By JOHN HOOD
RALEIGH – In North Carolina’s three competitive federal races – for U.S. Senate, the 8th Congressional District, and the new 13th Congressional District – voters will likely be presented with clear differences of opinion on three major issues before the country.
The first is Social Security. Obviously, the issue virtually dominates the U.S. Senate contest between Republican Elizabeth Dole and Democrat Erskine Bowles, at the latter’s instigation. He believes that Dole’s support of the Bush administration and its plans to introduce personal control and real investment into the program is unpopular enough to revive his flagging fortunes. Dole, to her credit, has stood fast behind the idea that the only way to avoid massive tax hikes or benefit reductions in the coming decades – indeed, the problem begins in about 15 years, in 2017, when Social Security benefits are estimated to exceed payroll-tax collections – is to invest the current surplus to expand the capital stock of the country, thus generating higher income from those investments when the fiscal crunch appears.
Haven’t heard it explained that way? Neither candidate has an incentive to do so. Bowles, who surely understands the issue better than his campaign would suggest, cannot afford to spell out an alternative to private investment. There are at least three he could honestly advocate. One is to simply cut benefits for Baby Boomers. The next is to raise either payroll taxes or tap into general (income) taxes, which is economically similar, to pay existing benefits. The third is to take today’s surplus in payroll taxes and “invest” it in public capital formation, such as roads, bridges, and aircraft carriers.
The first two are political anathema. The third is old-school Keynesianism, which will sound dated and vaguely liberal to swing voters. Having no alternative to sell, Bowles is attacking Dole for her moderately strong defense of the proper solution. We’ll see if it helps him.
The second issue is free trade. In the 8th Congressional District, Democrat Chris Kouri is attempting to use incumbent Republican Robin Hayes’ vote for fast-track negotiating authority for the president as a sledgehammer in a district broadly impacted by international trade. Some “conservatives” and Republican operatives think that Hayes and other GOP candidates should walk away from free trade, at least in North Carolina. I think that’s bogus – most voters know that free trade means better products and lower prices and protectionism means worse products at higher prices. Furthermore, protectionism is nothing more than an institutionalization of tax increases on consumers. Since when is it politically astute for conservative politicians to advocate higher taxes? Again, we’ll see how much the issue helps, or hurts, Kouri.
Finally, we have the emerging debate over war with Iraq. I’m betting that this issue might arise in the 13th Congressional District, where down-the-line liberal Brad Miller got the Democratic nomination and recent party convert Carolyn Grant got the Republican nod. Neither candidate has been pressed to take a firm stand on the coming war, but I expect that the Grant campaign will seek to make this happen. Miller’s views on Iraq, the United Nations, and the president’s request for an authorization of force may prove to be well out-of-step with an otherwise Democratic-leaning constituency in the new 13th.
In all three instances, the results of pivotal elections in North Carolina may tell us something about the direction of federal policy for years to come. Will we choose private investment over government growth? Will we choose a high-tax, protectionist regime for international trade or a free-market one? Will we do what the Bush administration believes is necessary to protect the freedom of the U.S. and the world, or will we defer to the UN?