Grinch is in the House
When it comes to government spending, officials have a couple of choices. You can go the Reno-Sparks way and tighten the belt temporarily. Sparks recently put the smack down on purchases, construction and hiring. Reno plans to trim its budget by a modest 3 to 5 percent. This sounds like a reasonable move.
It makes another kind of sense for government to spend money to boost the economy. If that money gets spent in areas that help the average taxpayer, all the better.
Enter federal lawmakers. Given the go-ahead to stimulate the economy by spending some $75 billion or so, as President Bush first recommended, the Republicans and Democrats whipped out their Christmas wish lists.
The results were what you’d expect.
Democrats in the Senate Finance Committee last week passed their $67 economic-stimulus package that includes $14 billion in rebate checks for those who pay only payroll taxes, $14 billion to extend unemployment benefits by 13 weeks and to extend the benefits to part-time workers who previously didn’t qualify for help, and $6 billion to subsidize 75 percent of health care premiums for unemployed workers under the federal COBRA program.
Republicans want to spend much more—$100 billion this year and another $140 billion over five years. They want the money to go to different needy groups, like IBM, General Motors and Dynegy Inc.'s recently acquired Enron Corp., the giant oil and gas brokerage.
The Republicans’ stimulus package, which passed Oct. 24 in the House by a vote of 216 to 214, would dole out $115 billion in tax breaks to big businesses and wealthy taxpayers. It would reserve only about $14 billion in tax rebates and unemployment benefits for poor or moderate-income families.
“What’s more, the money given to corporate America is given without conditions—not tax credits tied to investments, but handouts more likely to end up in the CEO’s Christmas bonus than back in the economy,” writes syndicated columnist Arianna Huffington, who calls the bill “Operation Enduring Avarice.”
The Republicans’ bill would allow multinational corporations like General Electric and Ford Motor Co. to avoid paying taxes by shifting profits to offshore subsidiaries and keeping the profits overseas. How’s that going to help this nation? No word on that yet.
The bill’s “most grotesque feature,” writes Hendrik Hertzberg in this week’s New Yorker, not only gets rid of an alternative minimum tax on corporate income, its retroactive feature forces the U.S. Treasury to return taxes collected for the past 15 years. IBM would get a check for $1.4 billion; Ford would get a billion; General Motors would get $833 million.
Though it’s disguised as patriotism, this is blatant profiteering, an unconscionable move when so many people are facing a truly dismal holiday season. The list of public needs is long, Hertzberg writes, from national and regional security to public health to education.
“Stimulating the economy by seriously tackling these needs would gird the country’s loins and fit its somber and selfless mood,” he says.