- The Washington Times - Tuesday, January 21, 2003

The level of hatred congressional Democrats have for tax relief is exceeded in degree only by their love of big government. That's no coincidence. The latest overwhelming evidence for this proposition can be found in the two economic-stimulus proposals that congressional Democrats have offered in recent weeks. Both contain extremely heavy doses of federal subsidies for state governments, whose budgets soared during the second half of the 1990s. Those same stimulus packages also offer a relative paucity of tax relief.
Democratic Sen. Max Baucus of Montana, the ranking member of the Finance Committee, has offered a stimulus plan whose "main provision," according to his press release, is a no-strings-attached $75 billion federal payment this year to state governments. States would receive another $7 billion from the federal government for highway construction. As for tax relief, Mr. Baucus' plan would reduce income taxes of each worker by $300 or give a cash rebate of $300 to the millions of workers who pay no income taxes. If both husband and wife are employed, their maximum tax relief would total $600. Tax relief would be for only one year. If it sounds insignificant, it's because it is. In fact, the tax cut is so insignificant that it did not even merit a mention in Mr. Baucus' Dec. 19 press release announcing his "economic stimulus package."
On Jan. 6, the day before President Bush revealed the details of his stimulus and growth package, House Minority Leader Nancy Pelosi announced the stimulus proposal crafted in the Democratic caucus. It would provide one-time, refundable tax rebates of $300 for singles and $600 for couples. Meanwhile, state governments would get $31 billion for homeland security, highways, Medicaid and unemployment. (Separately, federal unemployment benefits would be extended for 26 weeks.)
According to both the Baucus plan and the House Democratic plan, the exorbitant federal payments to state governments would be for one year only. But the states' budget troubles will not last only for one year, a fact that strongly suggests congressional Democrats will seek future federal bailouts of state profligacy. Indeed, the seeds of the states' troubles were sown over at least a six-year period.
So, it's time for states to bite the bullet. They clearly overreached during the second half of the 1990s. Now they need to retrench. Meanwhile, Democrats ought to listen to the electorate, which overwhelmingly endorses the principle elements of middle-class tax relief proposed by Mr. Bush. According to last week's Opinion Dynamics poll of 900 registered voters for Fox News, the electorate favors (1) "speeding up the effective date for tax cuts that had been planned for future years" by a 54-31 margin; (2) "increasing child tax credits for parents" (78-14); and (3) "eliminating the marriage tax penalty" (74-12). The electorate also endorsed (47-37) "eliminating the taxes people pay on stock dividends," a major growth component of the president's plan. As this page conclusively proved last week, Mr. Bush's stimulus proposal provided far more tax relief to the overwhelming majority of low- and middle-income families than the House Democrats' plan provided, a fact the electorate seems to have grasped.


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