Bush or Kerry

There are sharp differences between the economic philosophies of President Bush and his challenger, Sen. John Kerry," says David M. Jones, a Federal Reserve expert, prolific author, Republican and part-time Sanibel resident. "Bush, in his campaign against Al Gore, ran in the center or slightly to the right. In his first term President Bush actually governed more conservatively than most people expected. He carried through on cutting taxes across the board, instituting three tax cuts.

"Candidate Kerry, branded an economic liberal who will spend and raise taxes by Republicans, has the disadvantage of only being able to say what his economic policy will be, and the advantage of criticizing what many voters see as Bush's economic failures."

Jones is former chairman and chief economist at Aubrey G. Lanston & Co. in New York City, and he earned a Ph.D. from the University of Pennsylvania. He also had a 35-year career as a Wall Street economist, has written several books and articles related to Federal Reserve policy, and has frequently provided economic analyses on national news programs. He divides his time between Sanibel Island and Colorado, and serves as chairman of Fort Myers-based Investors Security Trust Company.

The most recent of Bush's tax cuts-slashing taxes on dividends and capital gains to 15 percent, a distinct advantage for the wealthy-has been the most controversial. Criticism came quickly from Democrats. "But those cuts were critical in giving the stock market a boost," says Jones. "I'd say they were a confidence booster and are responsible for at least half of the rally we saw."

Jones believes that Bush and Kerry would have different effects on the market. "We've seen it reflected in the stock market already," he says. "When Kerry is reported to be ahead of Bush in the polls, the stock market weakens because of uncertainties and fears of how Kerry's economic plan will impact the market."

Jones believes Kerry will raise taxes on the wealthy. Many on Wall Street claim it will have to be a broad increase, covering more that just the most wealthy, to pay for Kerry's proposed medical and social programs. "Kerry will govern more as a liberal and try to soft-pedal the tax increases," Jones adds. "He plans much larger domestic spending programs, especially on health care, and these plans will be costly and require tax increases. Some conservatives say this will plunge the country into a recession."

Jones also believes Kerry will regulate business more closely, especially in foreign trade.

But he agrees with Kerry on a couple of issues. "Kerry is correct in that a middle-income squeeze does exist, especially in the areas of health care and college costs," Jones says. A key element of Kerry's plan for health care is to control costs by helping pay for catastrophic-care cases. To address the college-cost crunch, Kerry wants to create a tax credit that would cover up to $4,000 in tuition per year. The credit would be good for four years, the length of a typical college career. Kerry also has proposed to pay tuition at public colleges for students who agree to serve their community and country in national service.

Kerry and Democrats point to the weak economy during the first three years of Bush's presidency as poor handling of the economy. But Jones says some important changes are taking place, and signs of a strengthening economy are apparent. "Since the middle of last year, we've been seeing a slightly less-than-four-percent increase in the real GDP," he says of the gross domestic product. "The polls don't reflect this because of the lagging job creation, but I think the momentum is strong enough to cause new jobs to be created."

Jones predicts that by election time, voters will view Bush's handling of the economy more favorably.

The Job Issue

John Kerry wants to stop the outsourcing of jobs, an issue that has been a problem for the president.

There is no doubt that jobs have been leaving the country. Key swing states Ohio and Pennsylvania have lost many manufacturing jobs during Bush's term in office. Bush claims that job creation is on the rise. That's true, but it's a recent trend that doesn't offset the total number of jobs lost during his presidency.

But the loss of jobs is a complex issue, Jones points out. "We are now in the age of a world economy," he says. "If the U.S. stops outsourcing jobs, other countries are likely to stop their outsourcing of jobs to the U.S." Many people either don't know about or don't completely understand the complex impacts of world trade and an increasingly globalized economy, and how they affect the United States economy. Kerry's promise to keep jobs in the country and create more jobs plays well with voters, but his critics say that if he wins the election, he will be able to do little to stop outsourcing. "Kerry can promise a lot but deliver little," Jones says. "If he throws up barriers to keep jobs here, he could run afoul of the World Trade Commission."

According to Republicans, statistics on outsourcing are not as severe as Democrats say.

"The jobs being insourced are high-quality jobs," Jones says. "The 2003 numbers show that we outsourced $70 billion of jobs, primarily service-sector jobs measured by the services components of trade figures. At the same time, we insourced $130 billion of high-quality jobs."

Jones' Bottom Line

"I really believe stock-market uncertainty, because of terrorism and the war in Iraq, will have a major impact on who is going to win the election," Jones says. "I truly believe Wall Street will do well if Bush is re-elected and poorly if Kerry wins."

He adds a caveat to his prediction: "Lagging growth in new jobs is a major economic problem for Pres-ident Bush. There will not be free sailing for him for another four years."

And if Kerry wins, Jones adds, will he be able to implement and maintain his economic plans? "If Kerry becomes like Clinton did and governs from the center, things could be different; perhaps not as bad as Republicans think," he says.

But the new president also will have to deal with Congress. Control in the Senate and the House could change, Jones points out. "The winner must have at least one of the houses in Congress on his side," he says, "or the president's ability to accomplish his economic plans will be limited."

In Republican-dominated Southwest Florida, high net-worth residents, both full-time and seasonal, abound. Sent-iment definitely favors Bush for another four years in the White House. But Election Day is not until Nov. 2, and neither candidate is expecting to lose.

At least this election year, Florida can't be accused of throwing the election to Bush because of hanging chads. The days of relying on paper ballots in Florida are history. If there is a problem this time, it will have to be blamed on computer glitches. Of course, those never happen.