Dems Divided Over Details on Economy

By E.J. Kessler

Published October 03, 2003, issue of October 03, 2003.
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Voters can be forgiven if they didn’t notice too many differences among the economic policies proposed by the top Democratic presidential candidates at their debate in New York last week.

One guy who was once in the candidates’ shoes didn’t notice many differences, either.

“I was in 39 debates in 1987-88,” former Massachusetts governor and 1988 Democratic presidential nominee Michael Dukakis told the Forward. “I don’t think there’s an enormous amount of difference in what these folks say. They all think [President Bush’s] economic policy is a disaster, which it is. You don’t revive the economy with tax cuts for the super rich.”

Economists, however, say that when it comes to economic policy, the devil is in the details. Several Democratic policy analysts surveyed by the Forward say that there are significant differences among the contenders’ economic policies on issues such as trade, taxes and domestic spending.

Paul Weinstein, a former adviser to President Clinton and Vice President Al Gore who is a fellow at the centrist Progressive Policy Institute, divides the candidates based on their stances on trade policy: Connecticut Senator Joseph Lieberman, Massachusetts Senator John Kerry and North Carolina Senator John Edwards are “for expanding markets” — which Weinstein’s institute strongly supports — while Missouri Rep. Richard Gephardt and former Vermont governor Howard Dean, critics of Clinton-era trade pacts, are in the protectionist camp.

Weinstein said Kerry, Lieberman, Gephardt and Edwards have “fairly detailed plans on the spending side,” while Dean’s plans tend to focus most on health care, but they all “need to be more specific about where and how they will finance these things.” Weinstein, who said he has been consulted by several candidates’ campaigns, said he likes Kerry’s plans to bolster energy independence and Lieberman’s ideas about expanding access to college. He approves of Lieberman’s, Kerry’s and Edwards’s plans for tax incentives for retraining workers and also of some ideas they have to “push new manufacturing partnerships” in cutting-edge industries.

Weinstein reserves his sharpest criticism for Dean, who, he said, “is trying to grab union votes” by sounding protectionist, without thinking about how his trade proposals would “have terrible repercussions for the rest of the economy.”

“I have some concerns about where Howard Dean is going,” Weinstein said. “He was a fiscally conservative governor, but his economic plan does not seem to be mimicking that. He’s not saying how he would pay for spending…. It’s not politically feasible to roll back all the tax cuts. I have some serious concerns about his trade positions, and he doesn’t have much focus on education. There’s a lot of big question marks.”

As a group, he said, the Democrats have neglected an important area of spending: “We do have defense and security needs. The Democrats haven’t made that argument.” While he said that Kerry, Edwards and Lieberman “have room to grow as candidates,” Weinstein does not give the field high marks for painting an overall picture of the economy’s future.

“As a voter, they’re not grabbing me,” he said. “They haven’t framed where they want to take us.”

Brookings Institution economist Henry Aaron, who describes himself as a “hardheaded, softhearted” liberal, worries about what the Bush tax cuts are doing to the long-term fiscal health of the federal government, and so he divided the candidates on the question of taxes. Aaron, who has advised the newest entrant into the Democratic field, retired general Wesley Clark, stressed that he finds the economic plans of any of the top Democrats better than those of Bush, but adds: “I don’t think the Democratic candidates have covered themselves in glory.”

“They’re all trying to attack the president for his irresponsibility, without taking head on the tax cut sales pitch he has used successfully,” Aaron said. He also faulted Kerry and Lieberman, who want to roll back tax cuts for the rich but retain tax relief for the middle class.

“The tax cuts enacted ought to be stopped cold, whether they’re for their guys or my guys,” Aaron said.

Aaron said that Dean’s positions looked promising but needed to be fleshed out better. He called Lieberman’s emphasis on targeting tax cuts to the manufacturing sector to protect jobs “beside the point,” because the long-term trend of job growth in the United States is in the service sector, not manufacturing, and no amount of presidential tinkering will change that.

While Gephardt and Dean have said that Bush’s tax cuts ought to be rolled back completely — Gephardt would reintroduce a child tax credit, estate tax reform and marriage penalty relief later — Aaron criticized Gephardt’s policy proposals, calling his health care plan “so lavish in cost that it would strip the capacity of the federal government to do anything else and leave us in as deep a hole” and describing his labor and trade policies as “retrograde” because “every president since Truman has been for free trade. I don’t think a U.S. president can be protectionist.”

Barry Bluestone, a union-affiliated political economist at Northeastern University and a sometime adviser to Gephardt, thinks quite the opposite: Gephardt, he said, has the best position on trade because unfettered trade in an age when even developing countries, such as China and India, are able to manufacture sophisticated goods is tantamount to rolling back much of the pro-labor legislation, such as the national minimum wage and the National Labor Relations Act, enacted since the 1930s. “How can we have a world where we force companies to live by those standards while others have no standards?” he asked.

Bluestone said the problem with the economy now is that it is growing at between 2% and 3% annually, but productivity gains have been such that business has been able to satisfy demand without adding workers. The cure, he said, is to provide stimulus through more federal funds for nearly bankrupt state governments and a tax holiday on regressive taxes such as FICA. He prefers the approaches of Gephardt, whom he rates best on all the issues; Dean, who has come to sound more like Gephardt on trade, and (while his proposals are only very broadly sketched) Clark.

What about erstwhile presidential candidate Dukakis? He supports his hometown hero, Kerry, voicing his approval of Kerry’s emphasis on infrastructure investments, such as urban transit, high-speed rail and bridge and road repair, because such spending “gets people back to work.” But he admits that, like most Americans, he is “not following these guys day to day.”

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