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Support for cutting payroll tax broadens
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Support for cutting payroll tax broadens

BY Paul Barton

WASHINGTON - A lot of politicians are starting to worry about the little guy when it comes to cutting taxes. A fresh round of tax cuts to stimulate the economy is expected to be one of the first tasks when the 108th Congress convenes in January. A growing number of voices on both the right and the left are insisting that the package include a reduction in payroll taxes, such as those taken out of every paycheck to finance Social Security and Medicare.

12/29/2002
Support for cutting payroll tax broadens
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Support for cutting payroll tax broadens

BY PAUL BARTON

WASHINGTON - A lot of politicians are starting to worry about the little guy when it comes to cutting taxes. A fresh round of tax cuts to stimulate the economy is expected to be one of the first tasks when the 108th Congress convenes in January. A growing number of voices on both the right and the left are insisting that the package include a reduction in payroll taxes, such as those taken out of every paycheck to finance Social Security and Medicare. Most American workers pay more in payroll taxes than they do in income taxes. And that's especially true for low-income workers. In fact, about 30 percent of the work force pays payroll taxes but ends up owing no income taxes, Congress' Joint Committee on Taxation reported. Because they pay little or no income tax, these same workers were left out of the $ 1.3 trillion tax cut package passed last year. That's why advocates contend a payroll-tax reduction would be the most effective measure Congress could pass to stimulate the economy: The middle- and lower-income workers who would benefit the most would be the most likely to put their money back into the economy through spending. "It's as good a way as any to put money in the hands of those most affected by the downturn in the economy" said William Dickens, an economic analyst at the Brookings Institution, a Washington think tank. Democratic presidential candidate John Kerry, a senator from Massachusetts, thinks so too. "Unlike most so-called stimulus plans, a payroll tax [reduction ] would help every working American," Kerry said in an opinion-editorial piece published recently in the Boston Globe. Every worker pays 6.2 percent in Social Security taxes and 1.45 percent in Medicare taxes on wages up to $ 84,900. Employers make matching tax payments. Together, the taxes equal 15.3 percent of wages and bring in almost $ 700 billion a year. Kerry is calling for a oneyear suspension of payroll taxes on the first $ 10,000 in income. Such a payroll tax "holiday" would give each worker an extra $ 765. Sen. Bob Graham of Florida, another possible Democratic presidential candidate, has seconded the idea. And another Democrat, Sen. Mary Landrieu of Louisiana, survived a tough re-election challenge this year by calling for payroll tax cuts as well. Conservatives also have gotten into the act. Conservative editor William Kristol recently told the National Journal, a public policy magazine, that a cut in payroll taxes is politically necessary for the Bush administration to pass any larger program of tax cuts that focuses on issues such as income tax brackets and stock dividends. Otherwise, the administration will face new charges that it caters only to the rich. Former Republican Rep. Jack Kemp told the National Journal that cutting payroll taxes needs to be done because, "It's not for Wall Street; it's for Main Street." The Club for Growth, a Washington-based conservative group that advocates aggressive tax-cutting, wants more than a one-year reduction. The group is calling for a 1 percent reduction in the combined Social Security and Medicare payroll tax rate lasting at least five years or until unemployment falls below 4 percent. Such a move would put an estimated $ 35 billion a year into workers' pockets. But employers also would benefit and have incentive to hire more workers. "That's a pretty hefty kick in the pants for the economy," economist Stephen Moore, head of the group, said. In contrast, a one-time payroll tax cut would not encourage employers to hire more, say critics of Kerry's plan. With so many endorsing a cut in payroll taxes, the Bush administration is rethinking its previous opposition to the idea. "The politics of this look to be playing out," said Eric Engen, tax expert at the American Enterprise Institute, a Washingtonbased think tank. But cutting payroll taxes raises a host of issues related to the always politically sensitive Social Security and Medicare programs, not the least of which is cost. Kerry's plan, which would be a type of tax rebate for workers, would involve a onetime cost of an estimated $ 100 billion to $ 129 billion. The Massachusetts senator says the money can come from slowing down income tax cuts slated to take effect later this decade. That way, neither Social Security or Medicare would be harmed, he added. But others question where that money would come from without hurting other programs. "I'm rather bemused by the debate," said Robert McIntyre, head of Citizens for Tax Justice, a liberal research and advocacy group in Washington. And Kerry's idea of using general revenues to compensate for a reduction in Social Security and Medicare taxes threatens to cross a line that many are wary of, added Engen, the American Enterprise Institute analyst. For years, he said, Social Security experts have preached the necessity of not mingling entitlement financing and general revenues. If Social Security is seen as supported by general revenues, rather than through payroll taxes, he said, it could lose some of its political support. "Social Security would be viewed as welfare," Engen said. Sen. Blanche Lincoln of Arkansas, a Democrat and member of the Senate Finance Committee, said she would want to carefully examine proposals for altering Social Security and Medicare programs. "We don't want to jeopardize what the elderly are depending on," she said, adding that Social Security and Medicare financing is "intricately designed." But Lincoln said she definitely wants to look at options that would help lower-income Americans. "We have to really think it out," she said. Others say it won't hurt to cut payroll taxes because the longterm financing of both programs will have to be reworked anyway. If they aren't, Social Security and Medicare will "eat the whole [federal] budget" by 2050, Engen said. Similarly, Citizens for a Sound Economy, another Washington-based conservative group that advocates tax cuts, said it is foolish to let long-term concerns about Social Security and Medicare financing stand in the way of small payroll tax reductions. "A payroll tax cut may exacerbate Social Security's current $ 3.2 trillion unfunded liability, but the entire system is in such dire financial straits that a payroll tax cut at this stage would be akin to cutting half an hour off the Titanic's voyage," Jason Thomas, staff economist, said in a paper prepared by the group. This story was originally published on Sunday, December 29, 2002.

