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Costly Plans Could Cost Democrats

Times Staff Writer

Even with the federal government facing record budget deficits, many of the 2004 Democratic presidential contenders are advancing much larger spending programs than Al Gore was willing to risk as the party’s 2000 nominee.

Some Democratic analysts are increasingly concerned that these substantial new proposals may threaten the party’s ability to challenge President Bush in next year’s election on what could be a major vulnerability: the federal budget’s sharp deterioration, from record surplus to massive deficits, during his presidency.

“At some point, the Democrats will be called to task to see if their own programs meet the fiscal test they are holding up for the Bush administration,” said Elaine Kamarck, senior policy advisor to Gore in 2000.

Already, the spending proposals -- especially for health care -- are emerging as a key divide in the Democratic race. Three leading contenders -- Sens. Joseph I. Lieberman of Connecticut, John Edwards of North Carolina and Bob Graham of Florida -- are questioning whether health-care plans offered by three rivals -- Sen. John F. Kerry of Massachusetts, former Vermont Gov. Howard Dean and, especially, Rep. Richard A. Gephardt of Missouri -- are affordable, economically or politically.

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Yet the pressure to produce bold ideas attractive to Democratic primary voters may be triggering a spending competition that will make it difficult for all of the candidates to hold down the cost of their agendas.

And that prospect has Republicans practically salivating at the opportunity to portray the Democrats as recidivist big spenders.

“There is no way you are going to be able to convince anyone in America that an increase in trillions of dollars in spending, even after trillions of dollars in tax increases, is going to do anything but increase the deficit,” said Jim Dyke, communications director for the Republican National Committee.

Democrats insist the debate won’t be that simple. Even those proposing significant new spending argue that their programs would produce much smaller deficits than Bush’s tax-cut and spending proposals -- which critics blame for what is expected to be the largest federal deficit ever this year, a shortfall projected at well over $300 billion.

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When Bush took office in 2001, the nonpartisan Congressional Budget Office projected the government would enjoy $5.6 trillion in surpluses over the next decade.

Amid war, recession, the cost of Bush’s 2001 tax cut and the effect of tax reductions Congress approved Friday, the federal government is now facing massive deficits for the foreseeable future.

“It’s like the old story: You don’t have to outrun the bear, you just have to outrun the other guy,” said Bruce Reed, president of the centrist Democratic Leadership Council. “And Bush has set such a dismal standard for fiscal responsibility that he won’t be able to blur the difference that much.”

Even when the budget moved into surplus by the 2000 race, Al Gore, hoping to sustain an image of fiscal responsibility, kept his spending proposals modest, especially in health care. With today’s medical costs, his proposal to expand coverage to the uninsured, primarily by enlarging public insurance programs, would have cost $260 billion over the next decade, calculates Emory University professor Kenneth E. Thorpe.

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By contrast, Dean and Kerry released competing health-care plans this month -- with a 10-year cost of $932 billion and $895 billion, respectively, according to Thorpe.

This spring, Gephardt unveiled a plan to provide nearly universal access to health care through tax credits for employers -- at a 10-year cost Thorpe estimated at $2.5 trillion.

The most expensive plan in the Democratic field belongs to longshot Rep. Dennis J. Kucinich of Ohio, who wants to impose a new payroll tax on employers to fund a government takeover of the health-care system, costing the federal government about $1 trillion a year.

Erik Smith, Gephardt’s spokesman, said the deteriorating state of the health-care system -- with costs and the number of uninsured rising rapidly -- demands a response more ambitious than Gore proposed.

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“People now feel the incremental approach to reform hasn’t worked,” Smith said.

But other leading 2004 contenders say Gephardt is moving the party in the wrong direction by promising an unrealistically expensive plan.

“We are not going to solve these problems with the kind of big-spending Democratic ideas of the past,” Lieberman charged.

Without criticizing Kerry and Dean as directly, Graham, Edwards and Lieberman have spoken about moving toward expanded coverage in a “step-by-step” manner -- which would return to Gore’s incremental, and less costly, strategy.

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Health care is only the beginning of the Democrats’ spending plans. Without yet providing specifics, Gephardt has also promised a teacher corps, a homeland security trust fund, a new federal effort to rebuild “crumbling schools” and new tax credits to encourage conservation and the use of renewable energy sources.

Kerry has proposed a $50-billion, five-year increase in homeland security spending and a $3-billion-a-year plan to expand Clinton’s Americorps national service program. Kerry’s Web site also promises programs to expand access to preschool, reduce class sizes and subsidize school construction.

Dean hasn’t laid out many other specific programs beyond his health-care plan. But he has promised to increase spending on homeland security, to “provide incentives” for young people to teach, to fund a “serious investment in our children” and to increase federal infrastructure spending “as a last resort” to stimulate the economy.

Though moving more cautiously on health care, Edwards, Lieberman and Graham are accumulating other obligations. All have pledged significantly more spending on homeland security.

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Lieberman last week proposed an increase in federal spending on medical research of at least $115 billion over the next decade. He also recently released an energy plan that would spend $30 billion over 10 years to develop less-polluting fuels.

Edwards last week unveiled a $7-billion rural revitalization plan. He also wants to spend $30 billion over the decade expanding access to college, and an additional $40 billion providing a tax credit for new parents.

Graham touts a $40-billion increase in aid to states.

Looming over all of these promises is the potential bill for a prescription drug plan under Medicare. All four of the senators in the race said last year that they supported a Democratic plan that would cost almost $600 billion over the next decade; Gephardt endorsed a House plan that would cost $800 billion. Although Dean has not been specific, he has also promised a benefit.

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To pay for these ideas, the Democrats all propose to repeal parts of the $1.35-trillion tax cut Bush won in 2001, and elements of the $350-billion tax reduction and spending bill passed by Congress last week.

Yet apart from Gephardt, who has proposed repealing the entire 2001 tax cut, all of the other leading candidates have pledged to maintain the elements of the Bush plan that benefit the middle and even upper-middle class.

Their problem is that those provisions -- primarily the reduction in the lowest income tax rate and expanded tax relief for married couples and parents -- amount to nearly half the cost of the 2001 tax cut.

By exempting those provisions from repeal, the Democrats “will have a hard time” implementing their agenda without increasing the deficit, said Peter Orszag, a tax expert at the Brookings Institution, a Washington-based think tank.

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That prospect will leave Democrats open to charges of “significant hypocrisy” when they criticize Bush’s fiscal record, the RNC’s Dyke predicted.

But Sarah Bianchi, Kerry’s policy advisor, said most Democrats will be able to argue that their proposals wouldn’t enlarge the deficit nearly as much as Bush’s plans.

“Even if Democrats spend more than they repeal from the 2001 tax cut, they are not going to be close to the fiscal mismanagement Bush is implementing for this country,” she argued.


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