How the Six Major Democratic Candidates Would Fix the Economy
AMERICA'S economy, stumbling through the longest slump since the Great Depression, has tossed millions of Americans out of work and damaged George Bush's popularity. But would Democrats do any better at creating jobs?Democrats eyeing the White House in 1992 are all highly critical of President Bush for failing to act faster, and smarter, when the economy failed to bounce back this fall. "Our economic engine has stalled," says former Sen. Paul Tsongas of Massachusetts, one of those trying to oust Mr. Bush. "The question is how to restart it." Next year's election likely will be dominated by that question. The recession, now in its 17th month, shows no sign of abating. As it deepens, and layoffs spread from IBM to General Motors to Eastman Kodak, Bush's approval rating continues to sink. Unlike some previous recessions, this one cuts across every strata of American society. Lawyers and engineers, MBAs and PhDs, blue collars, white collars, and pink collars alike are being tossed onto the streets. Yet even among themselves, the six major Democratic candidates don't agree on what should be done. They're particularly divided on tax cuts. Some of them, like Mr. Tsongas, want more emphasis on long-term measures to revive American factories and offices. Others, like Gov. L. Douglas Wilder of Virginia, demand that Washington immediately slash taxes to put cash into Americans' wallets. Quick-fix ideas being bruited by Democrats include: * Reduce taxes, particularly for the middle class. * Create temporary investment tax credits for business to stimulate immediate capital investment. * Reduce interest rates. * Speed up spending for roads, bridges, airports, mass transit systems, and other parts of the nation's infrastructure. * Extend and broaden unemployment insurance. * Vigorously cut waste in Washington, and use savings to help states and communities hard-hit by the recession. Over the long term, Democratic candidates have many proposals, including: * Bring home American troops stationed abroad, and use the savings to invest in the United States. * Spend more to develop technology for high-speed trains, faster aircraft, electric cars, and automated highways. * Invest more in energy efficiency to reduce dependence on Middle East oil, a major source of America's trade deficit. * Shift research efforts from defense into consumer goods, telecommunications, and environmental systems, which can be sold abroad to create jobs here.
The focal point It is tax cuts that really send the sparks flying. "The middle-class tax cut ... came out of polling data because the polls showed that [it] had support," says Tsongas, who opposes such cuts. "The question I ask [is], how do you compete [with Japan]? ... The answer is investment. We have to invest in the economy of this country and that means a number of things. But the middle-class tax cut is not part of that." Gov. Bill Clinton of Arkansas, another presidential hopeful, responds that while America needs long-term investment, it also needs to restore consumer confidence. He says: "In the '80s, middle-class incomes went down, middle-class taxes went up. The incomes of the richest people went up, their taxes went down. I want to restore fairness and use this boost to consumers to get the economy going again in the short run." Here are some of the views of the six major Democratic candidates, as taken from speeches, position papers, and their recent debate on NBC: Paul Tsongas. The former senator calls for a temporary investment tax credit to promote business spending on productive assets. m asking for it to be temporary," he says, "so firms will spend now ... when our economy needs it most." Tsongas also favors accelerated spending for transportation, noting that the nation wastes $40 billion a year in lost productivity due to traffic tie-ups. He would also favor pushing interest rates lower and extending and broadening of unemployment benefits.
Energy efficiency Jerry Brown. The former governor of California says the US should move quickly in several key areas, including immediate investments in highway programs and other infrastructure projects to put people back to work. He would also fund Head Start "tomorrow." Head Start is a popular educational program for young children which currently gets only partial funding from Washington. "Head Start ... is a fraction of the money that they gave the savings and loan bailout," he notes. Beyond that, Brown wants to see more federal funding for energy efficiency, including high-speed trains and thrifty engines. Bob Kerrey. The Nebraska senator supports an immediate tax cut for the middle class. "The middle class got robbed in the 1980s," he says. Mr. Kerrey would slash federal spending by slicing the number of Cabinet departments in half and reducing the military by 30 percent to 40 percent over 10 years. He would attempt to pass a national health insurance plan within 100 days after taking office. The plan would bring care to everyone while cutting projected costs by $30 billion a year. Future investments would target education, technology, and communications.
Education as investment Bill Clinton. The Arkansas governor favors a middle-class tax cut to start cash registers ringing. He also wants lower credit-card interest rates for good customers, an accelerated highway bill to spend $25 billion in six months and employ 45,000 to 50,000 more people, and higher ceilings on Federal Housing Administration-guaranteed home loans to expand ownership among the middle class. Long-term, Mr. Clinton argues that "education is economic development the only way to build a "high-wage, high-growth country." He says: "We ought to fully fund Head Start. If we can afford $500 billion for savings and loans, surely we can afford $5 billion for ... preschool." L. Douglas Wilder. The Virginia governor, another proponent of a middle-class tax cut, would slash federal spending to find money for urgent economic projects. He would trim $25 billion (10 percent) out of government administrative costs, $10 billion out of defense, and $15 billion out of low-priority budget items. Of the total $50 billion saved, $35 billion would go into the tax cut and $15 billion to states and communities hard-hit by the recession. He would also get tough on trading partners like Japan to open up markets for US goods.
No on the tax cut Tom Harkin. The Iowa senator derides the proposed tax cut, which amounts to only $1 a day for middle-class families. Instead, Mr. Harkin would "bring the money home" that is now being spent on stationing troops abroad. US troops funnel $17 billion a year into the German economy alone. With that money, says Harkin, the US could build "roads and bridges and highways, mass transit, communications, energy systems here in this country so we don't have to buy oil from the Mideast any longer."