Deficit budgets can serve a purposeThe Balanced Budget...


February 13, 1997

Deficit budgets can serve a purpose

The Balanced Budget Amendment would deprive the economy of a powerful force that now automatically cushions the painful effects of business recessions.

The federal deficit now automatically gets bigger in recessions and smaller in prosperity. This is because in a recession, tax collections fall and unemployment benefits rise, while in prosperity the opposite happens. This is exactly the right medicine. But if the budget had to be balanced every year, the federal government would have to cut expenditures in recessions and raise tax rates. This would make recessions worse. It would be exactly the wrong medicine.

This effect is not trivial. The increase in the deficit in a typical recession is about 2 percent of national output. This is enough to prevent about a million people from losing their jobs. State governments would be hard put to fill the gap caused by federal abandonment of this automatic cushion.

The Congress and the states should reject the balanced budget amendment and thus preserve the automatic anti-recession cushion that the federal budget now provides.

Carl F. Christ


The writer is a Johns Hopkins University professor of economics.

A bit of Nebraska needed in Maryland

In the Feb. 9 article, "Working poor need a tax break," Professor Robert Keller sells himself short if he sees his idea to make Maryland's earned income tax credit refundable is simply a matter of fairness or a good "workfare" strategy.

A refundable tax credit is also a worthy economic development tool because it makes "bad" jobs "good" by raising their effective wage rates.

If Maryland's earned income credit were made refundable at its current rate, a wage of $4.75 an hour would be increased to an effective rate of $7.31 an hour after taxes without any cost to the employer!

We can continue to bemoan the loss of high-paying manufacturing jobs for the low-skilled and wish, hope, pray and pay for those jobs to return to Maryland or we can take the hand the marketplace has dealt and play with it.

The low-wage service sector is fueling much of our employment growth and will continue to do so through the end of the century. Instead of giving low-wage employers tax breaks to hire people they would have hired anyway -- or enacting a general income tax cut to lure more such employers to Maryland -- why can't state tax policy be used to ensure that work in Maryland pays a living wage? A refundable earned income tax credit can provide that assurance without governmental interference in the labor market.

The next time you think that working at McDonald's is a "bad job," remember that McDonald's pays $9 an hour in Nebraska. If Maryland really is a microcosm of the U.S., why not bring a little bit of Nebraska here right now?

Peter Sabonis


There is more to life than the O.J. trial

Why do the media think everyone is interested in the O.J. Simpson trial? The mere fact that the TV channels break into popular programs boggles the mind.

Evelyn Kuester


Too much 'fairness' leads to persecution

Regarding your Feb. 7 article on the John Destry school suspension, students at Harwood High hit the nail on the head when they described their school's discipline policy as one that ignores the intent and background of the alleged transgressors.

The zero tolerance policy as it is enforced here is a paragon of political correctness. It is a blind policy created by a cowed school board ever fearful that someone may claim that less rigid policies are unfair or discriminatory or that someone's offended sensibilities may bring on a lawsuit.

This is the second time in less than a year that an honor student has become the victim of a policy not really aimed at him (or her). I wonder when we will stop persecuting our best and brightest for the sake of a distorted concept of "fairness." There is certainly nothing fair about wrecking a good student's chance for success in order to achieve political peace.

Like Jodi Ulrich, John Destry is an honor student. He is not some trouble-making kid with consistently poor grades and a bad attitude. He appears to be one of those who may achieve a position of leadership in this country, not help fill up its jails. He may one day find solutions and answers for this country's ills, not be part of its problems.

That distinction needs to be made when deciding his fate over an issue such as this, whether it appears "fair" to do so or not.

Charles H. Thornton


Consider morality in slots decision

About 35 years ago the Maryland legislature had the courage to eliminate the slot-machine industry from the state. It was then ranked as having the second largest gambling operation outside Nevada.

Now a Maryland legislature with apparently less social understanding anticipates restoring the nefarious slot-machine industry. The motive, economic and political, reflects a low understanding of both.

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