When presidential contenders George W. Bush and John Kerry first sparred over the economy, they seemed to be talking about different countries. Now they might as well be arguing over different planets.
On oil prices and the U.S. dependence on Middle East oil?
Kerry: Consumers and businesses are hurting with oil near $50 a barrel. The nation must achieve energy independence.
Bush: Gas prices at the pump are already down. We need "less dependence" on foreign energy sources.
Bush: Jobs are growing and pay more.
Kerry: Jobs are fading and pay less.
On the looming federal deficit?
Kerry: Bush turned a $5.6-trillion federal surplus into an enormous deficit.
Bush: I will cut the deficit in half.
Both the Bush and Kerry political camps have become true masters of economic doubletalk. In the process, they are confounding undecided voters and even some of their own supporters.
President Bush and Sen. Kerry square off in Florida on Thursday in their first official debate of the presidential campaign. After months of ruthless finger-pointing, how much real give-and-take can we expect?
The first debate, focusing on foreign policy and homeland security, will take place at the University of Miami. A symbolic 18-minute protest, dubbed "Miami's longest unemployment line" will occur on the day of the debate, with hundreds of people waving "pink slips" along U.S. 1 outside the university. Miami's unemployment rate is a relatively high 6.3 percent. Protest organizers say they may repeat the protest in the cities hosting the remaining debates.
The second debate, town hall-style on all subjects, will be Oct. 8 in St. Louis. A third devoted to economic policy and domestic issues is scheduled for Oct. 13 in Tempe, Ariz. (Vice President Dick Cheney will debate Kerry's running mate, Sen. John Edwards of North Carolina, once, on Oct. 5 in Cleveland.)
Given that we are not likely to hear much honest debate on some pressing issues, let's cut through the noise. Here are three key economic concerns challenging the United States the two candidates should tackle head-on:
OIL: Presidents for decades have tried in vain to wean the United States off its expensive dependence on Middle East and foreign oil. When oil prices hover near $50 a barrel, U.S. economic growth declines by half a percentage point and the inflation rate rises.
Bush says he wants to reduce oil imports. But is he serious? Federal data from the Energy Information Administration show the country imported in 2001 an average of 2.8-million barrels of petroleum daily from the Persian Gulf. Total daily imports averaged 10.9-million barrels. This year, through May, the nation imported an average daily volume of 2.3-million barrels from the Persian Gulf. Total daily imports averaged 11.5-million barrels.
To its credit, the U.S. economy is more energy efficient these days. Yet the country still gobbles more than 20.3-million barrels of oil every day, up from 19.6-million in 2001.
In his first term, Bush pushed to open part of Alaska's Arctic National Wildlife Refuge to drilling. That strategy might have gained broader support after the attacks of Sept. 11, 2001. But drilling on pristine lands remains an unpopular policy. It has played into the hands of Bush critics who claim he and Cheney are too cozy with their Texas and Saudi oil buddies, and too soft on U.S. automakers that lag Japanese competitors in the pursuit of more fuel-efficient cars, SUVs and trucks. Bush has not pressed for better mileage, but did invest in a five-year, $1.2-billion hydrogen fuel initiative to spur the development of hydrogen fuel cells in cars.
As for Kerry, his goal of energy independence is well out of reach in the near term. Two years ago, he cosponsored a Senate measure (it never became law) to raise fuel-economy standards to 36 miles per gallon by 2015. That's up from the current fleet average of 24 MPG. Now he wants to offer federal tax incentives and aid to encourage Detroit to catch up with Japan by making higher-mileage hybrid and advanced diesel vehicles.
Kerry also wants to swap some gasoline with ethanol made from corn. And to the electric power industry, he wants to see 20 percent of America's electricity generated from wind, solar, biomass, geothermal and other renewable sources by 2020. That's bold. Just 2 percent of the country's electricity currently is powered by these sources.
