Tax relief as a class act Our Turn

November 12, 1991

The latest craze in Congress, as the end of this session approaches, is a plan to cut taxes on the middle class. Should Congress and the administration ease the tax burden on middle-class families?

* KATE O'BEIRNE: Only the most dimwitted lawmakers (redundancy) have failed to realize that last year's deficit deal slowed federal spending the way a 200-mile-per-hour speed limit slows traffic, and the new taxes stimulated the economy like a shot of Novocain. Taxpayers were told the deal was needed to reduce the deficit and keep the economy growing. Well, the deal led to a record increase in domestic spending and will produce America's first $300 billion-plus deficit.

Poll-watching legislators fear a voter backlash over the stalled economy and widespread anger about high taxes. There is a long overdue rush in Washington to get on the right side of tax relief for the endangered middle class.

Two Democratic senators, Lloyd Bentsen of Texas and Bill Bradley of New Jersey, have joined Republican lawmakers like Sen. Dan Coats of Indiana and Rep. Frank Wolf of Virginia, in calling for tax relief for families with children.

Bentsen's proposal would provide a $300 tax credit for each minor child and would be funded with defense budget savings made possible by the collapse of the Soviet empire.

The special interest groups who demand that defense savings be used to further bloat domestic spending should be repudiated. Bentsen correctly understands that American taxpayers have been paying the Cold War bill for over 40 years, and savings from the peace dividend is rightfully theirs.

Family tax relief should be combined with measures to get the economy moving again. Such a package would not increase the federal deficit if phased in over a five-year period and matched by cuts in government spending.

The Capitol Hill crowd is beginning to wise up and see that high taxes and high government spending stall job creation. This is good news for American workers and their families, because spendaholic lawmakers who refuse to back tax relief will have to answer for the misery of a prolonged recession.

* BONNIE ERBE: Bipartisan tomfoolery reigns supreme iWashington. Both parties are running faster than Carl Lewis in the 100-meter -- to claim credit for middle-class tax relief. There are more tax cut plans floating up and down Pennsylvania Avenue than black and white houndstooth-check jackets in designer racks at fashionable department stores this season.

Unlike President Bush's claim that the recession is behind us, a tax cut may actually give the economy the jump start it desperately needs. But a tax cut is a short-term, politically motivated response to a grave situation. The problem is that the American public (including my colleague) is buying it hook, line and stinker.

The main reason for the economic slump is the deficit. Our government is built on borrowed money. If we do not trim the deficit, the debt will become larger and more unmanageable, interest rates will never drop to real levels (because the government drives up those rates by borrowing voraciously), and the underlying causes of this recession will not disappear.

Politicians are loath to reckon with the public. Voters prefer candidates who say they will cut or limit taxes (witness Ronald Reagan and George Bush). But what these candidates don't explain is that they cannot deliver on such promises without disastrous economic effects.

Tax cuts are only sound policy when coupled with true program cuts. Politicians are almost as institutionally incapable of cutting government spending as they are of cutting programs. Governor Schaefer recently tried to trim several hundred million dollars in spending, and he felt the wrath of Marylanders who refused to accept fewer state police or other providers of basic services.

To hold lawmakers who refuse to back tax cuts responsible for the prolonged recession is pretzel logic, but pretzels are, unfortunately, the favorite food for thought among voters these days.

Kate Walsh O'Beirne is vice president of government relations at the Heritage Foundation. Bonnie Erbe is legal affairs correspondent for Mutual/NBC Radio Network.

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