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Just as in the presidential campaign, how to shore up a shaky economy and put the nation’s fiscal house in order occupies center stage in Virginia’s hard-fought U.S. Senate race.
Republican George Allen and Democrat Tim Kaine have put forth sharply divergent plans for fixing America’s economic woes.
And perhaps just as relevant for voters who will choose between them on Nov. 6, both candidates have records — Kaine as governor, Allen as governor and senator — that yield clues about how they would approach fiscal issues.
The stakes in the Allen-Kaine race could extend well beyond the single Senate seat being vacated by retiring Democrat Jim Webb.
The outcome may be crucial in determining which party controls the Senate — a key factor in the political landscape facing the president for the next four years, whether it is Barack Obama or Mitt Romney.
Allen’s and Kaine’s stances on taxes are emblematic of their many policy differences.
Allen has signed a pledge never to vote for a tax increase. Not only that, he proposes to cut the top corporate income tax rate from 35 percent to 20 percent, which he says would stimulate creation of 500,000 private-sector jobs a year.
Cutting taxes and curtailing government regulations are what it will take to get the economy growing, he says. “It’s time to send a message to the world that America is open for business again,” he has often declared on the campaign trail.
He would also allow taxpayers to choose a flat tax — a single rate applied across all income levels, with no deductions or exemptions.
That would likely result in a net decrease in federal revenue, since taxpayers could be expected to choose the option that would yield the lower tax liability.
When he was in the Senate from 2001 to 2007, Allen introduced legislation to enact a constitutional amendment requiring a balanced federal budget and giving the president authority to control spending with a line-item veto. He has pledged to renew those efforts if he is returned to the Senate.
Kaine has refused to take the no-tax-hike pledge. He says it is unrealistic to expect to balance the nation’s budget with an “all cuts” approach.
Allen paints Kaine as a reflexive tax-raiser, pointing to the Democrat’s 2006-10 term as governor as Exhibit A.
Kaine unsuccessfully backed tax increases for transportation improvements — an unresolved issue that still bedevils the state today — and, in his outgoing budget, proposed a $1.9 billion income tax increase that would have replaced the hated local car tax. That initiative, too, was killed by the legislature.
Kaine is quick to point out that he cut taxes, too. He signed bills removing 140,000 low-income Virginians from the income tax rolls and abolishing the estate tax.
Context is important in comparing Allen’s and Kaine’s terms as governor. The two served during radically different economic times.
Kaine’s term coincided with the deepest national recession in 70 years. Required by the state Constitution to balance the budget, Kaine presided over more than $5 billion in spending cuts during four years in office.
The cuts extended across a broad array of state services, from education to health to public safety. As state funding contracted, Virginia’s colleges and universities imposed steep tuition increases to make up the difference.
Alone among modern-era Virginia governors, Kaine left office with the state general fund smaller than it was when he was sworn in.
He even resorted to closing 19 highway rest areas — a relatively small budget cut that produced a big public backlash. His successor, Republican Gov. Bob McDonnell, reopened them.
“I had to make a whole lot of very, very tough fiscal decisions,” Kaine said in an interview, comparing his term to Allen’s. “I had to do things that he didn’t have to do.”
In contrast, the national economy was booming while Allen served as governor from 1994 to 1998. Even with more than $600 million in tax cuts, the state general fund increased by 45 percent. State funding for higher education went up, allowing Allen and the legislature to freeze college tuitions.
Kaine says Allen’s claim to fiscal responsibility is belied by his record in the Senate during the George W. Bush administration.
Allen, he says, voted to put tax cuts, two wars and a new Medicare prescription drug entitlement on the federal credit card, helping to turn a budget surplus into a deficit and add $3 trillion to the national debt.
Allen has proposed a Paycheck Penalty Act providing that if Congress fails to pass annual appropriations bills on time, members won’t get paid. Yet as a senator, he voted to raise his own pay four times.
Allen has also proposed banning earmarks — pet projects inserted into spending bills by lawmakers — until the government has a balanced budget. But during his Senate term, he voted for appropriations bills containing more than 50,000 earmarks.
Another sharp difference between the candidates is their stance on the Affordable Care Act, Obama’s health care overhaul.
If elected, Allen has pledged to work to overturn the law, favoring portable health savings accounts as an alternative.
He says repealing the law would save the nation $1 trillion over 10 years — a claim that has been debunked by independent fact-checkers. The nonpartisan Congressional Budget Office has concluded that repeal would actually increase federal deficits.
Kaine supports the health care law as a “first step,” saying more must be done to rein in rising costs.
He also promises he’ll work to preserve Medicare and Social Security for future generations and will oppose any efforts to privatize them. He has expressed support for raising the income cap on the payroll tax — now set at $110,100 — to shore up Social Security.
Allen has said he favors gradually raising the eligibility age for Medicare and Social Security and reducing benefits for higher-income retirees. As a senator, he voted for a bill that would have partially privatized Social Security.
He has also spoken favorably — while stopping short of an outright endorsement — of the House-passed budget plan authored by Rep. Paul Ryan, the Republican vice presidential nominee. Among other things, it would make Medicare a voucher program for those now under 55. But in an interview, Allen backed away from that provision.
“I’ve not advocated a voucher system,” he said.