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| SEPTEMBER
2004 :: COVER STORY : LAW & POLITICS
Election
2004: A WALL STREET JOURNAL ROUNDUP JOBS
& THE ECONOMY COLLEGE FINANCE HEALTH
CARE JOBS
AND THE ECONOMY
The second force is peculiar to 2004. With other parts of the country still evenly divided between the two parties, this year's election could be decided in a few swing states in the industrial Midwest. And in those states, hit hardest by the loss of manufacturing jobs and concerns about offshore outsourcing, the economy is the largest worry for voters. The third is the high price of oil, which economists say is sapping consumers' purchasing power and putting the brakes on an economic recovery that seemed to be accelerating as recently as mid-summer. Mr. Bush argues passionately that the economy is strong and that the economic recovery is on track, despite recent numbers showing slowing job growth. He and his advisers point, for example, to decreases in unemployment over the past year and an increase in the number of people who are going into business for themselves. They argue that the president's economic policies-tax relief for individuals, investors and businesses-have helped the country weather a series of economic shocks: the bursting of the stock market bubble, the 9/11 terrorist attacks, a spate of corporate accounting scandals and the war in Iraq. For his second term, the president is promising to create an "era of ownership" that he says would give people more control over their money and their economic choices. For instance, he proposes to partially privatize Social Security, so that workers can manage some of their own retirement savings instead of turning it over to the government. He also favors giving vouchers to displaced workers and allowing them to choose retraining options outside of federal programs. On offshore outsourcing, Mr. Bush stands by his free-trade position. He says the tax cuts he has enacted for businesses give them more resources to create jobs in America. Moreover, he says, open trade encourages other nations to set up operations here and hire Americans. Mr. Kerry's economic campaign focuses on the theme of a "middle-class squeeze"-a combination of lower incomes, job insecurities and higher college and health-care costs that he says is depriving many middle-class Americans of the benefits of economic recovery. He plans to reduce the budget deficit by restricting new spending, cutting back subsidies to corporations and rolling back some of the Bush tax cuts on very wealthy Americans. More fiscal responsibility, he says, would free up money to invest in job-training initiatives and advanced technologies that could help revive the manufacturing sector. These measures, he says, would also cover the costs of tax cuts for the middle class to help them afford health insurance and college tuition. To counter the flow of jobs overseas, Mr. Kerry is proposing a business tax credit for any net new jobs created in the U.S. by businesses. He would also end a tax law that he says encourages companies to move operations abroad. JOBS
& THE ECONOMY COLLEGE
FINANCE One bright spot: A record $105 billion was available in student aid in the 2002 academic year, the latest for which numbers are available. A growing share of aid is in loans, however, and it is less generous than it once was, even for students who receive federal grants. Mr. Bush argues that the federal government hasn't any control over college costs-that's up to state governments and private institutions, he rightly points out. Generous tuition tax credits that are available to many middle-income families generally aren't included in analyses of the cost of college, even though they reduce the final bill, the Bush campaign adds. And it argues that most students don't pay full tuition-over 90% receive some financial aid, much of it from the federal government. In January, the president proposed modest expansions in those government aid programs. He proposed a $1,000 increase in Pell grants to about 33,000 low-income students who take certain college-prep courses in high school. He also proposed allowing freshmen to borrow up to $3,000 a year from the government, up from the current $2,625 limit. The president's predicament is that student-aid programs are so huge that even minor changes are expensive, and the White House must make cuts in other programs, or raise taxes, to pay for them. Mr. Kerry is proposing a $13 billion, 10-year program to partially repay the college costs of students who take public-service jobs after they graduate. He is promising up to $4,000 in new income-tax credits to" families having trouble with the costs of college and to young people who are paying their way through school." And he is pledging $25 billion to states to help support their universities in tough budget times. Mr. Kerry plans to pay for much of his education program by rescinding President Bush's tax cuts for upper-income earners. The public-service program would be paid for by trimming the profit that banks earn when they make and service federally subsidized loans. JOBS
& THE ECONOMY HEALTH
