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(COMTEX) B: Experts say Bush's proposals carry high price tag ( The Boston Globe - Knight Ridder/Tribune Business News )

WASHINGTON, Sep 15, 2004 (The Boston Globe - Knight Ridder/Tribune Business News via COMTEX) -- President Bush's spending and tax-cutting proposals would cost the federal government $3 trillion or more in the coming decade, and would probably have a deeper impact on the federal budget deficit than the plans offered by his Democratic opponent, Senator John F. Kerry, according to independent analysts and figures produced by congressional panels and the Bush administration.

Making the recent rounds of tax cuts permanent would siphon about $1.1 trillion over 10 years from the treasury, according to the Congressional Budget Office. Bush's plan to privatize Social Security for younger workers is expected to cost between $1 trillion and $1.5 trillion over that period, as the federal government picks up costs otherwise funded by current workers, according to the Social Security Administration. And the president has not said how he would pay for his proposed manned mission to Mars and space station on the Moon.

In addition, Bush has called for tax credits for health-care savings and a range of new spending items such as expanded college tuition aid, job training, health services for children, and "opportunity zones," economically depressed areas that would receive increased federal aid.

Bush hasn't offered enough details on most of his proposals to determine specific costs, analysts said. But estimates suggest the president's plans carry a staggering price tag that could grow further when his proposals are fleshed out. Even conservatives who back Republican candidates concede that Bush does not appear serious about cutting the deficit, a record $422 billion this year, despite his campaign rhetoric.

"Everything he's talked about is inconsistent with that objective," said William A. Niskanen, chairman of the Cato Institute, a not-for-profit research group that advocates small government. "He has made a commitment to cutting the deficit in half over five years, but he really doesn't have a plan -- at least, not one that he has announced."

The Bush campaign maintains that the president's new spending proposals would cost only $73.4 billion over 10 years. Campaign aides note that Bush's plan to halve the budget deficit within five years is laid out in the White House's latest budget proposal and takes into account the cost of making tax cuts that are set to expire permanent.

But the campaign's official estimate of proposed new spending includes only a handful of specific priorities Bush mentioned in his acceptance speech at the Republican convention -- not such budget-busters as the revamping of Social Security, space exploration, and most of his health-care plan.

The Social Security proposal alone would require vast new federal spending in the short term, since Bush has promised not to cut benefits for workers who are nearing retirement age. And none of the president's projections account for the costs of the continuing military operations in Afghanistan and Iraq.

In addition, Bush is proposing a range of changes to the tax code beyond making the tax cuts permanent, such as tax credits for health savings accounts, changes to the "alternative minimum tax," and the establishment of more tax-free savings options.

By far the biggest item on Kerry's agenda is tax credits for businesses to cover health insurance and new spending to cover uninsured patients, which Kerry says would cost $650 billion over 10 years, but which one conservative group claimed this week would cost more than double that, $1.5 trillion over 10 years. Kerry also has called for a middle-class tax cut, which is expected to cost more than $400 billion.

A chunk of those costs would be borne by rolling back tax cuts for the wealthiest taxpayers, saving $860 billion -- not enough to cover all the new spending. Kerry has also called for across-the-board spending cuts and canceling "corporate welfare" programs, though he has not been specific on either front.

"While Bush says Kerry doesn't say how he's going to pay for his priorities, Bush doesn't say, either," said Stan Collender, a longtime federal budget watcher and general manager of the Washington office of Financial Dynamics Business Communications. "He also doesn't say how he's going to pay for his tax cuts, and we know they're not going to pay for themselves."

Democrats began a fresh line of attack on Bush's fiscal policies yesterday, with Kerry's running mate, Senator John Edwards, saying at a campaign event in Oregon that Bush is running the country the way Kenneth Lay ran failed energy giant Enron. "The truth of the matter is he's taken a $5 trillion surplus, turned it into a multi-trillion-dollar deficit, now he's making proposals that are in the trillions of dollars in cost for which he has no idea how he's going to pay for," Edwards said.

Tim Adams, policy director for the Bush-Cheney campaign, said the campaign has provided details in every area where the costs are knowable at this point -- but the Social Security plan, war needs, and certain tax incentives aren't yet fleshed out enough to attach a dollar figure. Bush, Adams said, has laid out his plans in more detail than Kerry, and is capable of better fiscal management.

"For every dollar John Kerry raises by hiking taxes on small business and entrepreneurs, he spends two dollars on new or expanded government programs," Adams contended.

Analysts are split over whether the Bush or Kerry approach is the best long-term strategy to balance the nation's books. A Goldman Sachs & Co. report last week found Kerry to be "more credible" on his claims to reduce the deficit, since he has said he would rein in his priorities in the interest of cutting the deficit, while Bush is insisting on his tax cuts.

But supply-side economic theorists argue that the Bush tax cuts will help along an economic recovery that will increase the tax base over time. On the spending side, while Bush's Social Security changes would force the federal government to bear short-term costs, if his plan makes the system solvent, the investment could pay for itself in the long run, said Kevin A. Hassett, a resident scholar at the conservative American Enterprise Institute.

"It's wrong to think of a reform that improves the long-term balance significantly as costing money," Hassett said.

Bush has made fiscal discipline one of the cornerstones of his reelection campaign. He regularly accuses Kerry of calling for $2.2 trillion in new government spending, and says the Massachusetts Democrat would fuel expanded government spending with across-the-board tax increases if he were elected.

Yet the president's standard campaign speech includes a litany of items he wants more federal dollars to support, and no items that he wants to cut.

Bush has presided over four years of sharply rising federal spending, beyond even the costs of war and homeland security, as well as tax cuts that have contributed to record deficits after a brief period of record surpluses. He championed the addition of a prescription drug benefit for Medicare, which is expected to cost more than $500 billion over 10 years, and has pushed for more federal dollars to flow to local schools and farms.

Bush likes to point out on the campaign trail that his budget for fiscal 2005 boosts discretionary spending by only 0.5 percent, excluding spending on national defense and homeland security. The president's budget identified cuts that could save $14.5 billion in the first year. But as the National Taxpayers Union pointed out, the president's budget includes 17 times more new spending than it does cuts. While Congress approved the new spending throughout the Bush presidency, Bush has not vetoed a single appropriations bill that's reached his desk.

"The president has no credible case for fiscal discipline, or for being sounder than Senator Kerry on this front," said Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a liberal-leaning research group. "It's a policy path that puts you on a road to serious economic damage."

Glen Johnson of the Globe staff contributed to this report.

By Rick Klein

To see more of The Boston Globe, or to subscribe to the newspaper, go to http://www.boston.com/globe .

(c) 2004, The Boston Globe. Distributed by Knight Ridder/Tribune Business News.

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