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Archive for Thursday, March 14, 2002

Newcomer sees through stimulus bill

March 14, 2002

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— Tom Carper has not been a senator long enough to understand how the game is played.

He was elected in 2000 and began serving just 14 months ago, so he has not yet absorbed the lesson that in Washington, symbolism is far more important than substance. Even though he served an apprenticeship in the House of Representatives more than a decade ago, his eight years as the Democratic governor of Delaware ruined him.

Carper, like other governors of both parties, became accustomed to being judged on the results he produced for his state, not on his rhetoric. That is why he was able to defeat a popular incumbent, William Roth, in their gentlemanly Senate election campaign. And it is why he looked at the so-called stimulus bill that whisked through Congress last week and was signed by President Bush on Saturday with such a skeptical eye that he was one of only 12 legislators in the entire House and Senate to vote "no."

He explained to his constituents that he could not be part of the game when "Congress passed a bill that spends money we don't have to fight a recession that is already over."

Four hundred and seventeen representatives  all but three of those who voted  and 85 of the 94 voting senators disagreed, and many of them spent the past weekend at home, bragging about the help they delivered.

The new law extends unemployment benefits in most states an additional 13 weeks, provides rapid tax depreciation as an inducement for business investment, funnels aid into the New York City area hit by terrorists last Sept. 11, and keeps in place a few random tax provisions that otherwise would have expired.

The lead sponsor of the measure, Rep. Bill Thomas, a California Republican, said it would cost the Treasury $41 billion over the next 10 years  less than $3 billion of which would go to the jobless; 90 percent or more would go to business. Critics put the overall cost much higher, but agreed that Republicans had scaled down the tax cuts from the earlier versions they had pushed through the House.

It was the scale of those tax cuts  some of which promised rebates of hundreds of millions of dollars to Enron and other giant firms  that caused Senate Democratic Leader Tom Daschle to block the earlier bills. In turn, House Republican leaders rejected the Democratic bills, which put most of the money into unemployment and health benefits for the victims of 9/11 and the recession.

All of this partisan by-play meant that help which might have reached businesses and workers before winter was not approved until two days after Federal Reserve Board Chairman Alan Greenspan had declared that economic recovery was "well under way."

Something else changed while Congress was dithering: The war on terrorism, the earlier Bush tax cuts and the recession tipped the federal budget into deficits. That means, as Carper pointed out, that the Treasury will be borrowing Social Security taxes to provide further corporate tax breaks, most of which won't "stimulate" anything until 2003 and 2004.

But the measure almost everyone in both parties is celebrating makes even less sense. Unlike earlier versions, it fails to provide any help for those who lost their health insurance when they were laid off.

And it adds insult to injury when it comes to state government. Earlier versions of the bill had recognized the damage the recession had done to state budgets and had increased federal payments for Medicaid  the health care program for the elderly and the indigent. Runaway Medicaid costs are the main reason more than 40 states are facing budget deficits totaling more than $40 billion.

Instead of helping the states, this bill penalizes them. The more generous tax write-offs given to corporations in this bill will reduce their tax obligations to their home states by an estimated $14.6 billion over the next three years.

It is not easy for one measure to be both so ill-timed and so substantively flawed. And this is probably only the beginning. As the Concord Coalition, a bipartisan budgetary watchdog group, has pointed out, this is "a very bad start" in an election year when the temptation will be strong for Congress to buy off every military and domestic claimant and just let the deficits soar.

The few Tom Carpers in Congress are going to have to practice holding their noses.




 David Broder is a columnist for Washington Post Writers Group.

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