Sen. John Kerry, the presumptive Democratic nominee for president, in recent days has begun fleshing out his economic proposals. From our free-market perspective, there are some aspects of his program that are praiseworthy and others that bear criticism.
Predicting how he might apply his policies as president is difficult, however, because of Sen. Kerry’s troubling habit of switching positions depending on the political winds. For example, in the 1990s he favored ending taxes on dividends — a great idea that would encourage investment and jobs growth — but now he opposes the idea.
Nonetheless, he does seem to understand that removing government burdens on the economy will produce economic growth. However, he seems to believe such actions need to be “balanced” by raising burdens in other areas.
Here are two Kerry proposals revealed in recent days.
Energy policy: With gasoline prices hitting record highs across America, on Tuesday Sen. Kerry called for “a new direction on energy policy. … I’ll use real diplomacy to do what George Bush hasn’t — pressure OPEC to start providing more oil.” That’s not a bad idea, but it depends on cooperation from foreign leaders in a volatile region of the world.
“We’ll stop diverting oil to the Strategic Petroleum Reserve until gas prices get back to normal,” he added. That’s an excellent idea that should be taken further by ending government interference through selling the entire reserve to private industry.
Unfortunately, Sen. Kerry, typically, could not resist adding a promise to create “500,000 new jobs in renewable energy and building the vehicles of the future,” which would mean two massive new government boondoggles.
Corporate taxes: The senator proposes cutting to 33.25 percent from 35 percent the top corporate tax rate. That’s a good idea that would propel investment and jobs creation.
But in a March 26 speech in Detroit, he balanced it with some really horrid ideas. “Kerry vows to eliminate tax provisions that he contends gives companies an $8 billion annual subsidy to move jobs offshore,” BusinessWeek Online reported. “With the resulting revenue, the Massachusetts senator would create a tax credit for companies to expand U.S. payrolls. That credit would be aimed at manufacturers but also would apply to service companies whose work might easily be moved overseas.”
What has not been said of this bad idea is that it rigs the playing field of the marketplace with protectionist policies. Foreign countries might respond by putting similar limits on their operations in America, damaging the many foreign factories that operate here and killing American jobs.
A better idea: Just cut the corporate tax rate without adding new burdens in other areas.
If the senator is going to have a chance against President Bush — whose tax cuts now are boosting jobs production — he’s going to have to come up with more ideas to reduce government burdens on businesses and citizens. He must make sure any jobs-creating ideas are uncoupled from ideas that create boondoggles or kill jobs.