry Spin

Kerry himself issued a statement (see below) in which he didn’t address the $900 billion figure directly. Instead he said, “What’s most interesting about this ad is what’s not in it.” But the same can be said of Kerry’s tax proposals, which leave out many specifics.

The Bush campaign — in backup material issued to reporters — argued that Kerry’s health-care plan and other promised spending proposals are so expensive that only a $900-billion tax increase over 10 years will pay for them while still allowing Kerry to cut the deficit by half, as he has also promised to do.

And in fact, several news organizations have said that Kerry is overpromising, most recently a Washington Post story Feb 29. The Post said Kerry is proposing to spend at least $165 billion more on new programs in the next four years than his tax plan would pay for. Kerry disputed that, saying the Post failed to account for his plan to save $139 billion by repealing Bush’s Medicare prescription drug benefit, and overestimated what Kerry planned to spend — temporarily, he said — to stimulate the economy.

But Kerry hasn’t yet shown in detail how he would close the gap between his spending promises and his somewhat vague promise to repeal portions of Bush’s tax cuts.

Kerry’s health-care plan alone would cost $895 billion over 10 years, according to the Thorpe study, which Kerry has accepted. And it’s not clear how that would be paid for.

Kerry would not repeal the entire Bush tax cut; he’s said he would preserve increases in the per-child tax credit, tax breaks for married couples, and lowered rates at the bottom of the income scale. He also speaks generally about raising taxes on those making over $200,000 a year. But a look at some calculations made recently by the nonpartisan Tax Policy Center suggests strongly that raising taxes only on individuals in that category wouldn’t produce nearly enough to pay for Kerry’s health plan, let alone reducing the deficit.

For example, restoring the top two marginal tax rates to what they were before the Bush cuts would produce only $224 billion over the next 10 years. And even that would hit some people making less than $200,000. The top two rates currently affect those making $174,700 or more in taxable income for a married couple filing jointly, or $143,500 for a single taxpayer. Those income brackets would be somewhat higher in years to come, as they are adjusted each year for inflation.

Kerry might also recoup some additional billions by restoring the estate tax and reversing the new, lower rates on capital gains and dividends. But still, accepting the Kerry campaign’s statement that there’s no plan to raise taxes by $900 billion, voters are left to wonder where the money to pay for Kerry’s health plan would come from.

Pressed on that point, Kerry spokesman Michael Meehan told FactCheck.org: “John’s not the president yet. When he becomes the president he’ll send up a whole budget.” Meanwhile, Meehan said, “We’re not going to get into the back and forth on that.” He also said that the Thorpe analysis “doesn’t take into account any savings,” but Meehan would not be specific about what kind of savings he meant.

John Kerry’s Response:

(The full text of Kerry’s response as issued by his campaign)

“After losing nearly 3 million jobs, watching health care costs rise out of control, turning record surpluses into record deficits, and breaking his own promises on everything from improving schools to making America secure, this President has now decided to launch a negative advertising campaign against me. What’s most interesting about this new ad is what’s not in it. This President can’t talk about his positive vision for America, because at each turn he has put this nation on the wrong track. It’s time he pays attention to that old saying, when you’ve dug yourself into a ditch, stop digging. I am running for President because I want to change the direction of this country. If I’m elected, we’ll create new and better jobs, lower the cost of health care, and get Bush’s runaway deficits under control. What you’re seeing is the last gasp of air from the failed Bush Administration that has no record to run on and nothing but more of the same failed policies to offer the American people.”

Patriot Act Spin

The Bush ad also says Kerry would “weaken” the USA Patriot Act “used to arrest terrorists and protect America.” But that’s a matter of opinion.

Kerry voted for the act and even boasts of drafting some of its provisions relating to money-laundering. But he has also talked of “abuses” of the act by Bush’s Attorney General, John Ashcroft, and has said some portions of the act need changing.

After learning of the Bush ad, the Kerry camp called anew for “reforming” the act: “John Kerry believes it is necessary to scale back several provisions in the Patriot Act and introduce a new law to assure our enhanced security does not come at the expense of our civil liberties, such as more oversight of sneak and peak searches.”

That’s a reference to search warrants that judges can issue in special cases to allow a search without notification to the subject.

Pressed on precisely how Kerry would “weaken” the act, Bush campaign spokesman Steve Schmidt said rolling back any provision of the act weakens it. “That’s our position,” he told FactCheck.org.

 

Media

Watch Bush Ad: “100 Days”

 

Supporting Documents

View an Analysis of Cost of Kerry’s health-care plan, by Emory University’s Ken Thorpe

Sources

Kenneth E Thorpe, ” Health Insurance Reform Proposals of the Democratic Presidential Candidates” Emory University (unpublished paper) 5 Sept 2003.

Jim VandeHei and Brian Faler, “Kerry’s Spending, Tax Plans Fall Short; Review of Proposals Shows Expenditures Exceeding Savings by $165 Billion” Washington Post 29 Feb 2004: A1

Table T04-005, “Marginal Tax Rates –  Options to Repeal Portions of the 2001 and 2003 Tax Cuts Affecting Upper-Income Families  – Revenue Tables – 2005” Tax Policy Center 19 Feb 2004.

Internal Revenue Service, “Revised 2003 Tax Rate Schedules.”