Fiscal Forethought Needed

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Wednesday, November 9, 2005

BOTH THE HOUSE and Senate face budget-related tests this week. The fundamental challenge in both chambers is setting government priorities in an age of limited fiscal resources: tax cuts for the wealthy or spending cuts for the poor? The answer, once again, will be determined by a group of Republican moderates.

The House test will come in the form of a scheduled floor vote tomorrow on a package that would save $54 billion over the next five years, of which more than $17 billion would come from anti-poverty programs. The proposed cuts would push some low-income working families and long-term legal immigrants off food stamps, eliminate child-care subsidies for some low-income working families, cut funding for child support enforcement, and require some low-income Medicaid recipients to pay more for their health care.

These cuts, part of a post-Hurricane Katrina push for spending discipline, would go deeper than the $35 billion agreed on in a budget blueprint this year and are unnecessarily skewed toward those least able to tolerate them. They are particularly egregious given House leaders' plan, in a later vote, to extend tax cuts whose benefits flow primarily to the wealthiest Americans, at a cost of at least $70 billion over the next five years. Moderate Republicans have the votes to block cuts in coordination with Democrats; do they have the courage?

There are commendable provisions in the House measure, including a repeal of an unwise -- and according to the World Trade Organization, illegal -- trade provision. The provision gives anti-dumping duties to the affected industries rather than the federal government; in other words, uncompetitive industries get trade protection plus cash back. Overall, though, the Senate's $35 billion savings package, approved last week, is preferable to the House version and would do less harm to beneficiaries of federal anti-poverty programs, who would take just a $4 billion hit. For instance, the Senate chose to cut a special Medicare subsidy for managed-care providers rather than slash Medicaid for the poor; it cut farm subsidies instead of food stamps.

But senators face a test of their own: The Finance Committee is set to vote tomorrow on whether to extend the 2001 and 2003 tax cuts. The panel's nine Democrats oppose an extension. Ten of its 11 Republican senators will vote in favor. That means the sole undecided test-taker is Sen. Olympia J. Snowe (R-Maine). The proposal would extend Bush tax cuts set to expire in 2008 for an additional year, until 2009. Ms. Snowe is being lured to vote for the plan with a proposed tax credit to compensate for higher heating bills. She shouldn't give in to this phony temptation; those who most need help with heating bills won't get any from a credit on taxes they don't owe.

This is the moment for thoughtful Republicans in both chambers to draw a line.


© 2005 The Washington Post Company

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