Bush Unveils Economic Priorities President's Proposals Frame Contrast With Rival Kerry, But Strike Some as Timid
By JACOB M. SCHLESINGER and JACKIE CALMES Staff Reporters of THE WALL STREET JOURNAL
WASHINGTON -- Handcuffed by big budget deficits but eager to show voters a fresh economic agenda, President Bush laid out the central economic theme of his re-election campaign: He is pledging to create an "era of ownership" that will include proposals to partially privatize Social Security, and liberalize tax breaks for health care, savings and job training.
Most of the specific White House campaign proposals are likely to be small-scale, and will leave some of Mr. Bush's backers yearning for bolder steps to assuage voter anxiety over issues such as jobs, and lay the groundwork for a sweeping, conservative legacy. Most will also likely just repeat previous proposals, albeit in somewhat revised or expanded form. In large part, the Bush advisers feel constrained by the president's pledge to cut the budget deficit to $260 billion by 2009, down from the projected $445 billion this year. The White House economic team's caution toward new initiatives also reflects the risk-averse attitude of a campaign facing a close election.
The new Bush economic push will, however, set up a striking philosophical contrast with Democratic challenger John Kerry, whose economic plan centers on higher taxes for the most affluent households, and expanding government funding for health care, education, and other areas. The president is arguing that he has a different theory of economic stewardship.
"There's a philosophical divide in this campaign," Mr. Bush said in a town-hall forum at Northern Virginia Community College near here yesterday. "My judgment is government ought to be empowering people by giving them more control over their lives," he added.
This week Mr. Bush will travel to the swing states of Florida, New Mexico, Nevada and Arizona, to promote, among other things, his plan injecting more flexibility into federal job-training programs, by giving workers vouchers and greater choice on where they spend them.
The Bush campaign also unveiled yesterday a television ad titled "Ownership," where Mr. Bush speaks for 30 seconds over pictures of a house, workers, and companies, ending: "Because I understand if you own something, you have a vital stake in the future of America."
While Mr. Bush hopes to turn voters' attention to overhauling their personal finances, his opponent plans to hammer away at what he sees as continuing weaknesses in the economy, under the rubric of alleviating the "middle-class squeeze."
Kerry aides were quick to suggest that Mr. Bush's focus on spreading ownership seemed unlikely to appeal to voters with minimal savings who were more worried about keeping what they have and the slow pace of job creation. And many Democrats are betting that -- with the Dow Jones Industrial Average back below 10000 and the Nasdaq Composite Index at a third of its peak -- many voters are looking for government programs to protect their retirement earnings from market forces, not force a stronger link.
"Talking about an 'ownership society,' shows George Bush continues to be out of touch with the problems families face, and he continues not to have a plan to address them," said Jason Furman, Mr. Kerry's economic-policy director. "We've already seen the beginning of George Bush's ownership society in his first four years, and it looks more like a debt society," Mr. Furman added, referring both to the high level of household debt and government deficits.
Some Bush allies also have misgivings, but for different reasons. "It's still too tepid," Republican Sen. Lindsay Graham of South Carolina said yesterday of Mr. Bush's second-term economic agenda. "These are bold times. Be bold -- like you were in the war."
Behind the president's new, soaring rhetoric lies an intense debate among advisers, supporters, and Congressional Republicans over just how much Mr. Bush can say -- and needs to say -- when he gives his first big campaign address to the nation at the Republican convention in New York.
Several conservatives lately have been pushing for replacing the income-tax code with a flat tax; among the advocates are former top Bush economic adviser and Fed governor Larry Lindsey, and antitax activists Steve Moore and Grover Norquist. But Bush advisers say Mr. Bush won't be proposing a flat tax. For one thing, it would conflict with Mr. Bush's priority of encouraging homeownership, by ending the popular mortgage-interest deduction.
The most sweeping "ownership" idea Mr. Bush has promoted has been an overhaul of Social Security, which has had the same basic funding-and-benefit formula since Franklin Roosevelt designed it 70 years ago -- taking payroll taxes from the current generation of workers and channeling that revenue to the current generation of retirees. Any surplus revenue has been cautiously invested in Treasury securities.
During the 2000 campaign, Mr. Bush suggested that workers be allowed to keep some of their taxes and put them into government-sponsored accounts that could be invested in stocks. As president, Mr. Bush appointed a commission to devise various plans to promote that idea, but the panel split three ways and he never pushed legislation.
Some Bush aides say the president will return to that theme later in the campaign, and at the Virginia event yesterday, he gave his most extensive comments in a long time on Social Security.
"I support the idea of creating a personal saving account for younger workers," Mr. Bush told his audience.
The problem with that idea is finding the money to pay the current generation of retirees, if revenue from current workers is diverted into the workers' own accounts. As a leading proponent of creating private accounts from Social Security, South Carolina's Sen. Graham said he hopes Mr. Bush will promote the idea, which is the single biggest unfinished item from the 2000 campaign platform. But Mr. Graham has been willing to address the $1 trillion transition costs, whereas Mr. Bush has not. Mr. Graham would raise the amount of wages subject to payroll taxes to cover costs. But Mr. Bush has said he won't raise taxes or reduce benefits.
Another Kerry campaign criticism of Mr. Bush's ownership agenda is that it seems largely aimed at benefiting families with extra money to tuck away. "I would argue the middle-class squeeze is not as acute as the Kerry folks assert," replied one Bush campaign adviser. "Most families have room to put a little something away."