12/29/2002
Support for cutting payroll tax broadens
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Support for cutting payroll tax broadens

BY PAUL BARTON

WASHINGTON - A lot of politicians are starting to worry about the little guy when it comes to cutting taxes. A fresh round of tax cuts to stimulate the economy is expected to be one of the first tasks when the 108th Congress convenes in January. A growing number of voices on both the right and the left are insisting that the package include a reduction in payroll taxes, such as those taken out of every paycheck to finance Social Security and Medicare. Most American workers pay more in payroll taxes than they do in income taxes. And that's especially true for low-income workers. In fact, about 30 percent of the work force pays payroll taxes but ends up owing no income taxes, Congress' Joint Committee on Taxation reported. Because they pay little or no income tax, these same workers were left out of the $ 1.3 trillion tax cut package passed last year. That's why advocates contend a payroll-tax reduction would be the most effective measure Congress could pass to stimulate the economy: The middle- and lower-income workers who would benefit the most would be the most likely to put their money back into the economy through spending. "It's as good a way as any to put money in the hands of those most affected by the downturn in the economy" said William Dickens, an economic analyst at the Brookings Institution, a Washington think tank. Democratic presidential candidate John Kerry, a senator from Massachusetts, thinks so too. "Unlike most so-called stimulus plans, a payroll tax [reduction ] would help every working American," Kerry said in an opinion-editorial piece published recently in the Boston Globe. Every worker pays 6.2 percent in Social Security taxes and 1.45 percent in Medicare taxes on wages up to $ 84,900. Employers make matching tax payments. Together, the taxes equal 15.3 percent of wages and bring in almost $ 700 billion a year. Kerry is calling for a oneyear suspension of payroll taxes on the first $ 10,000 in income. Such a payroll tax "holiday" would give each worker an extra $ 765. Sen. Bob Graham of Florida, another possible Democratic presidential candidate, has seconded the idea. And another Democrat, Sen. Mary Landrieu of Louisiana, survived a tough re-election challenge this year by calling for payroll tax cuts as well. Conservatives also have gotten into the act. Conservative editor William Kristol recently told the National Journal, a public policy magazine, that a cut in payroll taxes is politically necessary for the Bush administration to pass any larger program of tax cuts that focuses on issues such as income tax brackets and stock dividends. Otherwise, the administration will face new charges that it caters only to the rich. Former Republican Rep. Jack Kemp told the National Journal that cutting payroll taxes needs to be done because, "It's not for Wall Street; it's for Main Street." The Club for Growth, a Washington-based conservative group that advocates aggressive tax-cutting, wants more than a one-year reduction. The group is calling for a 1 percent reduction in the combined Social Security and Medicare payroll tax rate lasting at least five years or until unemployment falls below 4 percent. Such a move would put an estimated $ 35 billion a year into workers' pockets. But employers also would benefit and have incentive to hire more workers. "That's a pretty hefty kick in the pants for the economy," economist Stephen Moore, head of the group, said. In contrast, a one-time payroll tax cut would not encourage employers to hire more, say critics of Kerry's plan. With so many endorsing a cut in payroll taxes, the Bush administration is rethinking its previous opposition to the idea. "The politics of this look to be playing out," said Eric Engen, tax expert at the American Enterprise Institute, a Washingtonbased think tank. But cutting payroll taxes raises a host of issues related to the always politically sensitive Social Security and Medicare programs, not the least of which is cost. Kerry's plan, which would be a type of tax rebate for workers, would involve a onetime cost of an estimated $ 100 billion to $ 129 billion. The Massachusetts senator says the money can come from slowing down income tax cuts slated to take effect later this decade. That way, neither Social Security or Medicare would be harmed, he added. But others question where that money would come from without hurting other programs. "I'm rather bemused by the debate," said Robert McIntyre, head of Citizens for Tax Justice, a liberal research and advocacy group in Washington. And Kerry's idea of using general revenues to compensate for a reduction in Social Security and Medicare taxes threatens to cross a line that many are wary of, added Engen, the American Enterprise Institute analyst. For years, he said, Social Security experts have preached the necessity of not mingling entitlement financing and general revenues. If Social Security is seen as supported by general revenues, rather than through payroll taxes, he said, it could lose some of its political support. "Social Security would be viewed as welfare," Engen said. Sen. Blanche Lincoln of Arkansas, a Democrat and member of the Senate Finance Committee, said she would want to carefully examine proposals for altering Social Security and Medicare programs. "We don't want to jeopardize what the elderly are depending on," she said, adding that Social Security and Medicare financing is "intricately designed." But Lincoln said she definitely wants to look at options that would help lower-income Americans. "We have to really think it out," she said. Others say it won't hurt to cut payroll taxes because the longterm financing of both programs will have to be reworked anyway. If they aren't, Social Security and Medicare will "eat the whole [federal] budget" by 2050, Engen said. Similarly, Citizens for a Sound Economy, another Washington-based conservative group that advocates tax cuts, said it is foolish to let long-term concerns about Social Security and Medicare financing stand in the way of small payroll tax reductions. "A payroll tax cut may exacerbate Social Security's current $ 3.2 trillion unfunded liability, but the entire system is in such dire financial straits that a payroll tax cut at this stage would be akin to cutting half an hour off the Titanic's voyage," Jason Thomas, staff economist, said in a paper prepared by the group. This story was originally published on Sunday, December 29, 2002.

