Kerry touts intention to halve federal deficit in first term

By Glen Johnson, Globe Staff, 8/29/2003

DURHAM, N.H. -- Senator John F. Kerry pledged yesterday to halve the federal budget deficit in his first term if elected president with an economic recovery program different from the ones of "voices of the past within his own party" and also of George W. Bush, whom he labeled "the job-loss president."

The Massachusetts Democrat proposed offering the states $25 billion of relief for each of two years, to help them avoid more of the fee increases and tax hikes they have been imposing to close their own deficits. He suggested a manufacturing tax credit that would reward employers by refunding their payroll taxes for each new employee. Kerry also proposed a tuition tax credit on the first $4,000 paid toward college tuition for each of four years of study, an expansion of the two-year "Hope Scholarship" created under President Clinton.

The package of proposals built on a plan Kerry announced in December, when he first spoke of the manufacturing tax credit and also offered a proposal to give employees a one-year tax credit for the federal payroll taxes they pay into Social Security and the Medicare program for the elderly and disabled.

In his New Hampshire speech, Kerry sought to identify himself with Clinton, whose presidency coincided with an economic recovery, and to differentiate himself from at least two key rivals by casting himself as a Democrat not tied to party orthodoxy.

"George Bush is the job-loss president, and only he would give us a jobless recovery," Kerry said, referring to the 3 million jobs lost during the Bush administration.

Taking aim -- although not by name -- at Howard Dean, the former Vermont governor who has led in recent New Hampshire polls, and Representative Richard A. Gephardt of Missouri, who intends to win the leadoff presidential caucuses in Iowa, Kerry criticized his rivals for proposing to repeal all the tax cuts enacted under Bush, including expansions to child tax credits and moves to eliminate the so-called marriage penalty. Kerry said such an across-the-board repeal would unfairly impact the middle class.

"Some in my party are so angry at George Bush and his unfair tax cuts that they think the solution is to do the exact opposite," Kerry told an audience of about 120 assembled at the University of New Hampshire. "Those are yesterday's ideas -- and they've been rejected every time. If Democrats offer up recycled slogans instead of real solutions, then we will lose in 2004, and we'll deserve to, and with it we will lose our chance to forge a brighter future for the American people."

Kerry, citing workers he had met in New Hampshire, Iowa and Washington state who have been hurt by Bush's economic policies, said: "These Americans deserve an election with a real choice: Will we follow the voices of the past or will we fight for America's economic future?"

In response, Dean spokeswoman Dorie Clark said: "While Washington politicians were driving our nation into debt during both Bush recessions, Governor Dean was balancing budgets in Vermont."

A Gephardt aide said the congressman's policies would help the middle class in different ways, in particular by using the tax revenues recouped from the repeal to pay for universal health care coverage.

"Dick Gephardt has said several times that after doing health care, he wants to go back to middle-class tax reform, and that includes eliminating the marriage penalty and the child care credits. They are not off the table, but what he said is that the $1.6 trillion spent on the first round of the Bush tax cuts would be better spent on health care," said Kathy Roeder, a spokeswoman for Gephardt. "That would make the middle class better off than they were from the Bush tax cuts."

A spokeswoman from the Republican National Committee mocked Kerry's economic plan.

"John Kerry has proposed to simultaneously increase spending, lower taxes, and be fiscally responsible," said spokeswoman Christine Iverson. "His plan is everything but realistic. It's also an indication of why Kerry's campaign is struggling."

In a brief interview after his speech, Kerry dismissed recent polls that showed him behind Dean in New Hampshire, which hosts the first primary that award delegates to the Democratic National Convention in Boston next July.

"First of all, I have other polls that show differently. No. 2, it's very early, much too early for that," the senator said. Kerry's speech was part of a weeklong buildup to a public declaration of his candidacy.

In a carefully choreographed strategy, the senator will seek to heighten his national profile with an appearance Sunday on NBC's "Meet the Press," the highest-rated Sunday talk show, and a two-part profile Monday and Tuesday on the network's "Today" show, the morning program with the largest national TV audience. While officially a candidate since last December, Kerry will publicly declare his candidacy Tuesday with speeches in South Carolina and Iowa, and then follow Wednesday with another economics speech in New Hampshire and a rally at Faneuil Hall in Boston.

Next Thursday, Kerry will join his rivals in Albuquerque for the first of four debates sanctioned by the Democratic National Committee.

Glen Johnson can be reached at johnson@globe.com.