The tax cut bill signed last week by President Bush is a good start to stimulate the sagging U.S. economy. But a last-minute change made in a House-Senate conference committee has turned an otherwise good bill into a potential stinker.
With Democrats excluded from the conference committee, Republican conferees axed a child tax credit for families with incomes between $10,500 and $26,625 -- that is, the people who need a break the most.
In North Dakota, some 19,000 working poor and low-income families will be cut out of the tax bill's child tax credit benefits. Across the nation, millions of families with children will not receive the additional child tax credit.
What happened? The credit was included in the bill that went to the conference. When the final legislation emerged (senators did not even get to see the final bill until after debate was over) the child tax credit for low- and moderate-income families was gone.
The spin coming from Republican apologists is that in order to reduce the full tax cut package to $350 billion, the committee had to pare back some reductions. Republicans are saying it was done because moderate GOP senators and Democrats insisted on the smaller tax-cut bill.
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But that partisan hogwash does not answer the questions: Why adjust the tax bill by hurting families on the low end of the income spectrum? Why didn't conferees make a slight adjustment (and it would have been very small) in upper income brackets in order to reach the $350 billion goal?
The action plays right into the hands of critics of the president and his party. They can point to the conferees' callous maneuver and charge Republicans are really not interested in helping working families. Instead, they again have tilted a tax package to wealthy people and corporations.
The charge is overblown, but the impression is valid.
The tax bill is far from perfect. No tax bill is. But provisions for small businesses (where most jobs are created) likely will have some stimulative effect. In addition, changes in the way investments and stock dividends are taxed will put more dollars into business investment which will result in economic growth.
On the wage-earner side, reductions in income tax rates will put more money in the pockets of consumers. Consumers are the prime driver of the economy; the more money they have to spend, the stronger and quicker economic recovery will be.
Economists know that low- and moderate-income families have to spend money to make ends meet, so the child tax credit checks would have gone to work for economic recovery right away.
But beyond economic stimulus, the additional child care tax credit (about $400 per child) should have gone to those families that most need it. In much of North Dakota (and in some parts of northwest Minnesota) family incomes are low -- flirting monthly with poverty. Human service workers tell us poverty levels and the number of stressed working poor families are on the increase.
Denying a modest child tax credit increase to those children and families was a mistake -- a petty display of insensitivity that taints the president's otherwise reasonable tax bill.
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Forum editorials represent the opinion of Forum management and the newspaper's Editorial Board
