Bang for the Buck, Bust in the States

The White House wants another round of elite tax cuts masquerading as a
$214-billion “stimulus” plan for the economy. Now, even the nonpartisan
Congressional Budget Office (www.cbo.gov) has issued a report that undermines
the bulk of the plan. For a good, reader-friendly summary of the CBO’s debunking,
check out the report of the Center on Budget and Policy Priorities
(www.cbpp.org). According to
the center, certain tax breaks would actually
energize the economy–but not the ones offered by the White House. Here’s how the
CBO ranks tax breaks according to their “bang for the buck” criteria.

Large bang for the buck:

  • Holiday on employees’ share of payroll taxes
  • Holiday on state taxes

    Medium bang for the buck:

  • Extension of last year’s rebate to low- and moderate-income households
  • Temporary incentives for immediate business investment

    Small bang for the buck:

  • Acceleration of the marginal rate cut on high incomes
  • Repeal of the corporate “alternative minimum tax”
  • Deferral of the tax on certain types of multinational corporate income
  • Reduction of the capital-gains tax rate

    Few in Congress are proposing to address another aspect of the
    recession–the effect on poor and working people. The Democrats want mainly to
    increase unemployment-insurance benefits and health insurance for the
    unemployed–fine, but only part of the story. The National Governors Association
    calculates that state budgets will be $40 billion to $50 billion in the red this
    year, and nearly all of that will come out of programs–already bare bones–that
    serve the poor. A holiday on state taxes for the sake of “stimulus” would only
    make problems worse.

    Medicaid, which provides health coverage to about 44 million Americans, is on
    the chopping block. Last year, Medicaid costs rose 11 percent, with 20 percent of
    the increase attributed to the rising cost of prescription drugs. One remedy:
    Increase the federal Medicaid share–but that means more federal spending and
    less tax cutting.

    Families USA (www.familiesusa.org) wants Congress to boost the federal
    share.
    Throughout February, in the Kaiser Daily Health Policy Report, the
    Henry
    J. Kaiser Family Foundation     (www.kff.org) will be following health-care issues
    discussed in state-of-the-state addresses.

    Another widely ignored tax-cut casualty is welfare reform. Until this year,
    several states were using welfarereform money–TANF funds–saved from declining
    caseloads to pay for extended child care and for career-ladder programs. Now,
    with
    new people losing low-wage jobs and coming onto the welfare rolls, TANF is
    squeezed and these innovations are evaporating. The Center for Law and Social
    Policy     (www.clasp.org)
    offers a good summary of this bleak story. For background,
    check out The American Prospect‘s special “Making Work Pay” issue, archived
    online at www.prospect.org.

    If you’re tired of reading about various stimulus proposals, the inventive
    folks at United for a Fair Economy (UFE) have allowed you to create your
    own. Go
    to RecoveryWatchdog.org, where you’re given $100 billion and a
    list of spending
    options. UFE has already collected around 500 homespun plans, many of which are
    more plausible than most of what Congress is debating.

    Unlocking Immigration

    Anti-immigration conservatives have used the post-September 11 climate to
    push their protectionist agenda. Nearly completed in the days before the attacks,
    a U.S.-Mexico deal that would have allowed millions of Mexicans to obtain
    temporary visas to live and work in the United States was put on hold as the
    White House moved to tighten border security.

    Upon Congress’s return from its holiday recess, pro-immigration groups will be
    pushing for passage of the Enhanced Border Security and Visa Entry Reform Act.
    Introduced by Democratic Senator Edward Kennedy of
    Massachusetts with 39
    co-sponsors, the bill would tighten security without penalizing immigrants. The
    legislation enjoys broad, bipartisan support but lacks political momentum or
    White House backing.

    Also on Congress’s plate are the reorganization of the U.S. Immigration and
    Naturalization Service into two parts, enforcement and services, and the
    reopening of discussions with Mexico on a new immigration agreement. Republican
    moderates, including INS Commissioner James Ziglar and Secretary of State
    Colin
    Powell    , find their agenda undercut by “lock the door” extremists like
    Attorney
    General John Ashcroft and Director of Homeland Security Tom Ridge.

    Web activism is complementing the grass-roots lobbying and phone campaigns on
    behalf of immigration reform. The National Immigration Forum‘s Web site
    (www.immigrationforum.org) features useful background. The
    American Civil
    Liberties Union    ‘s Immigrants’ Rights Project (www.aclu.org/issues/immigrant)
    includes information on resisting “expedited removal,” judicial review, mandatory
    detention, and workers’ rights.

    The AFL-CIO will also be promoting liberalization of entry restrictions
    and
    better protection of immigrant rights, starting with a national round of public
    forums. The National Immigration Law Center (www.nilc.org) and the National
    Council of La Raza     (www.nclr.org) Web sites are two other valuable resources.

    • This article appears in Issue: The United State of America.