CARE Last year, insurance premiums rose 14%. That increase priced many people out of the market for coverage. It also led many companies to trim health benefits. As a result, the ranks of the uninsured continue to grow and now top 43.3 million. Mr. Bush proposes $90.5 billion in tax incentives over a decade for lower- and middle-income people to purchase insurance, though the incentives might not keep pace with cost increases. To increase employer-based coverage, the president supports giving small businesses greater access to purchasing pools to reduce costs. Mr. Bush argues that one cause of high insurance costs is excessive malpractice awards, which drive up premiums and force some doctors out of business. He has pushed for a $250,000 limit on "pain and suffering" damages awarded in malpractice cases. The Senate narrowly defeated a measure that would have brought the proposal to a vote. Mr. Kerry opposes caps on malpractice awards, saying they would hurt people who have suffered the worst injuries. To cut down on the number of lawsuits, however, he would require states to make mediators available before a trial. Also, he wouldn't allow people to file malpractice suits unless a medical specialist decides a reasonable claim exists. Mr. Kerry says he can cut current insurance costs by two-thirds for small businesses through three measures: making the federal government cover part of the most expensive health-insurance claims; setting up a pool to allow businesses to buy into the insurance program that's available to federal workers; and offering tax credits to businesses to help them pay for covering their employees. To assist poor Americans, he would use federal funds to expand Medicaid and other state programs. JOBS
& THE ECONOMY ENERGY But Americans' concerns about energy extend well beyond the local gas station. The war on terrorism has led many to talk about reducing U.S. dependence on foreign sources of oil and to explore alternative energy sources. The popularity of SUVs has stirred up debate about fuel-economy rules, and energy issues are intertwined with questions about conservation of natural resources. In broad terms, Mr. Bush's main answer to high oil prices is increasing supplies. Mr. Kerry's approach emphasizes reducing demand. But the energy policies of both campaigns are also shaped heavily by electoral politics-particularly the local interests of the states that are considered toss-ups in the election. The emphasis by both candidates on agriculture-based fuels, for example, is aimed at wooing voters in closely divided farm states such as Iowa and Missouri. Mr. Bush hopes to keep gasoline prices low by pushing Congress to pass his energy bill, which stalled in Congress last year. The president blames Mr. Kerry for leading the fight in the Senate against Mr. Bush's plan to drill for oil in the Arctic National Wildlife Refuge. Mr. Bush also wants to encourage drilling for natural gas in sensitive areas of the West, including under the Rocky Mountains. Meanwhile, the president has proposed a $1.2 billion initiative to develop technology for hydrogen fuel cells to power cars, homes and businesses. He also says he wants to toughen fuel-efficiency rules incrementally over the next few years. Mr. Bush says his Clear Skies plan would reduce emissions of three pollutants-sulfur dioxide, nitrogen oxides and mercury-by 70%and trim costs associated with the Clean Air Act. Mr. Bush's campaign Website also touts his efforts to tighten diesel-emissions rules. Mr. Kerry's advisers say he would be more willing than Mr. Bush to persuade Saudi Arabia to boost oil production and help easerecord-high oil prices. They also blame Mr. Bush for Middle East instability and hostility to the U.S., and criticize the close ties between the current administration and the oil industry. Mr. Kerry has advocated imposing sharply higher fuel-economy standards on car companies. Such a move, he says, would save two million barrels of oil a day. Critics say it would force high costs onto U.S. automakers and hurt their competitiveness. Mr. Kerry champions hydrogen as a clean and reliable source of energy available domestically from farms, wind, solar energy, hydro-power and geothermal sources. He wants a national market for electricity produced from renewable resources and hopes to see 20% of U.S. electricity generated from renewable sources by 2020. He would invest $10 billion in "clean coal" technology. He would create an "Energy Security and Conservation Trust Fund" designed to encourage the development of technologies that could cut U.S. dependence on foreign oil. JOBS
& THE ECONOMY FOREIGN
POLICY After taking pre-emptive action against Iraq in 2003, Mr. Bush is taking pains to re-establish and strengthen international alliances. Mr. Kerry, who has spent 18 years on the Senate Foreign Relations Committee, uses his stump speeches to call for global cooperation and international involvement in U.S. efforts. Mr. Bush has made the Middle East the main focus of his foreign policy, and rebuilding Iraq into a free society is a White House priority. The president has asked Congress to double the budget of the nonprofit National Endowment for Democracy to develop free elections, markets, press and labor unions in the Middle East. While Mr. Bush's "forward strategy of freedom" to promote democracy continues to drive his administration, his actions now are tempered with an effort to shore up alliances, including with the United Nations and NATO. He has gotten NATO to agree to help train Iraqi security forces. At the same time, he has announced plans to shift U.S. forces to adjust to the war on terror, including cutting troop levels in Europe. Mr. Kerry wants to base his presidency on "a bold, progressive internationalism." He has called for Mr. Bush to work on new alliances while restoring old ones. He says he would treat the U.N. as a full partner in issues such as nuclear proliferation, AIDS and the Middle East. In the Middle East, Mr. Kerry says he would work to aid moderate Muslim leaders in creating more open societies. He says he wants to help human-rights groups, independent media and labor unions to build a grassroots movement that could compete with radical Islamic groups. Mr. Kerry, who initially backed the war against Iraq but then criticized Mr. Bush's handling of it, believes the U.S. needs a broader coalition of support in Iraq. He says he would work with U.N. leaders, drawing countries into U.S. efforts and giving them lead roles in rebuilding Iraq. He wants to transform the international military presence in Iraq into a largely NATO force led by American commanders. JOBS
& THE ECONOMY |
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