Recovery plan stumbles in the streets of America

January 30, 1992|By Susan BaerTom Bowman, Karen Hosler and Richard H. P. Sia | Susan BaerTom Bowman, Karen Hosler and Richard H. P. Sia,Washington Bureau of The Sun Sun staff correspondents yxB

WASHINGTON WILL CONGRESS GO ALONG? — WASHINGTON -- Already, some of the early income tax filers in Cuyahoga Falls, Ohio, have started hounding mailman Richard Hanna for their refund checks.

"Today? Tomorrow? Will it be here soon?" they ask.

"People live for these refund checks," says Mr. Hanna, a 26-year veteran of the U.S. Postal Service. "And they're a lot more likely to buy big-ticket items with a refund check than with a few more dollars a week in their paychecks. I know I would be.

"I really don't think a couple of bucks a week is going to do much good for the short term."

A couple of bucks a week is what taxpayers could find in their pockets with President Bush's proposed change in income tax withheld, one of the various incentives and tax breaks outlined in his fiscal 1993 budget.

And like Mr. Hanna, many Americans -- from Cuyahoga Falls to Groton, Conn., to Diamond Bar, Calif. -- say they believe that the president's proposals are little more than tinkering and would have little, if any, effect on the strains, squeezes and sacrifices they feel in their everyday lives.

Bud Henry, a real estate agent with Richard Sowers Realtor Inc. in Diamond Bar, says the president's proposal for penalty-free use of Individual Retirement Account funds along with tax credits for first-time home buyers will do little to bring back his business, which has dropped off 60 percent in the past year.

"How many first-time home buyers do you know who have IRAs? These are not the yuppies of America. These are kids getting out of school; they're 21-year-olds," says Mr. Henry, whose office has shrunk from 22 agents to 6.

The tax break -- a credit of up to $5,000 for first-time buyers -- may work to stimulate the housing market in the long run, he adds, "but it's not something a first-time home buyer can put in his pocket when he goes to buy a home."

The purchase of homes -- especially condominiums and starter homes, he says -- has virtually come to a halt in his neck of Southern California. His hope is that Mr. Bush and Congress will push for looser regulations on lending, rather than tax breaks.

At Luzzi's Pizza & Deli, a popular lunch spot in Groton, Conn., for employees of the Electric Boat Division of General Dynamics Corp., the hopes yesterday were even keener, the anxiety more palpable, the danger more immediate.

The proposal for cuts in military spending would terminate construction of Seawolf submarines, a project that now employs about 17,000 workers at Electric Boat, and would jeopardize the jobs of many others.

"If they end up cutting everything, we all could lose our jobs," said one man, asking that his name not be used. "My son might have to drop out of college, and my daughter might not have the chance to go to college. In this area, it's going to be pretty hard to find another job. McDonald's is going to have a long waiting line."

Joseph Luzzi, who just opened the pizza parlor down the block from the nation's leading submarine builder, said his regular customers lately have been lunching on fear along with meatball subs.

"People are very, very worried. Very, very shaky," said the owner, who himself fears having to close shop if he loses his customer lifeline. "Things don't look good for the Connecticut area here. It's going to be a ghost town."

And it is the unemployed, as well as the working poor, who will reap the least from the fiscal '93 budget, according to their advocates.

The president's pledge to make health insurance "affordable for all low-income people not now covered" through a health insurance tax credit translates to no help at all, says Lynn Clothier, president of Indiana Health Centers, a private, non-profit Indianapolis-based organization of 14 clinics serving low-income and homeless populations.

"The really hard hit, the people we see who are at or [near] 100 percent of poverty -- I don't think they're paying much in taxes," shesays.

And the working poor are most strapped by cash-flow problems, she adds.

"For them to think about having additional money pulled out of their paychecks for health insurance, even if they're going to get it back later, is going to be a hard sell for the average worker bee," she says. "For them to have to upfront the money for either insurance or health care and wait until tax time to get the money back means they'll go without necessary health care.

"A lot of people in Washington have forgotten what it's like to live hand-to-mouth," she says.

Beyond that, she says, the complexities of the tax code keep many low-educated, low-income families from taking advantage of tax breaks such as those proposed by Mr. Bush.

Even within her own staff, she's noticed that "the higher the income, the more readily they buy into benefits that have tax incentives. The lower the income, the less readily they buy into it. They don't understand it.

"It's not that they're dumb," she says, "they don't understand. It's complex."

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