If you're looking for enlightenment from Bush or Kerry on how best to shape the economy over the next four years, look again. Neither presents a viable strategy for the deficit or the entitlement programmes, social security, medicare and Medicaid.
The Bush policy on deficits was summed up by vice president Dick Cheney. “Reagan proved deficits don't matter,” he said after the Republicans won the mid-terms, says The Price of Loyalty, Ron Suskind's account of Paul O'Neill's years as treasury secretary.
The Congressional Budget Office's 10-year forecast for the current account deficit is for it to reach $2.3 trillion. That's a big change from before the 2000 election when it projected a surplus of $5.6 trillion
The number assumes no change in current circumstances. But Bush pledges to make permanent the tax cuts he has introduced. Most expect the deficit to be $5-$6 trillion, a $10 trillion swing in four years.
He also commits to rein in spending. That always sounds good coming from a Republican preaching small government, but congress and the White House have displayed a profligacy that seemed to have been conquered in the mid-to-late 1990s.
Kerry's plans rest on voodoo economics. He'll keep tax cuts for lower income earners but wants to spend. Some think he would spend more than he can fund.
He does, at least, pay more lip service to cutting the deficit, and wants to restore the pay-go principle, a stunning idea back in Clinton's days to make sure you only spent what you could afford. But Kerry has nothing to say about entitlement programmes. Bush pushes partial privatization of social security, an idea from his last campaign shelved when markets tanked.
Gone are the days when markets worried about how to cope without US treasury securities. Now they worry foreign central banks and investors may own too many of them. So much for fiscal responsibility.