October 24, 2004

Behind Candidates' Domestic Plans, an Ideological Gulf

WASHINGTON, Oct. 23 - On social and economic policy, President Bush and Senator John Kerry present a philosophical contrast that is one of the starkest in modern presidential campaigns.

Mr. Bush would, in important ways, break with the underpinnings of the New Deal and the Great Society that have directed the government's domestic policies for generations.

He wants, for example, to allow workers to open private investment accounts with part of their Social Security taxes, so the retirement program would no longer be run entirely by the government.

He proposes giving commercial insurance companies a larger role in Medicare, the government health insurance program for the elderly and disabled.

He favors spending federal elementary and secondary education money, used almost entirely for the benefit of public school students for 40 years, on vouchers to help parents pay tuition at private and parochial schools.

Mr. Bush calls all this an "ownership society" that would rein in the government and give individuals more control over and responsibility for their financial lives, their health care, their children's education and their retirement.

Mr. Kerry promises to sustain and strengthen the government programs enacted under Franklin D. Roosevelt and Lyndon B. Johnson, and to use government resources to ease the strain on retirees and middle class families caused by the changing economy and the soaring costs of health care and education.

But Mr. Kerry envisions no substantial overhaul of these programs.

Donald F. Kettl, a political scientist at the University of Pennsylvania, said the basic difference between the presidential candidates was in "the way they would use the marketplace to solve public problems." After ticking off a list of Mr. Bush's domestic proposals, Professor Kettl said, "When you start piling these things up, it amounts to a fundamental break with existing policy and an enormous change for the future."

Mr. Kerry, he observed, promises "more effective administration and perhaps more generous funding but no fundamental changes."

Mr. Bush accuses Mr. Kerry of being a traditional, big-taxing, big-spending, big-government liberal. "He's going to tax everybody here to fund his programs," Mr. Bush said in their second debate. "That's just reality."

In the third debate, Mr. Bush described his own philosophy this way: "I believe the role of government is to stand side by side with our citizens to help them realize their dreams, not tell citizens how to live their lives."

Mr. Kerry accuses Mr. Bush of threatening the economic security of the middle class and the elderly, and of abandoning his promise of "compassionate conservatism" in order to give big tax cuts to the wealthy.

"The president," Mr. Kerry said in the second debate, "thinks it's more important to fight for the top 1 percent than to fight for fiscal responsibility and to fight for you."

Later in that debate, Mr. Kerry offered his view of the proper role of the government. "I believe that we can together do things that are within the grasp of Americans," he said. "We can lift our schools up. We can create jobs that pay more than the jobs we're losing overseas. We can have health care for all Americans. We can further the cause of equality in our nation."

Here in brief is where the candidates stand on some of the most important domestic policy issues:

Taxes

Tax cuts are the central element of Mr. Bush's economic policy, reflecting his belief that, as he often put it four years ago, "It's not the government's money; it's your money."

The tax reductions enacted during his presidency, totaling at least $2 trillion over 10 years, are heavily skewed toward the wealthy. Arguing that those cuts are important for economic growth, the president wants to make them permanent.

Mr. Kerry wants to keep the cuts for most Americans but repeal them for the 2 percent of taxpayers with annual incomes of more than $200,000. He would use the revenue mostly to pay for his health care plan.

The president has also suggested that he would like to overhaul the tax system so that taxes on profits from investments are essentially eliminated. Mr. Kerry opposes such a measure.

The Economy

The state of the economy is mainly a function of the business cycle, but that has not stopped the presidential candidates from making a campaign issue out of people's jobs and income. Mr. Kerry points to Mr. Bush's record as the first president since Herbert Hoover to have the number of jobs in the country decline during his term. Mr. Bush notes that the number of jobs has grown in the last year.

Mr. Kerry points to data showing that median household income has fallen during the Bush presidency. Mr. Bush argues that average after-tax income has increased. Neither candidate has a sure-fire way to ensure job growth and higher incomes.