12/29/2002
The TOXIC AVENGER
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The TOXIC AVENGER

BY Neal Matthews

There has never been a surgeon general's report on air pollution, and after reading Devra Davis' new book you can understand why. "The real scientific difficulties of the field [of environmental epidemiology] have been complicated by a stream of disinformation fueled by short-term economic interests of those who stand to profit from keeping matters unresolved," Davis writes, spicing her central argument that the forces of commerce have consistently downgraded the importance of human life and health below the imperative of making a buck. It isn't exactly news that the U.S. government's job of protecting public health has been compromised by an industrial takeover of the regulatory process. But coming as it does when the current eco-unfriendly administration is trying to make the world safe for unfettered fossil fuel consumption, Davis' timing is fortuitous. She knits into a quirky whodunit the sorry history of industry's efforts to hinder knowledge of the role of pollutants in causing early death and debilitation. And her engaging style, surprising for a scientist, has no problem pointing fingers at the culprits -- often other scientists for hire. Davis' story is driven home in forceful and mesmerizing detail. She was raised in Donora, the Pennsylvania steel town where a killer cloud of toxic fumes in 1948 rolled into homes, schools and hospitals due to an inversion of cold air. Within 24 hours, 18 people were killed by the zinc and steel-making byproducts, and 6000 were made ill. Thousands more suffered chronic illnesses the rest of their lives, including Davis' relatives and the author herself. "Can anybody say what role growing up in Donora may have played in my mother's heart disease and that of her four siblings?" she writes. "Why my beloved Uncle Len suddenly dropped dead at age fifty? Why my brother Stan and I, both of us aging jocks, have developed severe allergies, or why my dad, who began working in the steel mill at age fifteen, contracted bone cancer at age fifty-three?" With the passion of a victim's advocate and the dispassion of an accomplished researcher (she's a visiting professor of public policy at Carnegie Mellon University's Heinz School, and a senior adviser to the World Health Organization), Davis clears away the cloud of muddle that industry-backed scientists and their public relations cohorts have conjured around the question of how much harm air and chemical pollutants are wreaking on society. She borrows a term from Saul Bellow's "The Dean's December" to describe these smokescreens as "zones of incomprehension." It took years of follow-up studies before Donora's "killer fog," and that of London in 1952 (the source of the book's title), were grudgingly acknowledged to be caused by industry and not by the weather. Davis carefully unearths the names of long-obscure scientific heroes who stubbornly stuck to their findings about the health effects of leaded gasoline, particulate air pollution, the connection between growth hormones and breast cancer, and the role of pesticides in the declining reproductive abilities of men worldwide. On almost every page there's a spicy zinger: "We would do well to remember this speech the next time somebody like Trent Lott holds up a photograph of a Mini Cooper and threatens that if car companies are forced to raise fuel efficiency by 3 miles per gallon, this is what we'll all be driving. What was nonsense a generation ago is still nonsense today." The speech she referred to was given in 1973 by Lee Iacocca, then president of Ford Motor Company, who warned that new federal requirements to reduce automobile emissions by 90 percent from 1970 levels had backed the industry "to the cliff edge of desperation." In arguing that "We could be just around the corner from a complete shutdown of the U.S. auto industry," Iacocca ended with a flourish by quoting Sam Goldwyn: "In two words, IM ... POSSIBLE!" But the litany of industrial intransigence in the face of clear evidence that pollutants are not only harmful, but can be drastically reduced while still protecting the bottom line, becomes especially infuriating when Davis turns her pen to the saga of Herbert Needleman. The Harvard toxicologist and psychiatrist figured out that lead exposure could be measured by analyzing baby teeth, which integrated the total amount of lead to which children had been exposed. In 1979, he also showed that high levels of lead exposure correlated with low IQ. The main source of lead in the air was gasoline, and in particular, the Ethyl Corporation. "The industry's counterattack was swift and massive," Davis writes. An industry trade group, the International Lead Zinc Research Organization, hired dozens of scientists to discredit Needleman's findings. The Environmental Protection Agency formed a review committee, and one member claimed Needleman failed to take into account the IQ effects of bad housekeeping and inept parenting. Needleman was formally accused of scientific misconduct for not controlling for the role of family environment and other issues, which allegedly distorted his results. It came out later that the scientists who leveled the charge were supported by the lead industries. Hill and Knowlton, a major PR firm, distributed letters to journalists claiming that Needleman's work had been discredited. Needleman later wrote in the medical journal Pediatrics, "If my case illustrates anything, it shows that the federal investigative process can be rather easily exploited by commercial interests to cloud the consensus about a toxicant's dangers, can slow the regulatory pace, can damage an investigator's credibility, and can keep him tied up almost to the exclusion of any scientific output for long stretches of time, while defending himself." In the end, Needleman's work was confirmed by many other studies, his reputation was restored, and leaded gasoline -- belatedly -- was phased out in the United States. The International Lead Zinc Research Organization is just one of numerous deceptively named industry front groups that Davis indicts as hazardous to human health. Others include the Air Quality Standards Coalition, the Center for Regulatory Effectiveness, the Advancement of Sound Science Coalition, the Reason Institute and the Alliance for Responsible CFC Policy -- each in reality dedicated, she says, to the opposite of what its name implies. For all her blunt condemnations of the way industry is able to buy off scientists and manufacture zones of incomprehension, Davis never lapses into shrillness. Her chapter on air pollution's role in global climate change slides deftly from clear explanations of why the six billion metric tons (and growing) of carbon released every year into the atmosphere is a problem to references to her own family, followed by a personal anecdote illustrating the almost nutball scrutiny global warming research is subjected to. As part of a team comprised of scientists from WHO, the World Research Institute, EPA and Harvard, Davis helped create a climate model projecting the release of pollutants and greenhouse gases up to the year 2020. They wanted to estimate how many lives will be lost due to air pollution if there are no reductions in emissions over the next 20 years. "[B]y the end of the second decade of the twenty-first century, 8 million avoidable deaths would occur solely from the controllable exposures to particulate air pollution," the study concluded. The research was published in Lancet, the world's oldest medical journal, in 1997. The result? A group calling itself Citizens for a Sound Economy Foundation attacked, and continues trying to discredit the findings. Davis' broad field of view also encompasses potential solutions to the problem of just slowing down the increase in greenhouse gases. "Compassionate" conservatives will likely dismiss her main proposal, which has to do with using economics to corner the problem. "Things that contain lots of carbon, such as coal and gasoline, should cost more than things that contain less, like natural gas, solar or wind energy, or fuel cells when they are better developed," she argues. This would entail "two great liberal evils: subsidies, to encourage the use of cleaner energy sources, and taxes and other penalties, to discourage the use of dirtier ones." This is radical thinking, of course, and anathema to the current energy industry; ergo, it will make little headway in public policy. The Bush Administration recently announced its strategy for tackling climate change: Let's study it to death (or at least until we're out of office). It's a tactic Davis tracks through decades of environmental health battles, when people were dying and falling ill while industry stalled for time, and through chlorofluorocarbons (CFC), which damaged the earth's protective ozone layer, spewed into the stratosphere for far longer than they should have. "The risks of irrevocable damage to the Earth's climate are so great," she concludes, "that waiting for certain proof constitutes a doomsday experiment." Neal Matthews is a San Diego-based free-lance writer. When Smoke Ran Like Water Tales of Environmental Deception and the Battle Against Pollution Devra Davis Basic Books, 316 pages, $26 Excerpts from When Smoke Ran Like Water Coal and diesel fuels are cheaper to use, because the prices we pay for them do not include the costs of the additional health-care expenses, workdays lost, anxiety spent worrying over our children's asthma or other health problems, and impacts on climate. Every ton of coal burned in Ohio means more children in Canada and the northeast will be stricken with asthma or other lung problems. Every time Mom turns the key in the family's fat, new gas-guzzling SUV, another child downwind faces an increased threat of wheezing or being wheeled into the emergency room. If we continue to subsidize gasoline, build roads, and encourage people to drive and park their cars in our cities for less than what it costs in services, we are perpetuating a culture that is dependent on pollution. [] [] [] [] [EPA administrator Bob] Fri knew very well he was dealing with some of the most powerful companies in the country. These were the same companies that, with the oil and tire firms, had been convicted of conducting a vast conspiracy to dismantle public transportation across the United States, monopolizing the sales of buses to replace trolleys and ensuring that Americans remained wedded to their cars for decades to come. But Fri knew something else as well: Public opinion was on his side. The car industry had recently engaged in a number of heavy-handed crusades. ... General Motors compounded its lapses in industrial design through efforts to undermine [Ralph] Nader personally. They hired women to lure him into a compromising position. They put private detectives on his trail in hopes of digging up embarrassing information on his personal life. This effort yielded only what Nader's associates already knew: He doesn't really have a personal life to speak of. But GM did manage to make itself and its Corvair the butt of many years' worth of cartoons and jokes about safety and cover-ups.

