Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, March 4, 1992 TAG: 9203040304
SECTION: EDITORIAL PAGE: A10 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
Why are politicians of all stripes falling over themselves in efforts to confer federal tax cuts on "the middle class"?
Is it because:
1. They think it will boost the nation's economy? Or:
2. It's an election year?
For those needing a clue, the answer has very little to do with economic policy. It has much to do with political pandering.
It has something to do, too, with the miserable state into which the majority of craven politicians on the national scene have fallen, as they clamor to buy votes at the expense of America's well-being and future.
The fact is that, in a year when the federal budget deficit is expected to reach $400 billion, Washington has no business cutting taxes.
Federal borrowing, economists point out, drains money from America's limited savings for private capital investment. With the cost of servicing the federal debt now above $200 billion annually, such borrowing also depletes funds that otherwise would be available to invest in public programs that the country badly needs.
The upshot: Tax cuts that add to the deficit could hurt long-term prospects for productivity and job growth.
Moreover, they would cause this harm without even providing a recession-busting economic stimulus, ostensibly the justification for offering the cuts.
While low interest rates already in place should help spur recovery, offering middle-class taxpayers a paltry 55 cents per-day tax credit is unlikely to generate much consumer activity. It would, however, add up to real money - $46 billion - when spread over the population and added to the federal deficit.
The Democratic tax-cut proposal (unlike President Bush's) at least includes the means to compensate for lost revenue; it would add a higher tax on the wealthy. But the deficit-neutral effect assumes Congress would allow the tax cut to expire two years from now - in another election year.
In any case, Congress would be squandering a justifiable source of new revenue on a giveaway gimmick of help neither to the economy nor to most Americans. What the nation's future requires is more investment in education, job training, research and development, and infrastructure.
A tax credit focusing relief on low- and modest-income families with children may be a good idea, but the election-inspired proposals mostly spread the benefits around to be all things to all people. "Middle-class" voters would get a little bit, while those most strapped - families rearing young children - would get not enough to make a difference.
Can't we do better than this?
As President Bush and most of the Democrats feverishly massage a surly electorate with tax-cut snake oil, give credit to presidential candidate Paul Tsongas for ridiculing the unseemly spectacle.
by CNB