They’re Different, and It Matters
In July and August, the Democrats and Republicans held their respective conventions. Nothing of consequence happens at conventions anymore; they’re just another part of the campaign, consisting of a big bash for party faithful and a bit of television exposure for a variety of orators. But the similarity of the conventions masks the profound divisions that shape this election. On most issues, the candidates are polar opposites.
You’d be forgiven if you had a hard time differentiating which convention was which. The slogans cast about were indistinguishable: “A safer, stronger America,” “A Nation of Courage,” said one party. “Hope is on the way,” “A stronger, more secure America,” said the other. Each marched out generals and military men to attest that their candidate is the better commander in chief. Each featured a symbolic defector, someone who had grown so frustrated with their party’s incompetence that they just had to shift to the other side: Ron Reagan, son of conservative saint Ronald Reagan, spoke to the Democrats, and Zell Miller, the nutty Democrat Senator from Georgia, fired up the Republicans. Each convention featured delegates with views sharply divergent from the mainstream. When President Bush noted that two-thirds of women are now working instead of staying at home, a delegate next to me muttered, “Now I don’t know if I like that.” Democratic delegates, on the other hand, hatched plans to incapacitate Fox News reporters on the convention floor.
The speeches hit the same themes: we’re not two Americas, we’re one America, said Barack Obama/Arnold Schwarzenegger. People don’t want government to do the work for them; they want smarter government that lets them help themselves, said pretty much everybody. And only our guy can get the country back on track and win the war on terror, each party agreed. Each candidate’s pair of mildly cute daughters gave a little speech, as did each candidate’s charming wife. Video montages painted homey portraits of both Kerry and Bush. Patriotism was on display in full force. Each party overcame internal divisions -- Republicans over social issues like gay marriage and Democrats over social issues like the war in Iraq -- to present a united front to the nation.
But Bush and Kerry have starkly different views regarding the appropriate role of government in society, and their views have important implications. Education, health care, retirement systems, and trade policies will each pose very serious questions for the country in the coming years. In each case, Bush seeks to reduce the role of government and return power to individual citizens, while Kerry seeks to extend the role of government and the command economy.
In health care, George Bush is trying to return responsibility for taking care of one’s health to the individual citizen. He’ll allow citizens to save money tax-free to pay for incidental health care costs. Less comprehensive health insurance for catastrophe costs can then be purchased more inexpensively than current comprehensive plans. Currently, individuals tend to overpurchase health care because they are not directly exposed to the price of the services received; ultimately, this results in higher prices throughout the healthcare system. Bush’s plan would encourage economy by giving citizens ownership of their health care dollars and letting them spend it as needed. These Health Savings Accounts are an excellent first step towards restoring the long-term viability of the health care system. Kerry, in contrast, has proposed nationalizing health care and shifting catastrophe costs to the federal government. The difference is clear: Bush would reduce the role of government intervention. Kerry would increase it.
Social security demands attention likewise. The pyramid scheme we have now requires current workers to pay taxes that fund current retirees. These current workers will be paid later in life by new workers who will join the program and fill the gap. This pyramid scheme works for now because everyone who is born has to join, but it will fail for the same reason all such schemes fail: they run out of people. The workforce is not growing fast enough to keep paying the new retirees. As of now, $10 trillion (in present value) more than will ever be collected in payroll taxes is needed to pay all obligations to retirees. The longer the system operates like this, the larger that number becomes. Bush’s plan is to end the pyramid scheme: he’ll let workers take the taxes deducted from their paychecks and invest it in their own private accounts, giving them ownership of their retirement funds. Doing so will require a one-time infusion of cash to pay off the current retirees, since workers would be saving for themselves the money that’s now used to pay retirees. Ending any pyramid scheme is expensive, but after that transition cost, social security will never again present a financial threat to America. The transition cost, estimated at $1 trillion, is far smaller than the ongoing social security deficit.
Kerry believes in the pyramid scheme, and would ratchet up the stakes: he’d demand more money from the new members to pay off the old ones, by raising payroll taxes from 12 percent to 16 percent. He would also reduce current benefits to richer retirees, so that all that money they paid for retirement over their lifetimes is given to others who need it more. Again, the contrast is stark: Bush would drastically reduce the government’s role as pension fund manager, instead letting people keep what they’ve earned and use it as they see fit. Kerry would expand the federal pension system, making an unsustainable pyramid scheme more expensive and intrusive.
The candidates also have different views regarding education. Bush seeks to introduce school vouchers. These would return some of the taxes parents currently pay to fund schools and let them use those funds as they choose, to send their child to a school that could educate him or her properly. Enabling school choice would encourage innovative approaches to education, and would help those who suffer worst under the current statist system. A majority of Americans and a large majority of African-Americans are in favor of school vouchers according to Friedman Foundation polls. Kerry seeks instead to simply increase education funding, by $10 billion or so. It is not an encouraging approach, given that non-public schools have demonstrated an ability to educate children more effectively at a lower cost than public schools. Throwing more money at this problem won’t solve it.
The difference in approach extends throughout each candidate’s respective domestic policy: Kerry would raise taxes on those who earn $200,000 annually, hurting the entrepreneurs and small businesses that power economic and employment growth. Bush has made his aversion to taxes clear.
The packages look the same: each has lots of flags, lots of nice speeches, and slogans with words like “safe” and “strong.” The packaging has apparently fooled the hapless Green Party, which reports per usual that the candidates are the same, and then adds some details involving “corporate” and “evil” before forwarding their own command economy proposals. But throughout their domestic policy agendas, Bush and Kerry offer the nation two different paths, between a socialistic future of ever-encroaching government expansion and a freer America in which individuals have responsibility and ownership of their own lives and property. The last century did a great deal to dispel collectivism in its uglier forms, but it’s still very much a part of American life. Foreign policy is a different story, but as regards domestic policy and the relation of government to society, these candidates are polar opposites.