12/29/2002
Don't Feel Sorry For States: They Caused Their Deficits
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Don't Feel Sorry For States: They Caused Their Deficits

BY JASON M. THOMAS

State budgets have rarely, if ever, been in worse condition than they are today. According to the National Association of State Budget Officers, the total deficit for state budgets nationwide stands at $40 billion in this fiscal year, with another $40 billion shortfall expected for 2003. Such a glaring disparity between revenues and outlays has led legislatures and governors across the nation to retrench and meet for special sessions to address the problem. Since nearly every state's constitution requires a balanced budget, the states lack the budget flexibility afforded to the federal government. But with capital spending kept off balance sheets, "rainy day funds" and refinancing of debt service obligations, states have lots of room to maneuver before real cuts have to be made. Not to mention the states' ability to return to the politically expedient well of cigarette tax revenues and the settlement money from the 1990s Medicaid class action against the tobacco industry. Yet budgetary obfuscation has its limits, and during this past year 39 states have cut enacted budgets by a total of $15 billion. This spending reduction more than tripled 1992's previous record $4.5 billion in enacted budget reductions. Most of these cuts have been across-the-board general fund reductions, with schooling and security spending exempted in many states. Federal Bailout? The size of these budget cuts has led many commentators, including Paul Krugman of The New York Times, to advocate the federal assumption of state deficits so "necessary services" aren't compromised. While good-natured, this would have the same effect as giving candy to a child for sticking a fork into an electrical socket. Today's record cumulative state budget deficit of 7.8% of aggregate general fund revenues did not just happen. It's the product of irresponsible budgeting and overly sanguine revenue forecasts. By rewarding states' fiscal negligence, the federal government would encourage -- and get -- more of the same. In the past decade, state budgets increased by 88%, which led total state government spending to eclipse $1 trillion in 2001. During the economic boom of the late 1990s, state spending grew 35% even though nearly a quarter of total state spending is need-based, which should fall during a period of prosperity. While welfare (Temporary Aid toNeedy Families) spending fell from 4.9% of state spending in 1992 to 2.2% in 2002, Medicaid's share rose from 17.8% to 20.5% during that same period. Elementary and secondary education spending grew roughly 85% during the past decade, as did higher education spending, with few, if any, criteria put in place to determine if the money was well spent. Unimpeachable in public discourse, higher education spending has fed a thriving public employees' union and done little, if anything, to address the faltering scholastic performance of American youth. Increased higher education spending has also gone to entrenched interests and established public universities instead of being targeted to needy families and prospective students. Higher education spending has become an entitlement for the upper middle class, who are able to send their sons and daughters to public universities at a fraction of the actual cost of the education. This has created excess demand for public universities, which has forced states to issue more bonded debt to build new dormitories and classrooms to house and teach these mostly middle-class students. The struggling economy has provided a welcomed check on extravagant state spending, but in some areas, like Medicaid, spending increases continue unabated. Medicaid spending is expected to rise by 13% in 2002 after an 11% increase in 2001. Health Care Nightmare While most states have blamed increases in prescription drug spending (18% in 2002), the problem is the system itself. It needlessly separates patients from doctors by erecting a dependent health care bureaucracy. Some hospitals and clinics win funding, others lose it; some treatments and drugs win Medicaid reimbursement, others do not. Through it all, the premium is placed not on quality of care and winning the trust and patronage of Medicaid beneficiaries, but on political sponsorship and lobbying. As a result, much of the Medicaid budget is squandered on the political funding contest and the inefficient allocation of resources. Patients not only have little choice among caregivers, but also absolutely no incentive to be discriminating health care consumers. Millions are lost each year on unnecessary treatments, emergency room visits and excess capacity. Until states start addressing these problems in a serious fashion, and stand up to the demands of the bureaucratic power centers of health care and education, the federal government should not take the cries of state lawmakers seriously. And state voters should remember well when lawmakers hike taxes and sacrifice their take-home pay at the altar of public employee unions. Jason M. Thomas is a staff economist with the nonpartisan Citizens for a Sound Economy. Today's record cumulative state budget deficit . . . didn't just happen; it is the product of irresponsible budgeting and overly sanguine revenue forecasts.

