Deficit Debate Puts Economy Into the Race
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WASHINGTON – The economy took center stage in the presidential campaigns yesterday as Senator Kerry seized on a fresh projection of a record budget deficit as evidence the country is on the wrong course, while President Bush blamed frivolous lawsuits for killing jobs.
The nonpartisan Congressional Budget Office yesterday predicted a $422 billion deficit for 2004, the highest ever. But higher-than-anticipated tax revenues reduced the projected figure by $56 billion from an even worse number the office had predicted in March.
Republicans said the downward revision proves the effectiveness of the Bush tax cuts. Democrats accused the budget office of padding earlier forecasts in a partisan statistical “shell-game.”
And while Republicans argued that the projected shortfall is below the deficits accumulated in the 1980s and 1990s when measured as a percentage of the overall economy, Mr. Kerry stressed that, in absolute terms, it is still the largest in history.
“Only George W. Bush could celebrate over a record budget deficit of $422 billion, a loss of 1.6 million jobs, and Medicare premiums that are up by a record 17%,” Mr. Kerry said at a campaign stop in Greensboro, N. C.
“Today George Bush is celebrating a record budget deficit. W. stands for wrong, the wrong direction for America. I have a plan to restore fiscal discipline, rein in out-of-control spending, and cut the deficit in half in four years,” he said.
But at a campaign stop in Lee’s Summit, Mo., the president portrayed Mr. Kerry as the enemy of small-business owners and the friend of tort lawyers.
“To create more jobs, we must stop the junk lawsuits that threaten small businesses,” Mr. Bush said. “I understand my opponent changes positions a lot, but for 20 years he’s been one of the trial lawyers’ most reliable allies in the Senate.”
He accused Mr. Kerry of being rewarded with millions of dollars in campaign donations from lawyers and drew applause with a veiled reference to Mr. Kerry’s running mate, a millionaire trial lawyer, Senator Edwards, who excelled at winning large jury awards in medical malpractice cases.
“Personal-injury lawyers should not get richer at the expense of hardworking Americans,” he said.
Mr. Kerry also sought to gain from job losses during the past four years. “Because of George Bush’s wrong choices, this country is continuing to ship good jobs overseas – jobs with good wages and good benefits,” Mr. Kerry said yesterday.
But the president stressed that despite a recession, corporate scandals, and a terrorist attack, the economy has started to add jobs again and is growing. The unemployment rate of 5.4%, he stressed, is a point below its peak last summer.
“It’s growing because our workers are great. It’s growing because the small business sector of America is strong. It’s growing because our economic stimulus plan is working,” Mr. Bush said.
The CBO reported that tax receipts for the first 11 months of fiscal year 2004 were about 5% above receipts for the same period in 2003, primarily because of economic growth. More than half the increase in tax receipts was from corporate taxes that increased by $46 billion, or 45% this year, thanks to higher corporate profits. Receipts from individual income taxes rose by $16 billion, or 2.2%, in the first 11 months of the fiscal year, which ends September 30.
Congressional Republicans also welcomed the budget projection and emphasized that it is below historical peaks as a share of the overall economy. The budget office predicted the annual budget deficit to be 3.6% of GDP in 2004 and then decline to 2.8% of GDP next year.
The chairman of the Joint Economic Committee of Congress, Senator Bennett of Utah, stated that the reduced projections were due to “the progrowth tax cuts” enacted by Congress over the last three years.
“As one can intuitively infer, stronger growth in national income due to sound economic policies expands the tax base, thereby increasing the amount of federal revenues pouring into the Treasury. This growth in revenue, in turn, contributes to lower federal deficits,” he said in a committee report.
Meanwhile, House Democrats announced plans to host a forum and release a report next week that will underline the impact of the deficit on young people, called “Reality Bites.”
Calling the deficit “an absolutely unsustainable course for the country,” the senior Democrat on the Senate Budget Committee, Senator Conrad of North Dakota, said the latest CBO numbers are part of a “shell game.”
“The president and his crew overestimated the deficit so that they could assert progress is being made. When in fact if you compare this year’s deficit to last year you see it is the biggest ever, a record budget deficit by almost any terms,” he said.
In a related development, Mr. Kerry ran into controversy after accepting the gift of a rifle from the United Mine Worker of America on Monday at a campaign stop in the coal-mining town of Racine, W.Va.
Mr. Kerry, a self-described gun-owner and a hunter, said, “I thank you for the gift, but I can’t take it to the debate with me.”
His presumed reference to the presidential debates against the president drew an outcry from some conservatives.
On his syndicated radio show, Rush Limbaugh complained, “Can you imagine if somebody gave Bush a gun, a rifle, and Bush says, ‘Ah, this is great! I love guns, you know? You’ve seen me firing guns. It’s just too bad I can’t take this to the debate’? Can you imagine the outcry?”
“He made a poor choice in words. That simply not a statement a true sportsman would have made,” said Ashley Varner, spokeswoman for the National Rifle Association.
Photographs of Mr. Kerry accepting the rifle led some observers to suggest he was accepting a gun that would be illegal under a Senate bill he co-sponsored that bans semi-automatic shotguns.
The legislation bans shotguns with “pistol grips,” while the gun Mr. Kerry accepted appeared to have a standard shotgun grip. Ms. Varner argued the language in the bill was vague enough to include the gun.
“They are so loosely written that they can be interpreted to mean used anything you can use to hold onto the firearm, yet its something Kerry should have well known since he is a co-sponsor of this legislation,” she said.
Meanwhile, Mr. Bush had his own close encounter with campaign trail freebies. At a barbecue near Warrensburg, Mo., yesterday, Mr. Bush was asked if he’d like some Heinz ketchup on his hamburger. He said, “I have got mustard on that, thank you.”