JOBS: Bush no longer has enough time to avoid a nasty footnote _ the first president since Herbert Hoover to suffer a net loss of jobs in his term as president _ that is constantly thrust upon him by Kerry. Early this year, Kerry had an easy time attacking Bush on the jobless recovery. But in the spring the country began generating new jobs and modestly continues to do so. In a shift, Kerry began criticizing the quality of new jobs, rather than the quantity.
Kerry argues new U.S. jobs pay less than the ones they are replacing. Bush as well as some economists claim the opposite, citing broad, non-specific labor data.
Michael Alter, a former McKinsey consultant and now CEO of a payroll processing business outside Chicago, claims new jobs on average are paying less. He sees it every day, in real time, in his online business, SurePayroll.
Alter's company handles the employee and contractor payrolls of more than 12,000 small businesses across the country. The good news is his business customers are hiring more people. The bad news is payroll data show the new hires making less. Alter even created a monthly index to better illustrate what he calls the nation's shift from a "jobless" to a "pay less" recovery.
Declining wages may not hit home in the next few years, but the long-term impact is "a scary one," says Alter. "This is the elephant on the table that no one wants to talk about."
THE DEFICIT: How did the United States go so quickly from a big federal surplus to a massive deficit? The Bush administration chose a free-spending combination: feel-good tax cuts of $290-billion to spur the economy out of a recession, plus massive spending of $216-billion on a war in Iraq. That combination cannot continue. No matter the political party, the next president faces a grueling task of reducing the federal deficit and managing the ongoing Iraq bill _ while trying to honor the expensive promises pledged during the campaign.
While fiscal conservatives are appalled at the lack of financial responsibility in Washington, Bush argues that deficit worries are overblown. As a percentage of the economy, the deficit is not especially big. And Bush vows the deficit will be cut in half in five years.
How? With an optimistic forecast of economic growth and some traditional government accounting tricks. To be fair, federal accounting sleights of hand were around long before Bush took office. On the other hand, Bush does not need to erase the entire deficit, just delay the bill. If re-elected, his second term would end in January 2009.
Kerry offers no silver-bullet solution to the deficit problem. He says he would simply be more budget-conscious. First, he says he would impose caps to limit discretionary federal spending _ outside of security and education _ to the rate of inflation. And he would try to bring back the "pay as you go" rule, which requires that no official propose or pass a new program without including a way to pay for it.
Is Kerry overreaching? His extensive plans to subsidize education and broaden health coverage for many Americans are based on taking away tax cuts provided by Bush to the wealthy _ families making in excess of $200,000 per year. But the price tag for Kerry's programs may quickly overwhelm his source of funds. And if elected, he would still likely face an uncooperative, Republican-controlled Congress.
No truthful debate on the deficit can ignore the biggest government bill of all: Social Security and Medicare. Bush wants to offload some of the crushing expenses ahead for "elderly entitlements" by allowing young workers to create voluntary personal savings accounts with some of the money they now pay into the Social Security system. Kerry opposes any efforts to privatize Social Security funds.
Better hurry and make up your minds, urges Thomas R. Saving, a public trustee of the Medicare and Social Security Trust Funds. A fiscal tsunami is coming, he warned last week in the Wall Street Journal in an opinion piece unusually lucid for such a complex subject.
This year, he said, the bill for Social Security and Medicare programs means the Treasury will have to spend more than 3.6 percent of the federal government's income tax receipts to cover the bill.
Here's the zinger: "In just 15 years, in the early stages of the baby boomers' retirement, we will be transferring more than 25 percent of federal income tax revenues to cover the funding needs of Social Security and all parts of Medicare," Saving stated. By 2030, entitlements will consume more than half of all federal income tax revenues. By 2069, they devour every tax dollar.
Obviously, that won't happen. Some future president will be forced to make harsh changes to the U.S. tax system and the programs for the elderly. It just won't be the next president.
Sounds like a big economic time bomb that any upfront presidential candidate would want to talk about with the American public. Before the ticking gets too loud.
_ Robert Trigaux can be reached at (727) 893-8405 or trigauxsptimes.com.