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Kerry Has Own Plan to Lift Economy

Democratic hopeful says he would rescind some of Bush's 'unfair tax cuts' and give $50 billion to ailing states. He also proposes tax credits.

August 29, 2003|Richard Simon | Times Staff Writer

WASHINGTON — Democratic presidential hopeful John F. Kerry on Thursday detailed his plan to improve the economy, proposing to rescind some of President Bush's tax cuts in order to funnel $50 billion to struggling states and to offer tax credits to companies that create jobs.

Speaking at the University of New Hampshire, the senator from Massachusetts blasted Bush's record on the economy, including the loss of more than 2.5-million private-sector jobs during his tenure. Despite signs of improvement, including figures released Thursday showing better-than-expected growth in the gross domestic product, Kerry argued that the nation faces "a fight for our economic future."

His plan to aid states would provide the $50 billion over two years to help them "bridge deficits" that Kerry blamed on Bush policies. Many states, including California, have had to make deep spending cuts in education and other programs because of their financial woes.

Kerry also sought to differentiate himself from two main rivals in the Democratic field -- former Vermont Gov. Howard Dean and Rep. Richard A. Gephardt of Missouri, who have called for repealing the broad sweep of tax cuts that Bush pushed into law.

Like most other Democrats, Kerry attacked many of the cuts as skewed toward the wealthy. But he said: "Some in my own party are so angry at George Bush and his unfair tax cuts that they think the solution is to do the exact opposite. They want to return to rejected old-style policies that eliminate all tax breaks, including those to working people."

He rejected that approach, saying he would keep tax cuts that help the middle class, including an increase in the child tax credit, relief from the tax code's "marriage penalty" and lower income tax rates. "Putting real money into the pockets of the hard-working middle class is true to our principles as Democrats -- and right for the American economy," he said.

Kerry, whose economic advisors include some of former President Clinton's aides, also pledged to cut the federal budget deficit in half in four years.

Earlier this year, many analysts believed that if a front-runner had emerged by this point in the Democrat campaign, it would be Kerry. But as Dean's campaign has caught fire -- in large part because of his staunch opposition to the war in Iraq -- Kerry has found himself fighting hard to break from the pack.

Kerry will formally launch his campaign Tuesday and plans to highlight his national security credentials by surrounding himself with fellow Vietnam War veterans as he speaks in front of the battleship Yorktown in South Carolina.

All the major Democratic contenders have criticized the $1.7 trillion in tax cuts that Bush pushed through Congress, blaming them for worsening the federal budget deficit, which the Congressional Budget Office projected this week would reach $480 billion in 2004.

"Rain or shine, surplus or deficit, George Bush has one answer for our economy: special- interest tax giveaways that are unwarranted, unaffordable and unfair," Kerry said Thursday.

He said he favored repealing the reductions in income tax rates for the top two brackets, affecting taxpayers that earn more than $200,000 a year. He also called for revoking the cut in taxes on dividends.

Dean and Gephardt have proposed repealing all the tax cuts. Among the other major candidates, Sens. John Edwards of North Carolina and Joe Lieberman of Connecticut have favored repealing tax cuts for the wealthiest recipients.

Assessing Kerry's call for retaining some of the tax cut, Don Kettl, a University of Wisconsin at Madison political scientist, said: "Everyone got something in the cuts, and it's always dangerous to try to make a case for taking money away from everyone."

A spokesman for the Dean campaign challenged Kerry to show how he would keep portions of the tax cut and reduce the federal budget deficit without making cuts in critical programs.

Gephardt responded to the Kerry plan by saying: "We're not going to lift this lagging economy by retaining the failed Bush economic policy."

Bush and other Republicans have argued that the tax breaks will increase spending and spur economic growth.

Christine Iverson, spokeswoman for the Republican National Committee, said Kerry "promises to lower taxes, increase spending and be fiscally responsible simultaneously. It's everything but realistic."

In his speech, Kerry proposed giving companies a break on payroll taxes if they created more new jobs than they had in the past. He also proposed expanding a tax credit for college tuition. On the revenue side, Kerry pledged to crack down on companies that move their legal address to tax havens such as Bermuda.

Kerry also said that as president, he would order a "top-to-bottom review" of all trade agreements to "ensure our workers are not victims of unfair trading practices."

To further stress his focus on the economy, he said he would convene economic policy summits once a week during the first six months of his term.

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