12/27/2002
FACTS AND FIGURES
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FACTS AND FIGURES

BY GREGORY E. RANDALL

Two recent letters to the editor, by Cheryl Johnson ("Taxed Twice," Dec. 7) and R.T. McMullan ("My Money," Dec. 9,) gave fallacious arguments against a previous letter by Keith Smith ("Estate Taxes," Nov. 27). Johnson and McMullan claim that the estate tax is a second tax, after the income tax. Perhaps it has not dawned on Johnson and McMullan that almost 100 percent of accumulated estate wealth over $7 million (Sen. John Edwards' proposed exemption) has never been taxed. A succinct explanation can be found in Michael Kinsley's article "Dead Wrong: The Estate Tax Doesn't Double-Dip, and They Know It" which appeared in Slate magazine on April 6, 2001. Such wealth is usually in stock, which is not taxed until sold. Ironically, much of large estate wealth is usually in stock, which, if sold by heirs, is filed on a stepped-up basis. Amounts below the stepped-up basis are never taxed. To be double-taxed under Edwards' plan, one must have accumulated an estate of over $7 million primarily through income on wages, which almost never happens. As Kinsley writes, "(No double taxation) is so obviously, overwhelmingly true that anyone with the slightest business or financial experience surely knows it." Other arguments may be credible, but the double taxation myth is not one. Johnson's "taxed twice" argument fails, as does McMullan's preconditions for a tax-free passage of his estate. ANNE GRISWOLD Winston-Salem. Pack Up Carol S. Cleary says in her Nov. 17 letter to the editor that the Israeli people had the right to Palestinian land because they were there in Biblical times ("Their Land"). The tribes of Israel were a nomadic people who crossed the Jordan into a land already occupied by a native people, much the same as the Jews leaving Europe did after World War II, and in Biblical times as in 1948, attacked without provocation. Displacing a people through murder and intimidation does not grant the right of ownership. The only Jewish people who have the right to land and property are the Arab Jews who lived in Palestine before the end of the British Mandate in 1948. All others moving to the region should have to buy the land and not remove the native populace and take it by force, which is the Israeli way. If Zionists think the treatment of the Palestinian people at the hands of the Israelis isn't persecution, look again. The very tactics used by the Israeli military are the same ones used by the Nazis against the European Jews. Bombing and bulldozing housing, confiscation of property, isolation in camps, killing innocent people. Sound familiar? If the Israelis have the right to return to a land they had in Biblical times, then perhaps Cleary won't mind packing up and leaving her home so that the native Americans who lived there before can have their land back. DAVID STRAUSSER Winston-Salem. Home Sweet Bunker It is refreshing to read columns such as Maureen Dowd's ("Disco Dick," Dec. 15) in my local paper. I usually have to go searching far beyond the mainstream media for what is happening in President Bush's Washington. I would like to add a few items to her list of possibilities for Vice President Cheney's "infrastructure improvements": The VP is installing a giant paper shredder to get rid of those pesky paper trails. Or maybe it's an aquarium large enough for three white sharks with laser beams attached to their heads. Or perhaps he's installing a cryogenic chamber so he and his Hummer H2 can be thawed 100 years from now to play chicken with the little solar-powered cars. It is important that those outside of Washington know of Bush administration dealings and appointments beyond what the newscasts can provide, tongue in cheek or not. I hope you will continue to print news critical of our government, especially with such recycled names as Poindexter, Abrams, Reich and Kissinger in the mix. I also hope Journal readers will remember what blind faith in leaders with too many secrets cost the American people in the past, and see critical reports as objective journalism, not as anti-American. ANDREW L. BREWER Winston-Salem. Look Closer In the Dec. 16 editorial "Tax Pledges," the Journal accused Citizens for a Sound Economy of bullying "legislators into promising not to raise taxes." Furthermore, the Journal accused the group of thievery. "In short, they are stealing from the broad base of North Carolina voters the right to be represented by people who stood for election, not by political operatives who stand on the sidelines." The term "operative" leads one to believe that CSE is involved in underhanded and sneaky activities. In reality, it is a group of ordinary citizens disgusted with government officials who recklessly spend a large percentage of citizens' hard-earned paychecks. Coincidentally, before I read the editorial, I calculated that 38.8 percent of my last paycheck went to taxes. I did not venture to include sales tax, city tax and vehicle tax. If runaway taxation does not slow down, we will be perilously close to sending half the money we make to careless politicians in $1,200 Armani suits. You also assert, "Any legislator who signed the pledge in advance did so either out of ignorance or timidity." It is possible, however, that these legislators may have understood the plight of the working American and agreed that the government has been a bit irresponsible. I'm sure CSE will thank the Journal for the free advertisement, and I thank it for bringing the group to my attention. And please, before you accuse anyone of being a bully, take a look at yourself. GREGORY E. RANDALL Kernersville. When You Write Our address is: Letters to the Journal, P.O. Box 3159, Winston-Salem, N.C. 27102. Our e-mail address is: Letters@wsjournal.com Please include your full name, including middle initial, and a daytime telephone number. All letters are subject to editing and should be limited to 250 words. Letters may be published on the JournalNow Web site. The volume of letters may require the cutting of some letters. Writers are limited to one letter every 30 days. Original poetry, open letters, letters sent to more than one address and letters from active candidates for political office will not be published.

