Tax-Cut Surrealism

March 02, 1992

House Budget Committee chairman Leon E. Panetta said it well when he described the tax bill steamrollered to passage by the Democratic congressional leadership as "the first act in a surrealistic play that may have no ending."

The highly respected California Democrat has long been unhappy with election-year posturing by both parties that could lead to further ballooning of the national debt. But like all too many Democrats, he dutifully voted the party line in setting up a confrontation with President Bush.

Among the obedient majority were all Democrats in the Maryland delegation except Rep. Tom McMillen, who rightly concluded he wants no part of the administration proposal or its Democratic alternative. We expect Rep. Steny Hoyer to stand up and salute Democratic every time, because he is fourth banana in the party leadership. Most of his colleagues can also be expected to get along by going along since they are not tax experts.

But then there is Rep. Ben Cardin, the first Maryland member of the tax-writing House Ways and Means Committee in half a century. Mr. Cardin must know this legislation is a phony that will do little to get the nation out of recession and do a lot to condemn it to more and more federal debt.

Just what is wrong with a measure that would increase taxes on the wealthiest 1.3 percent of the population in order to give middle-class taxpayers yearly credits of up $200 each, or 55 cents a day? What's wrong is that the paltry 55 cents a day adds up to real money -- $46 billion -- when spread over the population. What's also wrong is that the legislative pretense of paying for this revenue loss by soaking the rich falls apart when one measures the chances -- almost zilch -- that Congress will let the tax cut expire after its allotted two years.

Earlier, we noted that the Democratic leadership got its measure out of Ways and Means by offering tax breaks to Southern lumber interests. Thursday it got the measure through the House by passing out goodies to the Michigan, Massachusetts and Ohio delegations. This is Christmas in February.

Now comes the Senate Finance Committee, where Chairman Lloyd Bentsen has agreed to raise taxes on the rich instead of paying for middle-class tax cuts by reductions in defense spending. The "peace dividend" would be diverted to civilian pork barrel. His committee is expected to pass a bill slightly more to President Bush's liking; alas, a veto is not assured. Despite shrill oratory, there is remarkable convergence behind such economic-stimulus proposals as tax reductions in capital gains, depreciation and industrial investment.

Which brings us back to Mr. Panetta. What bothers him -- and us -- is that these proposed tax cuts mortally threaten the 1990 budget agreement to instill needed discipline in fiscal management. We hope the tax charade will be a "surrealistic drama with no ending." But we fear the drama will have an ending -- an incumbent-protective tax cut -- that won't be good for the country.

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