Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, April 3, 1995 TAG: 9504050054
SECTION: EDITORIAL PAGE: A-7 EDITION: METRO
SOURCE: L.F. PAYNE
DATELINE: LENGTH: Medium
``Tough choices,'' we were told again and again, would have to be made if we are to end the reckless fiscal policies that threaten the nation's economic future.
As one who helped marshal support for the balanced-budget amendment among House Democrats, I share these sentiments and expressed many of them myself. More than anything else, the huge deficits of the past 20 years have slowed capital formation, hindered job growth, and sapped the nation's productive capacity. Restricting government's ability to borrow money and to pass the bill along to future generations - which is what the balanced-budget amendment is all about - is entirely consistent with our constitutional system of limited powers. It is also the best medicine we could give the economy in the long run.
Having listened to all the rhetoric during January's balanced-budget debate, it is hard for me to believe that the first ``tough choice'' made by my Republican colleagues in this new era of ``fiscal discipline'' is to cut taxes - by a whopping $188 billion over five years.
The Republican tax-cut plan - like the more modest tax cut being proposed by President Clinton - is just plain wrong. In varying degrees, both proposals repeat the age-old Washington mistake of borrowing from future generations to pay for what is popular right now.
What is in the Republican's tax-cut plan? At its core is a provision to provide families with a $500 tax credit for each child under 18. The full tax credit would be available to all families with adjusted gross incomes under $200,000. Because the tax credit is not refundable, it would be of no benefit to folks on the bottom rung of the economic ladder.
Other provisions of the bill would lower the amount of Social Security benefits that are subject to taxation, cut capital-gains taxes, eliminate the alternative minimum tax for corporations, and increase the estate and gift tax exemption from $600,000 to $750,000.
I have supported some of these latter provisions, such as measured reductions in capital-gains taxes. But when viewed as a whole, it is clear to me that the GOP plan is the wrong tax cut at the wrong time. Even many Republicans are beginning to question this particular promise in their ``Contract With America.''
Important though it is, the debate over the fairness and equity of the GOP tax cut misses an even more fundamental question: whether we should even consider a tax cut of this magnitude given current economic conditions and the size of the budget deficit.
To me, the answer is a resounding no. Long-term deficit reduction - not a short-term tax cut - is the best way to sustain economic growth and to ease the long-term financial burdens facing American families, not the least of which is interest on the national debt. My Republican colleagues have argued fervently that the entire $188 billion price tag of their tax cuts will be paid for with corresponding cuts in government programs. In other words, they will provide tax relief for corporations and people earning up to $200,000 by cutting discretionary programs sharply. The result will almost certainly mean reduced services for poor and middle-class children, sick veterans and the elderly.
Even if we could reduce spending in discretionary programs fairly and equitably - and in many cases we can - then the savings should be applied to reduce the deficit - not to keep us where we are today. The Republicans' tax-cut proposal simply keeps us in the deep ditch of deficit spending, with our wheels spinning and no movement forward.
It is time to restore the spirit of fiscal discipline and integrity that was so prominent last January and to make the ``tough choice'' against massive tax cuts.
L.F. Payne is a member of the House Ways and Means Committee, and represents the 5th District of Virginia in the U.S. House of Representatives.
by CNB