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Economic indicators

Two days before the presidential election, Times business columnist Robert Trigaux summarizes each candidate's position on several key economic issues and offers his analysis.

PRESIDENT BUSH

First the numbers. More than 1.8-million jobs have been created nationwide since September 2003. But there are still 800,000 fewer jobs in this country than when Bush entered office in 2001. To boost job quality and ease the impact of outsourcing, Bush would provide $500-million to schools and community colleges to improve the skills of workers. He says an investment in better training, combined with tax cuts, will help boost a slowly recovering job market. He opposes any increase in the minimum wage.

Bush started his first term with a budget surplus that - after tax cuts, a war and spending on homeland security - has now become a record deficit (in total dollars). Bush's 2005 budget says the deficit will be cut in half over the next five years. He wants Congress to restrict discretionary spending on programs outside defense and homeland security to a 0.5 percent increase next year.

Bush signed tax cuts in each of the past four years, including cuts of more than $1-trillion over 10 years that he wants to make permanent. He says the cuts kept the recession shallow and revived the economy. Bush says he wants to make the tax code simpler. Some of his economic advisers are exploring the idea of overhauling the tax code, eliminating taxes on savings but boosting them on consumption and wages.

Bush has backed health savings accounts that use pretax money to encourage employers who don't offer medical benefits to provide lower-cost, high-deductible coverage and to help defray household medical expenses. He wants small businesses to band together to provide more affordable health care for their employees through association health plans. He introduced a Medicare drug prescription benefit designed to help seniors. And a new rule aims to lower drug costs by strengthening competition between generic and brand-name drugs.

Kerry vows to create 10-million jobs over the next four years through a combination of tax credits to manufacturers to discourage outsourcing abroad, education and investments in new industries. He also proposes more job training and up to a $4,000 tuition tax credit on up to four years of college. He supports increasing the minimum wage from $5.15 to $7 by 2007.

Kerry says he would halve the deficit in four years by raising taxes on the wealthy and restraining most other discretionary spending. He also would cut electricity use in federal facilities, freeze spending on federal travel and reduce the number of contractors used by the federal government. And he would try to restore the caps on discretionary spending put in place in the 1990s - though not on education and security - to keep spending at or below the rate of inflation. Kerry has acknowledged that he might have to scale back some campaign promises if his new budget goals are to be met.

His specific tax plan calls for raising taxes on those who make more than $200,000 a year, while keeping the middle-class tax cuts that he wants to make permanent. He would trim the corporate tax rate by 5 percent, from 35 to 33.25 percent. He also would use tax credits to help trim the rising costs of college tuition, personal and small business health care coverage and child care.

His plan calls for extending health care coverage to all children and 95 percent of Americans. The plan, which relies on funding from taxing the wealthy, aims to cut family premiums by $1,000 annually, allow importation of cheaper drugs from Canada and cut inefficiencies by 25 percent. It includes a tax credit of up to 50 percent for small business health insurance premiums.

Under President Bush, household real incomes dropped and net worth declined. Stressed households still face rising costs of health care, gas, insurance, college tuition and higher interest rates. Many recently created jobs pay less than the lost jobs and often lack benefits. Can Kerry do any better? He has made too many promises to ease the "middle class squeeze." Energy prices are sky high. As for wage growth, the Bureau of Labor Statistics on Friday said the average pay of working Americans in the third quarter of this year grew at the slowest rate on record. A job bonanza is not in the near future.

Talk about the chicken or the egg. Kerry views lowering the $415-billion budget deficit as key to boosting economic growth. Bush says economic growth must come first so the deficit can be reduced. Either way, the runaway deficit will prove a drag on Bush or Kerry. Both candidates say they will cut the deficit in half. That's a job half done.

Bush never met a tax cut he did not like. Doling out lower taxes is like eating all your candy on Halloween night. It's a quick fix but leaves a bad feeling later. Last year, households with incomes of $1-million or more received an average tax cut of nearly $89,000. But half of all U.S. tax filers received $100 or less. While Kerry wants to roll back the recent personal income tax cuts for those making more than $200,000, that revenue would only pay for some of his spending proposals.

The ranks of the uninsured increased last year by 1.4-million. Now nearly 45-million people, or 15.6 percent of the U.S. population, lack health insurance. Bush's health care plan - tax-free accounts, capping medical lawsuits - is supplemental and would not change much of the current health care system. Kerry's plan would have the government subsidize the cost of catastrophic coverage in order to insure more than 25-million additional Americans. Is it good government policy to help its citizens stay healthy?