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Thursday, August 21, 2014         

OUR VIEW: FEDERAL BUDGET


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Tax-cut deal is best for now


POSTED:



Reluctantly but correctly, Hawaii's congressional delegation has agreed to support President Barack Obama's deal with Republicans to extend the federal tax cuts that were a main cause of the nation's economic abyss. The alternative would have been unacceptable: higher taxes for all Americans and an ill-timed cutoff of unemployment compensation that millions rely upon to pay their housing bills and put food on their plates.

While liberal Democrats denounced and vowed to oppose the agreement in House and Senate chambers, Sen. Daniel K. Inouye said he "will hold my nose and vote for it." Sen. Daniel Akaka said he will support it with "strong reservations," while Rep. Mazie Hirono said she is "still hoping that we vote on a better package." Not surprisingly, outgoing Rep. Charles Djou, the delegation's only Republican, said he will support what liberal Democrats are likening to a surrender by Obama.

The agreement between Obama and congressional Republicans would restore an extension of jobless benefits to a maximum of 73 weeks in Hawaii and nine other states with unemployment rates of 6 percent to 8.5 percent.

The deal would allow tax cuts made during the administration of George W. Bush to stay intact for another two years -- without the Obama proviso that taxes paid by millionaires and billionaires return to their original rates.

Inouye said he wants to "ensure that working families, the unemployed and the poor have a good Christmas."

Akaka said he "simply cannot allow these middle-class tax cuts to expire or abandon the unemployed during these tough times."

Those immediate concerns are legitimate, including the usefulness of the unemployment benefits extension in helping stimulate the economy.

Of course, it's appalling that congressional Republican leaders are willing to hold the unemployed and middle-class taxpayers hostage in order to protect an extension of tax breaks for the rich. That giveaway was a bad idea, then and now. Bush was the first president in history to initiate, with congressional approval, tax reductions in time of war, while at the same time adding prescription drug benefits to Medicare.

As a result, the federal debt over the past 10 years skyrocketed from $3.5 trillion -- equal to the historical average of 35 percent of the gross domestic product -- to $9 trillion, 62 percent of GDP. The bipartisan Congressional Budget Office projects it will reach 90 percent of GDP by 2020. As a consequence, America has become the world's largest borrower, and the debt is destined to grow under current policies.

This more far-reaching concern has been examined by Obama's bipartisan deficit commission, with the majority of members signing on to deep spending cuts and revenue increases through an overhaul of the tax code. The next Congress should focus on that issue in a common-sense bipartisan manner, if such a thing is possible.






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