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John Kerry talks economics

Democratic Presidential candidate John Kerry recently took his economic case to Middle America with a three-day bus tour through West Virginia, Pennsylvania, Ohio, and Michigan and  BusinessWeek's Richard S. Dunham caught up with him.
Sen. John Kerry (D-Ma), with deli cook Greg Ausserer of Ann Arbor, Mich. during the candidate's visit to Zingerman's on April 28.Jim Bourg / Reuters
/ Source: Business Week

Democratic Presidential candidate John Kerry recently took his economic case to Middle America with a three-day bus tour through West Virginia, Pennsylvania, Ohio, and Michigan. BusinessWeek's Richard S. Dunham caught up with the Massachusetts senator on Apr. 28 aboard the Jobs First Express between Ann Arbor and Detroit. Here's an extended version of the edited excerpts appearing in the May 17 issue of BW.

Q: You and the President both have plans to create "jobs for the 21st century." You both are going on bus tours of the industrial heartland.

A: [Laughing.] I'm intrigued that the President is following my lead. Now, in the context of the campaign, [the Bush team is] playing copycat. It's about four years too late. The American people will hold them responsible for the loss of 2.8 million manufacturing jobs. Let's see how direct and honest he is about his record.

Q: What's your top economic priority?

A: The most important thing is creating jobs and giving the American worker a fair playing field to compete on.

Q: But you can't say that you will restore all of the lost manufacturing jobs?

A: I'm not going to tell people it will happen in a day or a week or a month. I will restore investor confidence in the fiscal policies of the United States. I will restore worker confidence that the trade rules are going to be applied and enforced.

If we can offset the cost of health care [through my health-reform proposal], we can reduce the cost of doing business in America. What we need is an active President making these choices. What this country has had is four years of George W. Bush, and the only thing he can come up with is tax cuts for the rich.

Q: You talk about $60 million or $70 million in attack ads on your candidacy by President Bush. Polls show those ads are having some effect on perceptions on you as a tax-hiker. Are you concerned about the reaction of swing voters to the ads?

A: Swing voters are smarter than the Bush people think, and they see through that kind of malarkey. Once people hear what my vision is, we will do better.

Q: The Bush campaign says you'll raise taxes by $900 billion in the first hundred days. You say you'll cut taxes to 98% of taxpayers.

A: I will hold onto the 10% bracket, which will benefit all taxpayers. I will keep the child credit and the marriage-penalty fix. I will only roll back [the top marginal rate] to the level it was with Clinton.

Then I have tax cuts on top of that. The $4,000 tuition tax credit, a tax credit for small business and the self-employed for 50% of health-insurance costs. That's two very significant tax cuts putting money back into people's pockets. That will give the middle class a huge break. [In addition,] 163 million people who get health care at the workplace will save $1,000 [a person]. That's a very significant tax cut.

Q: The President says his tax cuts have turned the economy around.

A: The President is fixated on tax cuts for wealthy Americans. It's the most extreme example of trickle-down theory, and he has pursued it to the exclusion of common sense.

Q: Haven't the tax cuts had any stimulative effect?

A: Of course [they have] had some stimulative effect -- there's a lot of money sloshing around the system from tax cuts and military spending. The question is: Is [all that] an anchor that's holding back growth? They're not making smart economic choices and are fiscally irresponsible.

Q: You talk a lot about fiscal responsibility and reducing the deficit. How will you do it?

A: I have a fiscal record beginning in 1985 [with support for the Gramm-Rudman-Hollings budget-balancing law]. I've been there and done that. I put the country on a responsible fiscal course then. It's important that we do that now.

Q: Do people really care about the deficit? Is it an issue that voters will vote on?

A: People care about the deficit. They know they're going to have to pay for these tax cuts. They know the interest rates will go up, and their kids will be saddled with debt. They know the impact it will have on Social Security and Medicare. People are much smarter than the pundits think.

Q: Do you expect higher interest rates to follow as a result of the current deficit?

A: Of course. Unfortunately, logic tells us that it won't happen until after the election.

Q: You have long been considered a supporter of free trade in the Democratic Party, which is not always a popular position. With a record trade deficit and growing controversy about international trade, are you having any doubts about your position?

A: I have doubts about the way the Administration is enforcing trade agreements. This Administration takes rigid ideological positions that hurt American business and American workers.

There's nothing wrong with a trade agreement that contains enforceable labor standards and environmental standards. We have antisurge and antidumping provisions in current trade agreements. This Administration doesn't enforce them. Why? They're just being rigid and doctrinaire. They've had four years to do it and have failed.

Look, I know we're going to trade. I want American companies to succeed. But I don't want American workers to subsidize with their tax dollars the export of American jobs. A lot of people feel that this rush to the bottom doesn't serve either [trade partner] in the long run.

Q: The WTO has pretty consistently ruled against American interests. Do you have any concerns about the way the WTO is acting?

A: I have concerns about the standards applied in some of the [WTO] judgments. I think it needs to have a little more transparency and accountability. We may need to reform it. And we need a more effective U.S. trade representative.

Q: How about bilateral agreements? What if the other country isn't living up to the terms of the agreements? How do you enforce them?

A: You agree [on a solution], or you pull out of it.

Q: President Bush and Karl Rove have gone after the votes of union workers. Has it worked?

A: Yes, the President and Karl Rove have gone after them. They're losing them their jobs. Ask any blue-collar American: They're tired of being gone after by this Administration. It has been the worst Administration since I've been in public life in its treatment of working people. You have overtime pay [rules], [lessened] OSHA [enforcement], [opposition to a] minimum-wage [increase], [an anti-union] NLRB, Davis-Bacon.... They've dealt a blow to the hopes of working people to do better and be respected.

Q: So the President is tilting toward Big Business?

A: Absolutely. It's his only policy. The Small Business Administration has been a big loser. Manufacturing partnerships: down. Job training, he's cut. You start moving down the list. All of the things they could have done that would have led to a softer landing.

But the economy suffered because of the short-sightedness and ideological rigidity of this Administration. It has done a great deal of damage to American business, particularly small business. I want to strengthen the SBA, the new market initiative, microlending, access to credit, and more. Every big business in America was once a small business. I want to create wealth. I want businesses to start up and succeed. I want companies to grow and compete well internationally.