Cut the boondoggles, not the people

SCOTT A. HODGE

March 19, 1992|By Scott A. Hodge

AFTER MONTHS of political squabbling over how to jump start the economy, both the House and Senate seem to agree on one thing: Something must be done to lighten the crushing tax burden on middle-class American families.

The Senate soon will debate a tax bill that alleviates the tax burden on some Americans, but does so by raising taxes on others -- and without giving a much-needed boost to the sagging economy. The bill would cut taxes on average working families by increasing taxes on those with incomes above $150,000 a year -- those who typically invest and create jobs. The House approved a similar measure in February.

Both plans would pay for their middle-class tax break with pink slips. "Soak the rich" tax increases always have that effect: Ask the two million people who have lost their jobs since Washington imposed a record tax hike in its 1990 budget agreement.

Instead, Congress should finance both tax cuts and tax incentives by placing real controls on runaway federal spending. Indeed, no tax-reduction plan can be declared "fair" or sensible if it fails to cut government spending.

According to Congress's Joint Committee on Taxation, the Senate tax package will mean a loss of revenue to the Treasury of about $57 billion over the next five years. To make up for this revenue loss, the bill raises $57 billion in new taxes: It creates a fourth income tax bracket for single taxpayers with incomes above $150,000 per year and for families with annual incomes above $175,000 per year, by imposing a 10 percent tax surcharge on millionaires, and by other measures aimed at upper-income Americans.

Lawmakers who cheer the "fairness" of these plans seem content to allow domestic spending to continue its meteoric increase: Adjusted for inflation, domestic spending will grow 70 percent more in the four fiscal years since Ronald Reagan left office than it did during the 12 years of Jimmy Carter and Reagan combined.

But neither the House nor the Senate plans to do anything to rein in the spending beast. In a $1.5 trillion budget, lawmakers apparently could not find a single dollar of pork, fraud or wasteful spending that could be cut, with the savings returned to taxpayers. Believe that and you're ready to believe in leprechauns.

If lawmakers are serious about turning government waste into tax relief, here are some programs that could easily be cut to raise revenue:

* Save over $10 billion in the next five years by canceling the proposed space station.

* Save over $9 billion by eliminating the Department of Agriculture's Conservation Reserve Program, which pays farmers not to plant crops.

* Save $700 million by closing or selling the National Helium Reserve program, begun in the 1920s when it was thought that blimps would be used actively in the U.S. military.

* Save over $10 billion by lowering the subsidies paid to wealthy agribusinesses.

* Save $1.2 billion by eliminating the honey, wool and mohair subsidy programs.

* Save $5.2 billion by eliminating unnecessary highway "demonstration" projects.

* Save $2 billion by cutting the travel costs of the federal bureaucracy.

* Save nearly $12 billion by holding the increases of federal personnel costs at the inflation rate, a measure suggested by the General Accounting Office.

* Save $5.7 billion by eliminating school lunch and other nutrition subsidies to middle and upper-income families.

* Save $1.2 billion by eliminating the Economic Development Administration, which for many years has been a source of pork barrel funds for members of Congress.

The congressional schemes do none of these things. All they do is raise taxes on Peter to pay Paul. In a recession, that sort of tax game usually puts Paul on unemployment.

Scott Hodge is Grover M. Hermann Fellow in federal budgetary affairs at the Heritage Foundation, a conservative Washington think tank.

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