The Best Hope for Fiscal Sanity
New York Times Editorial
November 8, 2005
In the next day or so, Senator Olympia Snowe, Republican of Maine, will decide the final shape of the tax bill moving through the Senate Finance Committee. Fiscal sanity hangs in the balance.
The committee has 11 Republicans and 9 Democrats; if Senator Snowe votes no, the tie vote will defeat the tax package. The committee's Democrats have refused to support the plan if it extends through 2010 the tax breaks for dividends and capital gains that are now set to expire at the end of 2008. Extending the breaks now makes no financial sense because it would merely lock in a huge and unaffordable drain on the Treasury. It is also morally wrong to give wealthy Americans a big tax cut when Republican lawmakers are barreling ahead with multibillion-dollar cuts in programs for the poor.
Many of these same lawmakers insist that they cannot spend an additional $3 billion for adequate heating subsidies this winter for low-income people. And that is where Senator Snowe comes in. A rare Republican voice for fiscal responsibility, she voted against the Senate's version of the bill on spending cuts, in large part because it did not provide adequate heating aid. Now, lo and behold, it appears that the committee's leadership may add to the tax package a new $500 tax credit to be used, presumably, to offset heating costs.
A tax credit is a bad way to deliver heating aid. It won't help the poorest people, who have no tax liability, and will be available to people who don't really need it. But Senator Snowe introduced a bill calling for a credit after the Senate repeatedly voted down attempts to provide heating aid in a more direct and timely way. Now Republicans are angling to co-opt the idea to secure her vote for tax cuts on dividends and capital gains.
By refusing to support another round of tax cuts for wealthy taxpayers, Senator Snowe could limit the committee's tax package to the few items that everyone agrees need to be passed - like extending beyond this year the law that gives middle-class taxpayers much-needed relief from the alternative minimum tax. Heating aid for the needy must be financed separately, and soon.
It's not politics to hold the needs of the poor hostage to the demands of the rich. It's blackmail.