Kerry Slams Bush Economic Policy

Democratic presidential hopeful John Kerry proposed new tax cuts now for the middle class, while criticizing the Bush administration's tax policy as "unfair, unaffordable and unquestionably ineffective in growing our economy.''

The Massachusetts senator made the comments in a speech prepared for delivery Tuesday afternoon to the City Club of Cleveland. Kerry said Sunday that he plans to form an exploratory committee for a run for the White House in 2004, with a final decision on his candidacy early next year.

"The largest cost of the Bush tax giveaway will not be borne by any of us here today — it will be paid for by our children. We're borrowing from Social Security and Medicare to put money in our pockets today — and sticking our children with the bill.''

White House spokesman Scott McClellan responded "there's going to be lots of jockeying between now and 2004 among the Democrats.

"I think the Democratic presidential aspirants ought to first resolve their own differences about what taxes they want to raise,'' McClellan said. "Then there will be plenty of time to talk about how cutting taxes encourages job creation and economic growth.''

To focus tax relief on lower and middle income workers, Kerry proposed "a payroll tax holiday'' on the first $10,000 of income, meaning no Social Security tax could be collected on that amount.

The Business Roundtable, composed of top executives of some of America's largest corporations, made a similar proposal recently, saying this relief from paying Social Security taxes would provide a needed boost to an uncertain economic recovery.

The business group estimated exempting the first $10,000 in wages from the Social Security tax would cost $129 billion next year. Kerry in his speech did not specify how long his tax holiday would last.

"Every worker in America would immediately receive a 765 dollar tax cut and every two-income family would get a cut of $1,530,'' he said, "money to help families pay for new school clothes, put a down payment on a new car or save for the future.'' He said his proposed tax cut would come out of general revenues and not from funds intended to support Social Security.

Kerry also proposed extending unemployment benefits that run out at the end of this year for 820,000 families.

"It is extraordinary to me that the U.S. Congress left town after passing a bill to help businesses with terrorism insurance, but will allow unemployment insurance to run out three days after Christmas,'' he said.

Among Kerry's other proposals:

—Raising the minimum wage and expanding the earned income tax credit that rewards low income families for being on payrolls instead of welfare rolls.

—Passing a new job creation tax credit to encourage employers to start hiring.

—Letting rapidly growing small businesses defer up to $250,000 in federal taxes if that money is reinvested in business.

—Simplifying the tax laws and making them more fair by closing loopholes and ending corporate welfare.

—Increasing investment and accelerating the technology to help with the search for alternative forms of energy.