12/24/2002
Tax-cut packages stack up ; Bush likely to unveil his plan next month
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Tax-cut packages stack up ; Bush likely to unveil his plan next month

BY Bill Walsh

WASHINGTON -- The spirit of gift giving is in the air, and on Capitol Hill this holiday season that means tax cuts. President Bush and lawmakers from both parties are busy compiling their wish lists for the New Year, and there is no shortage of ideas for reducing some taxes, repealing others and speeding up those already set to phase out.

12/23/2002
Tax-cut packages stack up
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Tax-cut packages stack up

BY Bill Walsh

WASHINGTON -- The spirit of gift giving is in the air, and on Capitol Hill this holiday season that means tax cuts. President Bush and lawmakers from both parties are busy compiling their wish lists for the New Year, and there is no shortage of ideas for reducing some taxes, repealing others and speeding up those already set to phase out. It's not that the federal Treasury is suddenly overflowing. In fact, the Congressional Budget Office said that the federal budget ran a deficit of $157.7 billion for the fiscal year ending Sept. 30, and, if the nation goes to war with Iraq, the federal balance sheet is expected to dip further into the red. Most of the would-be tax cuts are dressed up as "economic stimulus" measures, which are designed, at least in theory, to spur business and consumer spending and rev up the economy. While the economy grew a respectable 4 percent in the third quarter, year-end predictions are for an anemic 2 percent to 2.5 percent. So, proponents argue, although tax cuts will surely cost the country money, a robust economy will eventually put ample revenue back into the federal government. Bush is expected to outline a tax-relief package in his State of the Union address Jan. 28, but already some possibilities have emerged. According to congressional Republican sources, among the likely candidates are: Accelerating the start date of the phased-in $1.35 trillion tax cuts that were passed in 2001; providing business tax relief in the form of more generous expensing for small businesses and additional depreciation on capital purchases; and reducing or eliminating the tax on corporate dividends. Bush has made no secret of his desire also to make permanent the tax-cut package Congress passed last year. But skeptics, notably congressional Democrats, question how much the economy will be stimulated by such things as permanently eliminating the tax on multimillion-dollar estates. Bush contends it will. He has argued that the 2011 expiration date of the tax cuts creates "uncertainty" in the economy and that "people need a stable environment in order to create jobs." It wouldn't be cheap, though. Just a two-year extension of the 10-year tax-cut package is estimated to cost about $200 billion, according to Congressional Quarterly Weekly. Congressional sources say that the White House is aiming to have a total tax-relief package amounting to $300 billion over the next decade. The buzz over tax cuts represents a shift away from Clinton-era focus on debt reduction as a means of national economic stability. Not surprisingly, clamor for tax relief has only heightened since Republicans reclaimed the Senate in the midterm elections in November and Bush could look forward to a newly receptive Congress in January. No one has any illusions that Bush isn't also looking forward to 2004, when he stands for re-election. The fate of his president father, whose political fortunes tanked with the national economy, is undoubtedly on his mind. In recent weeks he has hired a new economic team whose job it will be to sell tax cuts to Congress and the American people. "If we pass something this spring or summer, it would provide some relief to the economy by 2004, which would provide some relief going into the election campaign," said Jeff Lemieux, a tax analyst at the centrist Progressive Policy Institute. But not everyone is enthusiastic about Congress tinkering with the economy. Federal Reserve Board Chairman Alan Greenspan has said that making the 2001 tax cuts permanent wouldn't offer much short-term voltage to economic growth, and he cast doubt on the ability of Congress to steer the economy. Instead, Greenspan has counseled caution, saying that the economy is merely in a "soft patch" on the way to recovery. Business groups and many Republican lawmakers see it differently and predict that Congress will move ahead with a tax-cut package anyway. "I don't think Alan Greenspan would say we are in a robust economy or this is a typical recovery," said Rep. Jim McCrery, R-Shreveport, a member of the tax-writing House Ways and Means Committee. "I wouldn't hesitate to cut taxes because Alan Greenspan doesn't think we should. The good news is that Republicans and Democrats see the need for further tax cuts as a way to stimulate the economy." The two parties share some common ground when it comes to tax relief. Popular in both parties are proposals to let small businesses deduct a larger amount of their capital expenses from their taxable income and allowing businesses of all sizes to depreciate a heftier share of their capital outlays. By giving businesses investment tax relief, the thinking goes, they will spend more money on new computers, machinery and other big-ticket items -- spending that will kick-start the economy. In general, though, Democrats are keeping a wary eye on the White House and are bracing for a battle over a critical point in the tax-cut debate: Who gets the relief? "We want to make sure the package isn't one that just gives away money to the high-income brackets," said Rep. William Jefferson, D-New Orleans, a member of the Ways and Means Committee. "It has to be something that really stimulates the economy. It shouldn't be to stimulate savings, but to stimulate consumption." Popular among Democrats is a temporary elimination of the 12.4 percent Social Security payroll tax that workers and businesses split. Known as a payroll tax "holiday," the idea would be to put cash in consumers' pockets immediately, and their spending will spur the economy. The idea has a diverse following, including the Business Roundtable, Sen. Pete Domenici, R-N.M., and Sen. John Kerry, D-Mass. Sen. Mary Landrieu, D-La., also floated the proposal during her recent campaign, but it's unclear how forcefully she will push it in Congress. Critics acknowledge that it would put money in people's pockets, but they aren't convinced they will spend it. When consumers received government tax rebates last year, many of them paid off credit-card debt or put the money into savings, neither of which does much to jolt the economy. Jefferson said that a payroll tax holiday could be geared to low-income wage earners. "They will spend the money, so it will have the stimulative effect we are looking for," he said. When Congress returns, Democrats are also intent on providing some assistance to unemployed workers and are touting quick action as a means of economic stimulus. Bush has embraced an extension of unemployment benefits, and some House Republications are also receptive to the idea, although there is no consensus yet on what a proposal will contain. Neither party expects to monopolize a tax-cut package, and both recognize that to get the necessary votes, the largesse will have to be spread around. The National Association of Manufacturers, for instance, is pushing business tax breaks worth about $150 billion, leaving what they say is "room for competing ideas." Wayne Brough, chief economist for the business-friendly Citizens for a Sound Economy, said that despite Republicans controlling the White House and Congress, out of political necessity there will be room made for Democratic proposals in order to get any package passed. "Especially after a year of business scandals, it will be hard to say you are just cutting taxes for business," Brough said. "When you put the package together, you want something in there for everyone." . . . . . . .

