A Boost for the Economy
Editorial
The New York Times
December 14, 2001
President Bush and Congressional
leaders are finally getting serious about
negotiating an agreement to stimulate the
economy and provide help for those hit
hardest by the recession. With only a few
days left to reach an accord, Republicans have, little by little, acceded to
Democratic demands to extend jobless payments and provide health benefits to
those thrown out of work. The Democrats in turn have agreed to expand tax
breaks for business. But the talks remain snagged on a few areas, the biggest
of which is the Republicans' misguided insistence on income tax cuts for the
wealthiest Americans. Dropping that demand could help produce a quick and
welcome agreement.
In striving to reach a compromise, Republicans and Democrats need to
remember a few key principles. The first is that the package, estimated to cost
$100 billion in the next year, should not permanently widen the federal deficit.
It should concentrate its benefits on the most needy Americans. It should
provide a quick and real stimulus to the economy. Finally, and most important
for New York, it should not only hold states harmless against tax code changes
that reduce state tax revenues, it should provide financial relief to the states.
Unfortunately, the Republican strategy since Sept. 11 has been to lard the
stimulus bill with unnecessary tax benefits to those least in need of help.
Republicans are now trying to win over a handful of conservative Democrats
who voted for Mr. Bush's tax cut earlier in the year. The administration should
instead work for a package that wins broad bipartisan support.
Republicans do seem willing to drop their insistence on eliminating the
corporate minimum tax, a step that would have awarded huge tax breaks to
the nation's biggest businesses. But the G.O.P. still insists on accelerating the
individual income tax cuts enacted earlier this year. That mostly helps families
making $150,000 or more. It also widens the deficit, and is intended to lock in
tax cuts for the rich.
Though the Republicans have agreed to expand health benefits for the
unemployed, their proposals favor young and healthy people at the expense of
older and ill Americans. The health benefits plan needs to be restructured.
Equally important, the tax breaks for expenses and depreciation, now endorsed
by Democrats as well as Republicans, would cost the states $5 billion in lost
revenue, because their taxes are based on federal law. The bill needs both to
make up for that lost revenue and help New York and other states cope with
their budget deficits. Otherwise, Congress would end up trying to stimulate the
economy while forcing states to cut aid to schools, health care and social
services.
Congress members love to talk about their respect for state governments.
They should back up their talk with money and include state aid, as George
Pataki of New York and other governors are asking.
nytimes.com. |
