On Sat, 24 Jul 2004, Michael Perelman wrote:
> We could concentrate on the issues if Kerry separated himself from Bush
> on any.
Actually Kerry's class message as laid out the FT article below is kind of perfect for drawing a sharp line within mainstream discourse. It's just that he has no charisma and has so far shown no ability whatsoever to define himself in the media. In electoral terms, it's not the message, it's the messenger who sucks.
Although to be fair, so far he has been bulletproof to attacks, just as advertised. And this is no small consideration. Dukakis was up by double digits in the summer of '88 and was destroyed by attack ads. Kerry has faced a much bigger barrage much earlier in the campaign when he was more undefined. And he's still pretty much unscathed. A lot of that is the revolution in internet fundraising. But a lot is the candidate as well: long service, high name recognition and very little controversial action in the last 15 years -- which is why they have to go back to the early 70s and 80s to get anything juicy at all.
In other words, his boringness is his virtue as well as his vice.
Michael
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Financial Times; Jul 21, 2004
THE AMERICAS: Kerry taps into unrest of middle class over rising costs
By Christopher Swann
"It has been as if Santa Claus drops a load of presents down the chimney, then sneaks back in through the door and takes everything away again," says Silas Ferroll, a factory worker in North Carolina.
Mr Ferroll is one of many Americans who feel their tax cuts have been offset by the rising cost of healthcare and education. With unemployment receding as a hot political topic, rising expenses for middle-income Americans have become a central theme of John Kerry's presidential campaign.
No speech by the Democratic candidate is complete without a paean to the middle classes, and Mr Kerry has pledged to bring down the price of health insurance and university tuition. To do so he is prepared to shift part of the tax burden back on the top 3 per cent of earners who have benefited under President George W. Bush.
So is Mr Kerry's sympathy for middle-income families justified and would his plans help?
Most economists say the Bush years have been far from glorious for middle-income Americans and some - though not all - of the blame can be pinned on the president.
First, the earnings of the average American family have been rising much more slowly than the highest incomes. A household close to the median income of between $40,000 to $50,000 (E32,160-E40,200, £21,400-£26,750) has seen its income climb by just over 2 per cent in real terms since Mr Bush became president. By contrast, during the first three years of former president Bill Clinton's second term, between 1997-2000, the median household income rose by 6.1 per cent in real terms to $43,848. A family on $250,000 has done much better under Mr Bush, with wages and income from capital both rising by closer to 6 per cent.
The Bush tax cuts have helped out middle-income families. Most have benefited from the lower marginal tax rates but those with children have gained even more due to the rise in the child tax credit from $500 to $1,000. A middle-income family with two children has seen its federal tax bill more than halved.
However, "the US television sitcom family of a couple and two kids are now in a minority", says Richard Cogan, an analyst at the Centre of Budget and Policy Priorities, a fiscal think-tank.
Just 7 per cent of the US's 143m "tax paying units" fit into this category - compared with 26 per cent who are single and 16 per cent who are married without dependent children. Middle-income couples with no children have seen a more modest gain, with the tax bill falling by 18 per cent to about $4,400.
High-income families with no children have seen their tax bill fall by a similar magnitude, resulting in a bigger dollar gain of $8,598 for a family on more than $250,000, against $963 for a middle-income family. The top 1 per cent of earners have received an average tax cut of $35,000.
Although the tax gains of middle-income families have been significant - compensating for weak earnings growth - the additional spending power has frequently been chipped away. Those with children have faced a steep rise in tuition fees. The cost of a four-year degree at a public university - even after tax credits and grants - has risen steeply in recent years.
"The financial problems of state governments have fuelled a swift rise in tuition fees over recent years and this has been hard for middle-income families whose wages have been only creeping higher," says Sandy Baum, professor of economics at Skidmore College in Saratoga Springs, New York.
Other costs of middle-class living have also outpaced earnings growth.
"It is not just that health-insurance premiums have been rising but the amount most people are having to pay for health costs before the insurance company cuts in has also been climbing," says Gary Claxton, a vice-president of the Kaiser Family Foundation, a think-tank. "The result is a fairly dramatic rise in the amount people are having to find out of their own pockets for healthcare."
Add in the rising cost of petrol and a middle-income family whose children have left home are barely 1 per cent better off since Bush came to power, according to estimates by the Brookings Institution, a think- tank. Mr Kerry's plan is a politically shrewd combination of tax cuts and benefit increases. By using tax credits to help the middle class, he is able to claim that he will both cut taxes and promote social welfare without pushing the deficit higher.
"This is a very shrewd way of dressing up a Democrat agenda in Republican clothing," says Bob Litan, a Brookings senior fellow. "It is a powerful message if he can get it across effectively."
Mr Kerry said recently: "Under my plan 98 per cent of Americans and 99 per cent of American businesses will get a tax cut."
On education, he proposes extending tax breaks for college tuition by providing credit for $4,000 of college tuition a year. His tax plan attempts to bring down the cost of health and education to middle-class families by revoking tax cuts to the top 3 per cent of US earners with incomes over $200,000.
On health, Mr Kerry offers "reinsurance" for private health plans, with the federal government picking up the tab for 75 per cent of medical bills exceeding $50,000.
Removing these ruinously large bills from the insurance pool would drive down health premiums by as much as 10 per cent, health experts estimate.
Republicans say returning the highest rate of tax, capital gains tax and dividends tax to pre-Bush levels would undermine entrepreneurialism and cost jobs.
"[Kerry's] class-warfare rhetoric would really hurt the economy," Don Nickles, a Republican senator, said recently.
But most economists say the direct effect would be higher disposable income for all but the wealthiest Americans.
"Middle-class families would be better off under Kerry, since federal resources would be diverted away from tax cuts for ultra-high earners into making health and education more affordable for the majority," says Peter Orszag, of Brookings' tax policy centre.
© Copyright The Financial Times Ltd