12/23/2002
Service to America Medals 2002: recognizing the story of two FBI employees in Birmingham, AL and their groundbreaking a…
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Service to America Medals 2002: recognizing the story of two FBI employees in Birmingham, AL and their groundbreaking a…

BY Bethany Hardy Young

The Partnership for Public Service and the Atlantic Media Group, co-founders of the annual Service to America medals, recently honored the first slate of Service to America Medals recipients at a gala ceremony in Washington, DC. Special guests for the evening included Andrew Card, President Bush's chief of staff; John Spencer, the actor who plays chief of staff Leo McGarry on NBC's "The West Wing;" Transportation Secretary Norman Mineta; Homeland Security Director Tom Ridge; Senator George Voinovich; Representative Connie Morella; CNN anchor Judy Woodruff; and Office of Personnel Management Director Kay Coles James. The Service to America medals were created in early 2002 to pay tribute to the groundbreaking achievements of federal civil servants. This year's recipients were chosen from 26 finalists, who were selected from a pool of over 300 nominations. To view a list of the 26 Service to America medals finalists, visit www.govexec.com/pps. The 2002 winners were chosen by a committee of distinguished national leaders with a strong commitment to public service: Representative John Lewis; Kay Coles James; C. Boyden Gray, chairman of Citizens for a Sound Economy and former counsel to President George H.W. Bush; the Honorable Louis Caldera, vice chancellor for University Advancement, California State University; M. Peter McPherson, president, Michigan State University; Colleen Kelley, president, National Treasury Employees Union; Bernard Marcus, co-founder and chairman of the board, The Home Depot, Inc.; Jeffrey Swartz, chief executive officer (CEO), Timberland Company; Judy Woodruff; Senator Voinovich; Timothy B. Clark, editor and president, Government Executive; and Max Stier, president and CEO, Partnership for Public Service. Federal Employees of the Year Following is the story of the Federal Employees of the Year-William Fleming and Ben Herren, special agent and investigative special agent respectively with the Federal Bureau of Investigation (FBI) in Birmingham, AL. Fleming and Herren will split a $ 10,000 cash prize for their noble achievements in federal service. It was one of the most horrific events in the long struggle for African-American civil rights. Denise McNair, Carole Robertson, Cynthia Wesley, and Addie Mae Collins were preparing for Sunday services in the basement dressing room of the 16th Street Baptist Church when a dynamite bomb planted outside exploded, killing all four girls and blinding another in one eye. Two of their killers remained beyond the grasp of the law for nearly 40 years. FBI Special Agent William Fleming and FBI Investigative Research Specialist Ben Herren took the lead in bringing them to justice. Ground Zero Birmingham, AL was ground zero for the civil rights movement in September 1963. Its epicenter was the 16th Street Baptist Church, where Martin Luther King, Jr., and hundreds of other African-Americans met and planned sitins and demonstrations for equal rights. They were met with massive resistance from the white state and local officials and the Ku Klux Klan (KKK). The city--known as "Bombingham" because there were so many bombings of black homes there--was infamous for the water hoses and dogs its police department unleashed on nonviolent civil rights demonstrators earlier that year. Yet no one was prepared for what happened on Sunday morning, September 15. "No other incident had such a dramatic effect on those of us in the civil rights movement than the bombing of this church," recalled Representative John Lewis, a veteran of the campaign for civil rights. The tragedy galvanized the civil rights movement and helped lead to enactment of the Civil Rights Act of 1964. The wheels of justice would prove to move slower than the dismantling of segregation. It wasn't until 1977 that Robert "Dynamite Bob" Chambliss was found guilty for his role in the bombing and sentenced to life in prison, where he later died. Another two decades would pass before two other perpetrators were held accountable. Reopening a Decades-Old Case In 1996, the special agent in charge of the Birmingham FBI office reopened the case to address the concern that the men responsible would never be brought to justice. The case was assigned to William Fleming and Ben Herren, then a Birmingham police sergeant. Despite long odds that had thwarted the success of two previous investigations in 1965 and 1977, Fleming and Herren went to work. During the course of their investigation, they learned that over 130 witnesses had since died, with more passing away each year. This limited access to valuable evidence and information, but they found new avenues of investigation and developed new evidence. Fleming and Herren tenaciously employed numerous sophisticated investigative techniques and federal grand jury testimony to develop proof that suspects Thomas Blanton and Bobby Frank Cheny were also involved in the bombing. They also relied on solid, old-fashioned investigative skills, such as re-interviewing witnesses who had not talked about the case in decades, and interviewing additional witnesses, including family and local 1960s-era KKK members, who offered never-before-revealed information. In fact, several witnesses indicated that they specifically heard Cherry make statements regarding his involvement in the crime. They carefully combed through 90 volumes of previous investigative activity, adding an additional 35 volumes of new work. They conducted an extensive, detailed review of approximately 