- The Washington Times - Friday, March 21, 2003

The moral limits of international commerce

Bruce Bartlett has always opposed economic sanctions because he believes in free international commerce as a philosophical principle ("Trade sanction futility," Commentary, Wednesday). Yet, what would have been the result if Saddam Hussein of Iraq had enjoyed unrestricted access to world commerce in the past decade?

We know that he manipulated the "oil-for-food" program and engaged in smuggling to obtain resources to support his weapons programs. But this was inefficient and did not provide Iraq with enough resources to complete its nuclear program or modernize its armed forces. But if Saddam had had substantially more money and more open trading opportunities, he undoubtedly would have made more progress and today present a challenge far more difficult to confront.

Too much of the sanctions debate has centered on the false notion that sanctions alone can topple a regime. The real purpose of sanctions is to limit the resources an opponent has available to support his ambitions. Sanctions may persuade a government to change its policies, or weaken it enough so that it may be contained. Or they may retard its growth so we may stay well ahead of it in power.

If conflict still comes, our troops will be very happy for every capability the enemy does not have because sanctions denied our enemy the means to acquire it.

Mr. Bartlett's desire that traders be allowed to make money regardless of the consequences is not just untenable in our dangerous world, it is immoral.


WILLIAM R. HAWKINS

Senior fellow

U.S. Business and Industry Council

Washington

Guatemala's drug record

The government of Guatemala has made significant progress in its anti-drug efforts, prompting John Hamilton, the U.S. ambassador, to express his satisfaction and commitment to work with the Portillo administration. So I was disheartened to read the article "U.S. agents see drug flow via Guatemala on increase" (Nation, March 11).

The article unfortunately focused on old State Department reports and relayed only one side of the issue. The government of Guatemala and President Alfonso Portillo are working aggressively with the Unites States to stem the damaging flow of drugs through our country. In the past two weeks alone, Guatemala has made several key arrests that resulted in breaking up a drug-trafficking operation, dismantled a drug processing lab, seized 176 kilos of cocaine and 500 pounds of ephedrine (ecstasy) and destroyed more than 1,500 kilos of other illicit drugs. In the same time period, Guatemala cooperated with U.S. authorities by agreeing to extradite a suspect in a drug-related double homicide back to the United States. Also, in an unprecedented move earlier this month, Guatemala took full institutional responsibility before the Inter-American Court of Human Rights in the 1990 murder of anthropologist Myrna Mack Chang case.

These are a few examples of the proactive reforms the Portillo administration has undertaken to stop the flow of drugs through its country and respect international standards of human rights. Sadly, neither I nor any member of the embassy received a call asking for our comment on the issue on which our government is so focused.


ANTONIO ARENALES

Ambassador

Embassy of Guatemala

Washington

Giving builders a boost

Living in the lofty environs of a think tank, as Alan Reynolds does, must offer rare air ("High-income builder's subsidy," Commentary, March 2). For practitioners in the trenches, fighting to revitalize communities by channeling private investment into creating and rehabilitating affordable housing, his column doesn't quite ring true.

The National Association of Affordable Housing Lenders' (NAAHL) 200 member organizations including more than 45 nonprofit providers have spent decades in community development and revitalization. They know: Since 1986, the Low Income Housing Tax Credit (LIHTC) has generated more than $6 billion annually in private equity investment in more than 1.5 million affordable apartments nationwide. It produces virtually all of this country's affordable rental housing and is involved in 40 percent of all multifamily housing starts. These corporate investments account for about 98 percent of the equity capital generated by the LIHTC.

We support the Bush administration's proposal to eliminate double taxation of dividends. However, a surely unintended consequence of the compelling dividends exclusion proposal is that it undermines the market for one of the most effective tools for creating low- and moderate-income housing ever devised by Congress.

The genius of the LIHTC, Historic Rehabilitation Tax Credit, the New Markets Tax Credit and the administration's own proposed community homeownership tax credit is that, in essence, investors are making a payment in lieu of federal taxes. Funds from corporations provide the needed capital more efficiently and effectively than direct federal funding. If the government borrowed the same amount, invested at 4 percent over 10 years, the cost of capital alone to the federal government would be about the same with the added expense of federal program administration.

There's a better way. The Bush administration, in its wisdom, has seen fit to allow corporations to treat taxes paid to foreign governments as if they were paid in the United States. Investors who provide funds directly to affordable housing and community development in America should get the same treatment.

Our nation's housing needs remain acute. The Department of Housing and Urban Development estimates that 4.9 million seniors and families lack decent, affordable housing. Banks have helped meet that need by investing billions in housing credits and other debt instruments, with positive effects on the nation's housing stock. Clarifying President Bush's proposals would help them continue to do so.


JUDITH A. KENNEDY

President and chief executive

National Association of Affordable Housing Lenders

Washington

Qualifying per-pupil spending

The March 13 editorial "Per-pupil spending" cites a recent Census Bureau report and other sources to support the assertion that per-pupil spending by the District is dramatically higher than the "average" state. Comparisons of per-pupil spending by the District and any state, however, are highly misleading.

Per-pupil funding levels typically are a direct function of many factors, including the cost-of-living and the percentage of students with special needs (that is, low-income students, students requiring special education and students with limited English proficiency). No state, on a statewide basis, has as high a percentage of special needs students as does the District, and few states have as high a cost-of-living.

The Census Bureau report does contain data permitting somewhat more meaningful comparisons of per-pupil spending in the District and other large urban school systems. These data show that, for the school year ending June 2001, many such school systems (including Boston; Buffalo, N.Y.; Camden and Newark, N.J.; Hartford and New Haven, Conn.) report per-pupil spending levels substantially above the District's.

However, even comparisons using these data can be misleading. For example, special education costs for students in private schools, which amount to more than $100 million of the D.C. Public Schools (DCPS) budget, are a significant expense for many urban school systems. But in many other jurisdictions, these costs are borne directly by the state and are not reflected in an individual school system's per-pupil spending figures.

Fortunately, there is a recent study prepared by Parents United for the D.C. Public Schools, which makes an apples-to-apples comparison of per-pupil spending by D.C. and school systems in the surrounding suburbs. That study shows that local per-pupil funding for DCPS falls below state and local per-pupil funding of all but one of the surrounding jurisdictions all of which serve much lower percentages of students with special needs. These data clearly refute conventional assumptions that per-pupil spending by DCPS is higher than "average."


RONALD S. FLAGG

Washington

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