Budget Blues and Fuzzy Math
|The Bush administration claims that its FY 2002 budget blueprint contains a $1.9 billion dollar increase for HUD. Not so, say Rep. John J. LaFalce (D-NY) and Democrats on the Committee on Financial Services. They charge that the numbers reveal a real spending cut of $2.2 billion. The discrepancies come from accounting that allows FHA receipts to be added to the HUD budget, and an increase in Section 8 budget authority that does not produce a penny in additional spending. So much for Bush’s intent to “end accounting sleights of hand.”
Among the real cuts in the blueprint are $859 million from public housing, including $700 million from repair and maintenance funds and termination of the Drug Elimination anti-crime program; $422 million from the Community Development Block Grants; $200 million from the HOME program; elimination of the $25 million rural housing and development program; and a dangerous reduction in Section 8 reserves, which could jeopardize local agencies’ ability to pay rental subsidy checks on time. The blueprint’s proposal for 34,000 incremental Section 8 vouchers is half the level funded the last three years (and one-third the level proposed by the Clinton Administration).
|Wealthy See Through Bush’s Logic Loophole||Over 400 wealthy people and small business owners who are subject to the estate tax have signed on to a call to prevent the Bush administration’s attempt to repeal it. The call was launched by Bill Gates, Sr. and Responsible Wealth, an organization of affluent individuals concerned about rising economic inequality. Call signer and Syracuse entrepreneur Martin Rothenberg explains, “I was able to build a successful software company thanks to the support of public schools, public scholarships, public research grants and public contracts. The last thing I want to do is pull up the ladder behind me so that others can’t get those same kinds of support.”
There are many reasons to oppose this repeal. It only applies to the wealthiest 2 percent of the population. By preventing unlimited untaxed inheritance, it provides an on-going leveling of the economic playing field. As billionaire Warren Buffett explains in The New York Times, repealing the estate tax would be “the equivalent of choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics…”
Despite professed Republican concern for small businesses and family farms (which only account for 3 percent of estate tax collections) there are already exemptions in place for both, which could be increased without repealing the tax. And the tax is fair: the vast bulk of the value of the largest estates are capital gains, such as appreciated stock portfolios, which have never been taxed.
But even leaving fairness aside, Bush should consider the effect of estate tax repeal on another one of his pet policies: devolving responsibility for social services to private nonprofits. Carrying out those services requires money, but according to Responsible Wealth, repealing the estate tax would:
• Reduce annual charitable giving by between $5 billion and $6 billion. (Estates subject to the estate tax give a larger percentage to charity.)
• Remove a key incentive to create and add to private foundations. Currently, estates provide about one-third of foundation revenues.
• Reduce government financial support for charities. Nearly one-third of charity revenue comes from government. Removing the revenue from the estate tax, which at $30 billion is greater than the budgets of nine cabinet departments, would cut government charitable funding significantly.
Less does not equal more in this case, Bush.