Kerry's Voodoo Economics
Jan Larson
March 12, 2004
Senator John Kerry has all but clinched the Democratic nomination for President. Given his fellow Democrats' proclivity to join him in simply lambasting President Bush's policies and accomplishments during the campaign, he has not had to subject his solutions to the nation's "woes" to scrutiny. Now, however, it is time for Kerry to step up to the plate and face a few fastballs. Unfortunately for Kerry, his positions on taxes, business and employment can result in nothing but a swinging strikeout.
Two of the underlying certainties that must form the foundation of sound economic and employment policies are that in the long run, economics will always win, and that protectionism will always fail.
Kerry's proposals indicate that he believes economics can be defeated and protectionist policies can succeed. He is wrong and if his proposals come to pass, American workers will be the ones left holding the bag.
Kerry's list of goals [1] include the repeal of President Bush's tax cuts for the "wealthy" and to "invest" in education and health care. Kerry also claims that he will "fight his heart out" to restore the three million jobs (the figure commonly cited by the Democrats) "lost" by the Bush administration.
Because Kerry thinks he can defeat economics, he may very well think raising taxes will create jobs, but the immutable laws of economics dictate that taking money out of the economy, especially from the people that create jobs will not help Kerry meet these goals.
How many people making $50,000 or less per year employ others? Very few. How many making $300,000 or more employ others? Most of them. I recently heard an advertisement for a local paint and body shop that was opening a fourth location. I don't know the owner of this particular small business, but I would certainly estimate that he might very well be one of those "wealthy" targeted by Kerry. How much more taxation would it take before such a business owner would decide opening a fourth location and hiring 8 or 10 employees isn't worth it?
Kerry plans to "invest" the windfall from the wealthy toward education and health care. For those readers unfamiliar with the terminology of politics, in this instance "invest" means "waste."
While campaigning in Iowa, Kerry explained what people want. "They're all asking for world class health care at a price they can afford. And that's not too much to ask for." No, it is not too much to ask, but it is impossible to get, much like the five-year old that asks for ice cream for dinner. It defies common sense that healthcare costs can be kept "affordable" for everyone, while feeding a bureaucracy to control and administer it and keep it "world class." Kerry's idea of affordable health care for everyone can certainly not be world class as we know it and, in the final analysis, cannot be affordable. That is, we'll get what we pay for.
Kerry's ideas of "investing" in education include tax credits (an "after school" tax credit), tax credits (a "college opportunity" tax credit) and another government "trust fund" (education trust fund). All are doomed to failure, but not before American taxpayers spend billions. The real educational problem in America is not at the college level (excessive liberalism on many campuses aside), but at the primary and secondary level. A much simpler and far more effective solution to America's education problems would be to give parents a choice as to where their children go to school.
Kerry plans to impose protectionist measures that will drive up the cost of government, raise taxes and drive businesses out of business or out of the United States entirely. The Senator apparently didn't study the economic disaster implemented in California under fellow Democrat, Governor Gray Davis.
Kerry wishes to award federal government contracts to American workers. This sounds good until one realizes that some of government work such as entry-level administrative functions, data entry, etc. may be done just as efficiently and at much lower cost by outsourcing. This is a fact, but is not something that any Democrat would admit. In the mean time, the cost to taxpayers would increase.
Kerry proposes extending and improving unemployment insurance, obviously extracting the funds for this "improvement" from American businesses.
Kerry also wants to raise the minimum wage and index it to inflation. The minimum wage is, in itself, inflationary. Raising the minimum wage serves only to cut off opportunities for entry-level workers, make American products less competitive on world markets and, worst of all, costs American jobs. Not only that (as if that isn't enough), but those at the bottom of the economic ladder remain at the bottom of that ladder.
Kerry must think he's on the World Poker Tour if he believes that raising taxes, costs and regulations for businesses will assure a better environment for America's workers. How many companies may just call his bluff and move operations to a more favorable business climate? Those with international operations might very well be tempted to take all of their jobs elsewhere.
Don't be fooled by John Kerry's economic policies. They aren't limited to just within the borders of the United States. Kerry wants to use the World Trade Organization to "take on" Japan and China for currency manipulations that undermine US exports. As if the WTO could have any influence in those countries, under Kerry's plan for America, this won't be an issue. There won't be many US exports.
John Kerry has railed against the President's handling of the US economy. Well, everyone is entitled to an opinion, but when it comes to implementing an economic policy, putting John Kerry in charge is akin to letting that five-year old plan the menu for your next dinner party. It may sound sweet, but you'll end up with a stomachache a few hours later.
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