Tax cut draws cheers challenges

Partisans take sides over $1.6 trillion Bush proposal

This story appeared in the Antelope Valley Press March 4, 2001.

By LISA WAHLA
Valley Press Staff Writer

The question was barely asked before Marguerite Grayson rushed out a reply: "I love it. It's what we need and it's what he said he would do."

The query concerned President George W. Bush's tax cut plan, which the Lancaster grandmother of 17 openly endorsed Wednesday from a Costco parking lot.

In his first speech to America since Inauguration Day, Bush proclaimed his budgetary goals this week, including a controversial $1.6 trillion tax cut and the beginnings of Social Security privatization.

Bush wants the tax cut to phase in over the next decade. The plan calls for an eventual $1,600 tax reduction for an average family of four, the repeal of the so-called marriage penalty and the elimination of the inheritance tax.

Despite the new president's calls for civility in Washington, congressional leaders responded in partisan fashion: Republicans loved it, Democrats harshly criticized it. On Thursday, the House Ways and Means Committee passed a tax cut plan similar to the president's - along party lines.

Locally, the reaction was similar to that in Washington, if not as clear-cut. Some residents - like Marguerite and David Grayson - believe the president when he says the federal government's $5.6 trillion surplus belongs to the people. Others question the plan in the wake of widening economic uncertainty.

Acton resident George Cannon likes Bush's "attitude that the money is the people's." He praised the idea of a trigger system that would reduce the cuts if the economy sours.

But Palmdale resident Lorraine Torsney said she'd rather have the government keep the money.

"I'd rather have that safety net there," said Torsney, who said she voted for Bush. "Look at California, with the huge energy crisis - I'd rather have a cushion."

Predictably, the Valley's Republican lawmakers accepted the plan as fair, appropriate and responsible, while Democratic leaders used the exact opposite terms when describing it.

"I think the tax cut is a prudent utilization of government funds when the people provide more funds to run the government than is necessary," state Sen. William J. "Pete" Knight, R-Palmdale, said. "After all, all the funds in Washington belong to the people; they don't belong to Washington."

Assemblyman George Runner agreed, calling the tax refund "good public policy" that doesn't exclude expanding worthy government causes.

"The frustrating part is ... the surveys (that) say people want money for education or environmental cleanup rather than tax cuts," Runner, R-Lancaster, said. "The reality is there's enough money to do all of those things."

Republican Congressman Howard P. "Buck" McKeon said the fluctuating economy makes tax cuts all the more needed.

"Americans are taxed at the highest level since World War II," McKeon, R-Santa Clarita, said. "With a $5.6 trillion surplus, we can provide tax relief to stimulate the economy, while staying within a balanced budget."

Officers of the Democratic Club of the High Desert disagree.

Club vice president Lynda von Husen said the tax cuts are too big and will cost the nation's poor and homeless.

Von Husen said the cuts actually will bloat to about $2 trillion, while the average taxpayer will benefit by just $227 a year, according to the nonprofit group Citizens for Tax Justice.

She assailed the estate tax repeal as an "outrageous pandering to the wealthiest people in this country."

"I'm hoping Democrats will be firm in their resolve to oppose that kind of giveaway to the rich," she said.

Echoing Democratic concerns from top congressional leaders, von Husen said the cuts mostly benefit the wealthy while leaving behind the working families that need the assistance.

Bush's plan involves cutting taxes for all citizens, regardless of income.

The cuts would reduce the tax bills of low-income citizens from 15% to 10% of their annual salaries. The bills of upper-income citizens would be reduced from 39.6% to 33%.

Lancaster resident Jessie Fryer thinks the tax cuts are needed - and they don't go far enough. She favors a flat tax, with all citizens paying the same percentage in taxes.

"If it's 20%, I think it should be 20% across the board," she said. "If you're only making 30 (thousand dollars a year) and you're complaining about the district attorney making 250 (thousand), well, he went to school, he got grants, he got loans. He worked hard to get there. I think everybody ought to pay the same."

If the cuts materialize, Fryer will invest the money, pay off bills and donate to church. That response was common among Valley residents, most of whom haven't sat down to figure out how the cut would affect their income. Taxpayers can estimate their possible savings via a link on McKeon's Web site, www.house.gov/mckeon.

As for Social Security, Bush promised to appoint a presidential commission this spring to overhaul the program and instruct the panel to report its findings by next fall. "It must return Social Security to sound financial footing, and it must offer personal savings accounts to younger workers who want them," Bush said in his Tuesday speech.

That plan drew praise from Valley legislators, including Runner, who advocated allowing workers to invest for themselves 10% to 20% of what they would pay into Social Security.

"The average Social Security investment return is about 2%, which means you're losing money with your Social Security investment," he said. "You can't eat the elephant all at one time, but you can begin to let individuals take a segment ... and invest it under the same requirements they're now under with retirement accounts."

Knight agreed, adding that the point of Social Security has been overlooked in the privatization debate.

"I think it's time we develop a task force to look into Social Security," Knight said. "It was designed as a safety net but we've since grown to rely on it and it's become another one of those entitlements. If you would manage those funds yourself, you'd do much better than the government is doing."

But von Husen, the Democratic club officer, said that privatization would cost too much money that could be better spent paying down the national debt.

"I feel the government is a better guarantor of the needs of people in retirement," she said.

"We know the economy is floundering," von Husen said. "We're worried he will exploit fears about the economy to ram a conservative agenda through Congress. He has no mandate to push a conservative agenda through."