Mr. Kerry favors raising the minimum wage and eliminating tax advantages to companies that move jobs overseas. Mr. Bush opposes those proposals and favors more generous tax incentives to encourage businesses to hire and expand.

The Deficit

When Mr. Bush took office in January 2001, the Congressional Budget Office projected a budget surplus of $397 billion for the fiscal year 2004, assuming no changes in tax and spending laws. When that fiscal year ended two weeks ago, the budget showed a deficit of $415 billion, a swing of $812 billion. The budget office calculates that about one-third of the swing was due to tax cuts, about one-third to the sour economy and about one-third to increased spending, mainly for the war and domestic security. Both candidates promise to cut the deficit in half in the next four years, but neither has offered a plausible way to reach that goal.

Health Care

Mr. Kerry would make medical insurance available to all children and most adults now without coverage through a combination of tax credits, subsidies and the expansion of public programs. His campaign estimates the cost at $653 billion over 10 years; the Bush campaign puts the cost much higher.

Mr. Bush calls the Kerry plan a government "takeover" of health care. In fact, it is intended to build on the existing employer-based system. Its most innovative feature would have the government pick up the cost of the most catastrophic cases - over $30,000 in 2006 - easing the burden on the premiums of workers and their employers.

Mr. Bush's health care plan, much more modest in scale, aims to encourage people to buy high-deductible health insurance plans and use tax-free health savings accounts for routine medical expenses. Mr. Bush also promises tax credits to help people buy insurance and more assistance for community health clinics.

Social Security

Mr. Bush has proposed allowing younger workers to divert part of their payroll taxes into private investment accounts. He has said such a step would ensure that young Americans receive the benefits they deserve.

The president promises that the benefits of current retirees and those near retirement will not be affected. But he has not endorsed a specific plan, and has not said how he would pay the transition costs of creating those accounts, which could be as high as $2 trillion over the first 10 years.

Mr. Kerry asserts that personal accounts amount to privatizing an important social safety net, exposing the elderly to much greater risk and draining the program in the near term of money it badly needs. Mr. Kerry has said the best way to shore up Social Security for the strains of the coming decades is to restore "fiscal responsibility" to the federal budget so that Social Security tax revenues are used less to pay operating expenses of the government.

Medicare

Mr. Bush points to the Medicare overhaul he pushed through last year, which provides drug discount cards for retirees this year and limited insurance coverage of prescription drugs beginning in 2006.

Mr. Kerry denounces the law as a giveaway to the pharmaceutical industry. He supports giving the federal government the right to negotiate prices for the elderly and would allow importation of lower-priced prescription drugs from Canada. Mr. Bush has opposed imports on the ground that their safety cannot be guaranteed.

The Supreme Court

With eight of the nine justices older than 65, the next president is expected to have the opportunity to name at least one, and possibly as many as three, new members of the court.

In his first-term appointments to lower courts, Mr. Bush consistently nominated conservatives, including some who were outspoken opponents of Roe v. Wade, the 1973 decision that recognized a woman's constitutional right to abortion. His supporters expect him to do the same with the Supreme Court.

Mr. Kerry has said he will only nominate justices who support "the law of the land," including Roe.

Energy

Both candidates promise to reduce the nation's dependence on imported oil, but neither has put forth a convincing way to meet that goal. Mr. Bush wants increased production, including drilling in the Arctic National Wildlife Refuge. Mr. Kerry favors more conservation, including stricter gasoline mileage standards for cars.

Education

Both candidates support the basic tenets of Mr. Bush's sweeping education law known as No Child Left Behind. It sets rules to make sure all children at all schools become proficient in reading and math over the next decade, and it imposes onerous consequences on high-poverty schools that fail to make steady progress toward that goal. Mr. Kerry has called for increasing spending on the program.

Diana Jean Schemo contributed reporting for this article.