Analysis Budget agreement is costly and skewed
By ARTHUR JONES
NCR Staff Washington
Some are celebrating the balanced budget agreement as a welcome
sign of the kind of discipline necessary to eliminate governmental red ink.
Advocates for the poor and working class, on the other hand, see
in the 1998 budget reconciliation tax package currently making its way through
Congress signs of grave danger ahead -- budget deficits as high as $700 billion
over the next 15 years.
What is especially worrisome, the critics say, is that some
Americans will benefit from about $240 billion in tax cuts over the next 10
years while in the decade after 2007 others are going to have to pay for them
as the cuts turn into deficits. That discrepancy, they say, raises serious
social issues that should be part of the public debate.
The $600 billion to $700 billion projected deficit outlined in the
fiscal year 1998 budget reconciliation tax package is the actual cost of
granting tax cuts while keeping to a balanced budget agreement, according to
the Center for Budget and Public Policy.
The publicly debated side to the tax package is on precisely how
$85 billion in tax cuts will be doled out in child tax credits, capital gains
cuts, estate tax exemptions, IRA tax exemptions and education tax credits.
However, as the Center for Budget and Public Policy -- founded in
1981 to examine policy priorities from a low-income family perspective --
states in a June 25 report on the Senate Finance Committee, these tax cuts are
"designed in such a fashion that keeps the costs artificially low in the
initial years so that the plan fits within cost limits the budget agreement
sets."
What Congress and the White House are doing together, regardless
of the fine details of the eventual agreement, is what many couples do when
purchasing their first house. To keep their household budget in balance, the
couple buys the house initially with perhaps a five-year low, fixed-interest
mortgage knowing that the full market variable interest rate, plus a balloon
payment, then awaits them.
The homeowners are hoping that by the time the balloon comes due,
their income will have increased sufficiently to meet their new and more
expensive obligations. The White House and Congress are hoping for the
same.
But they are not making this "backloading" (the term used to
describe costs to the U.S. Treasury increasing over time) a central theme of
the public debate.
Rather, the immediate public and political face of the current tax
battle is that of the House and the Senate reconciling tax cut minutiae, while
Congress and the White House wrestle over details.
The tax cut package will either aid primarily the upper middle
class and the wealthy (Congress' version) or aid the middle and upper-middle
classes and wealthy with a symbolic nod to the working class (the White House
version). "At some point we're going to go into economic recession and we're
going to be hurting again for revenues as outlays and revenues become further
unbalanced," the center's Wendell Primus told NCR, but "the Republicans
will say, 'well, the budget remains balanced.'"
Primus believes the issue of costs in the "out" years is serious,
and that the shortfall will have to come out of future entitlements and
discretionary spending. And that in turn will hit the middle class rather than
those higher up the income ladder.
Network, a Catholic social justice lobby, applauds fiscal
discipline but has "grave difficulty" with both the tax cut process and the tax
cut packages that "confer two-thirds of the proposed cuts on families with
incomes above $93,000, or the highest-earning 20 percent of all taxpayers."
There are other serious issues. In a June 30 statement, for
example, Network said Medicare and Medicaid should be restructured within the
context of comprehensive health care reform, not as provisions of a budget
bill.
Network's Sr. Catherine Pinkerton, a Sister of St. Joseph, sees
the budget package, like the earlier welfare reform bill, as "trends in the
nation."
People who care about the common good and a social contract, she
told NCR, "are fighting on four fronts in this country: on morality,
from social values to family values; on the role of government; on the domestic
economy itself -- people are still anxious despite the fact the economy is
supposed to be booming; and on the fact that people don't know what [the U.S.]
role in the world is."
Pinkerton said she "sometimes feels we had to come to this point,
of people beginning to look at the entire value system -- at the values that
undergird the economy, such as consumerism, consumption, greed," in order "to
go into some kind of national reflection on who we are as a people."
National Catholic Reporter, July 18,
1997
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