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With all the debates going on in New Hampshire and Iowa, Bruce Josten, a tough-minded observer of Washington politics for the U.S. Chamber of Commerce, says he has just one question for all the Presidential hopefuls. Here it is: "Sir, we're going to have $100 billion surpluses for the next three to five years, and possibly even after that. What would you do with the money if you were President?"
Actually, all the major candidates have already provided an answer, in one form or another. I've culled through their position papers and answers to such questions in the debates so far. Their proposals, it turns out, are quite varied and provide an interesting contrast.
"SO HELP ME GOD."
Texas Governor George W. Bush is fairly straightforward about it. He would cut non-Social Security and Medicare spending by 5% to 10% (adjusted for inflation) over the next 10 years. Then, after adding in any other surplus, he would provide more than $1 trillion in tax cuts for families. Most of the money would go to upper middle-class and wealthy taxpayers, and a little would go to working-class families. Almost none would go to business.
Bush's dad, of course, got himself in trouble by backtracking on his Clint Eastwood-like promise of "read my lips, no new taxes." George W., not satisfied with making promises in the name of Dirty Harry, is now appealing to a higher authority: On Jan. 6, he promised "tax cuts, so help me God."
Arizona Senator John McCain will release details of his plan in a few days. He too would generate a big budget surplus by slashing nonentitlement government spending. But he would use two-thirds of the savings to shore up Social Security and Medicare. The rest would go to a tax cut, though a smaller one than Bush's.
HAPPY ELDERS.
McCain's tax cuts could be interesting -- geared much more to working-class families. He would, in effect, create a 15% flat tax for most filers. And McCain goes Bush one better on business taxes. Where Bush would leave them untouched, McCain would raise some corporate taxes with a series of loophole closers.
If McCain actually shifted money from the FBI, national parks, or other discretionary programs to Social Security and Medicare, as he has proposed, he would accelerate a significant trend. Over the past couple of decades, America's seniors have been soaking up a larger and larger share of the federal budget. Today, seniors get more than one-third of all federal dollars. That's more than any other single group in America. Depending on what he does, McCain could raise the retirees' share to more than half.
Bill Bradley's agenda is built around one Big Idea: He would use federal budget surpluses to restructure the nation's health-care system. That effort could be hugely expensive, perhaps $1 trillion or more over 10 years. And Bradley won't say how he would pay for it, beyond proposing a modest effort to rein in corporate tax shelters. Would he cut spending elsewhere, raise other taxes, or scale back his plan? He hasn't said yet.
LITMUS TEST.
Al Gore is the candidate of many modest ideas. His plan for the surplus: $300 billion in targeted tax cuts for married couples, education, health care, and savings, plus additional spending for education and tech. A big question for Gore is where would he get the money to pay for his initiatives? Would he cut other domestic programs? And if so, by how much?
All the candidates still have plenty of details to flesh out. But as they campaign over the next 10 months, keep Josten's question in mind. It isn't a bad litmus test for deciding which way to vote.
Gleckman, senior correspondent for Business Week in Washington, offers his views on Mondays for Business Week Online EDITED BY DOUGLAS HARBRECHT
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