John Kerry, international man of mystery?

By wrecking the Western alliance, President Bush has paved the way for a President Kerry to rebuild it.

By Thomas Geoghegan

Mar 26, 2004 | At my local Imbiss, for doner kabob, in Berlin, the owner, no fan of Bush, worries that America might elect Sen. John Kerry and flee Iraq. "If he leaves it is chaos." Relax, I said. Kerry's more likely than Bush is to stay.

First, because the Democrats have to prove themselves: being tough, Rambo-like, is now a Democrat obsession. It's Bush who has more running room to get out of Iraq. But a bigger reason is: Relieved Bush is gone, the Europeans might pay for Kerry to stay on. So why close a losing show, when at last it starts to pay? Indeed, to roll back Bush's tax cuts, Kerry may need a real commitment to Iraq.

Consider this nightmare: In 2005, a President Kerry goes to the Republican Congress and tries to get a tax hike. Meanwhile, the Fed is raising interest rates, with Americans deep in debt. And he wants to raise taxes. Could anything be worse? (Yes, housing prices could be falling, as well!)

Better for Kerry to hang on in Iraq, and go to Congress, not for a permanent but a temporary tax: a "surcharge," a war tax. Call upon the country's patriotism. Doesn't the right wing pride itself on that? And if Congress gives him such a war tax, take it -- and let the Europeans pay.

This may sound like a bait and switch. But who would object? The Europeans might, but should not. If our deficit goes down, the dollar may stop falling. Or at least not fall to $2-to-a-euro. Even some of the Republicans would be relieved. (After President Clinton raised taxes, with every Republican senator voting no, one was famously quoted, "Thank God it passed!")

If there's a President Kerry, let's consider his big problems: cutting the deficit. Creating jobs. Fighting terror. It may just be that all of these are related.

Cutting the deficit.
Being a superpower is similar to being a Broadway producer: Rule No. 1 is to use other people's money. So Europe, the Middle East and East Asia should be paying us, at least for Iraq. Just in Iraq, the bill due could be up to $200 billion, in the next five to 10 years. And that's just reconstruction.

The point is: The allies should pay. As they paid for most of the Gulf War, with Bush I. Or Kosovo, with Clinton.

If only because Bush II fails to grasp this lesson that his father applied in the first Iraq war, he demonstrates he is unsuited to be president.

I have no doubt Kerry could get them to pay this much. But would they pay more? For example, the European Union might now kick in for the entire cost of our bases in Europe. It may be true that the Europeans are already paying their "fair share." About 72 percent to our 28 percent. But life isn't always "fair." Let them pay it all.

But what about South Korea, Japan, India? They should be defraying our costs more. And if they think we'll act more sensibly, and multilaterally, they may.

The only country that is doing enough is of course China, which, at some financial sacrifice, is buying the Bush bonds that no one else wants to buy.

Creating jobs.
If our allies (or ex-allies) are willing to pay more than for Iraq, Kerry could use the "surcharge," or the temporary war tax, to create jobs. His cover with Congress? To fight the war on terror.

Here he has the Clinton model to follow: Whenever there was an earthquake, or a fire in California, Clinton would announce a relief program and then money on some public works program he thought desirable on other grounds. So the same rule should work with the war on terror.

Indeed, it seems to me Kerry is sensible to say, "Bush isn't doing enough on terror," precisely to give him cover to start creating jobs. Recently James K. Galbraith wrote a wonderful piece explaining that the real "American model" is using federal and state taxes and tax breaks to create private-sector jobs in health and education. It's what he called "Soft Keynesianism."

By "Soft Keynesianism," we give tax money, credits, loan guarantees, to hospitals, universities and other "quasi-public" institutions. It's in this "soft" sector, not in manufacturing, where America is now best at creating new jobs. If we have a jobless recovery, it's partly because we're cutting back, not paying out to the soft sector.

Or put another way, we are priming the wrong pump. At the federal level, we are creating a huge deficit, so we can go on making transfer payments to individuals. But in adding new jobs fast, these payments have a weak indirect effect. And while we have a war, we've got a lid on the size of the armed forces, so we get fewer jobs.

Indeed, as mandatory entitlements explode and Bush's tax cuts bite, we've got no choice at the federal level but to cut away at jobs in homeland security and defense. And when the states now ask Bush for help, he says no. What he doesn't grasp of course is that it's state and local government, not the federal government, directly, that is on the front line of creating jobs.

The answer?

President Kerry should seek a war tax for a labor-intensive war on terror. Educate and subsidize the hiring of more nurses, of all kinds. We have a shocking national shortage. Spend for new hospitals, since there are shortages in urban areas. Spend more on teachers, to teach languages, language skills.

Forgive or cancel student loans, to keep more kids in college, so colleges in turn will go out and hire more.

None of this should be done at the federal level, where the Republican Congress can quibble over it: Just give it to the states, in the name of national security, with broad guidelines as to how to spend it.

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