Don't stick poor people with bill

Author: Col Owens and John Corlett

Published: October 4, 2005

As Congress grapples with the task of funding the recovery effort for the Gulf Coast region in the wake of hurricanes Katrina and Rita, there has been discussion about cutting domestic spending elsewhere to off-set the $200 billion that lawmakers are appropriating. The victims of Katrina are in desperate need of this funding and, by all means, it needs to be distributed to them without delay. However, the idea of cutting spending on programs like Medicaid and Food Stamps is misguided and would hurt the very people already devastated by the hurricanes.

It's no secret that when these hurricanes came ashore they found an America unprepared to deal with the unforgiving winds, rain and storm surges. As the stories unfolded in the media, it quickly became clear that the majority of those harmed the most by the hurricanes were our nation's most vulnerable - children, the elderly, persons with disabilities, and the poor - who lacked the economic and physical means to flee.

These economic realities don't just exist in the Gulf Coast; they exist across the country and in Ohio. In fact, less than a month ago, the U.S. Census Bureau reported that poverty is growing in Ohio, and low wage workers are struggling to make ends meet as the price of energy and food climbs ever higher by the day.

Media coverage of the impact of these disasters, and of the government's inadequate response has forced us to confront the causes and tragic consequences of poverty.

It's instructive to contrast the day-to-day struggle of Ohio's most vulnerable with those who are much more fortunate, especially when some in Congress are pushing these new tax cuts which are funded with health care and nutrition cuts.

The budget reconciliation bills that Congress is slated to consider in October will make billions in cuts in programs like Medicaid and Food Stamps, and use the savings not to reduce the deficit, but to offset a portion of the $70 billion that the new tax cuts will cost.

Yet as poverty grows, the highly respected Urban Institute-Brookings Institution Tax Policy Center reports that households with incomes of more than $1 million a year - the richest 0.2 percent of the U.S. population - are receiving tax cuts averaging $103,000 this year. And these millionaires are slated to receive another $20,000 a year in increased tax cuts in the upcoming year.

At the same time, there remains a movement afoot in Congress to pass a repeal of the estate tax. A full repeal of the estate tax would cost the federal treasury nearly a trillion dollars over the next 10 years and would benefit only the wealthiest 1 percent of Americans. That is why some have dubbed it the "Paris Hilton Benefit Act." Estate tax repeal is an absurd idea in light of the present and future fiscal needs of our country. The estate tax is called the "death tax" by those in favor of repeal, although a true cost/benefit analysis reveals that repeal of the estate tax should be as wildly unpopular as death itself, especially in light of the enormous and necessary hurricane recovery efforts.

Legislators are right to insist that the deficit not be unnecessarily increased. The way to do that, though, is not to place the costs of hurricane recovery on the backs of children, the elderly, persons with disabilities, and the poor. That's exactly who would be hurt by budget reconciliation cuts in Medicaid and Food Stamps. Instead they should start by rejecting new tax cuts and opposing repeal of the estate tax.