8,000 investigative documents and created timelines that helped visualize a string of events that had happened over 30 years before. In fact, it was Herren's timelines that would eventually uncover a flaw in Cherry's alibi--directly leading to his eventual conviction. As they meticulously dug through old files, Fleming also uncovered crucial tape recordings of Blanton's conversations originally recorded during the initial investigation in the 1960s. He and Herren spent hundreds of hours reviewing the tapes; their contents proved to be essential evidence against Blanton. Going to State Court When federal criminal charges could not be proven, Fleming and the prosecutors took their new case to state court. A state grand jury responded with indictments of both men on four counts of murder. A Birmingham jury of eight whites and four blacks took just two-and-a-half-hours to find Blanton guilty in 2001, while another jury of nine whites and three blacks found Cherry guilty of murder in May 2002. Both are now serving life sentences. Devotion to Duty Both Fleming and Herren displayed remarkable devotion to seeing the case through to its conclusion. Fleming continually delayed his retirement for several years and, although scheduled for mandatory retirement in March 2001, even applied for an extension to continue to lend his expertise and institutional knowledge to the Cherry trial. After retiring from the Birmingham Police Department in 1997, Herren was immediately hired by the FBI to continue working on the case. His lifelong residence in Birmingham and his experiences in the city during the civil rights era helped investigators relate to witnesses. Fleming and Haerren's devotion to pursuing justice for the four girls who lost their lives in 1963 is truly extraordinary. Other 2002 Service to America Medals Recipients The Partnership for Public Service also saluted the seven other 2002 Service to America medals recipients: Call to Service Medal: $ 5,000 prize. This medal recognized an employee who has made a significant contribution to the country as a recent entrant to the federal workforce. The recipient was Rachel Billingslea, foreign policy specialist/Israel desk officer, Department of Defense, Washington DC. In her three years of federal service, she has played a leading role in developing national security policy to improve relations with US allies. Career Achievement Medal: $ 5,000 prize. This medal recognized an employee who has demonstrated lifetime achievement in public service. The recipient was Katherine Gebbie, director, physics laboratory, National Institute of Standards and Technology (NIST), Gaithersburg, MD. The founding director of the award-winning NIST Laboratory and a pioneer in the practical application of emerging technologies, she has helped enhance scientific career opportunities for women and minorities through a lifetime of service. Heroes of September 11 Medal: $ 5,000 prize. This medal recognized an employee who has made a national contribution during or after the events of September 11. The recipient was Kenneth Concepcion, chief of US Flag Deepdraft Vessels and Plan Review, US Coast Guard, Staten Island, New York. He directed the safe and orderly seaborne evacuation of 70,000 confused and frightened people from Lower Manhattan amidst the chaos of the September 11 attacks. Environment, Science and Technology Medal: $ 3,000 prize. This medal recognized the federal employee who demonstrated significant achievements within the environment, science, and technology fields. The recipient was Donald Sweeney, senior regional economist, US Army Corps of Engineers, St. Louis, MO. He saved taxpayers $ 1.5 billion in unnecessary construction projects after refusing orders to improperly falsify data. Justice Medal: $ 3,000 prize. This medal recognized the federal employee who demonstrated significant achievements within the justice field. The recipient was Robert Rutherford, criminal investigator/group supervisor, US Customs Service, Miami, Florida. His initiative, leadership, and ability to organize multiagency personnel into a cohesive unit led to a reduction in narcotics trafficking and crime in South Florida. National Security and International Affairs Medal: $ 3,000 prize. This medal recognized the federal employee who demonstrated significant achievements within the national security and international affairs field. The recipient was Alfred League, division chief, imagery and geo-spatial sciences, National Imagery and Mapping Agency, Bethesda, MD. His technological innovations provide American military personnel with real-time information they need to ensure operational success and protect our national security. Social Services Medal: $ 3,000 prize. This medal recognized the federal employee who has demonstrated significant achievements within the social services field. The recipient was Daniel Weinberg, division chief, housing and household economic statistics division, US Census Bureau, Suitland, MD. He led the development of an improved measure of poverty that more accurately reflects the needs of the poor; this will help leaders effectively target resources toward improving economic well-being. Nominations for 2003 Congratulations and thanks to all of the 2002 Service to America medal recipients for your tremendous service to our nation! The nomination period for the 2003 Service to America medals will open February 1, 2003. Nominations must be submitted online at www.govexec.com/pps. Bethany Hardy Young is the press secretary for the Partnership for Public Service (www.ourpublicservice.org). She can be reached at byoung@ourpublicservice.org

12/22/2002
Riley's chief of staff, 34, considered mature, smart
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Riley's chief of staff, 34, considered mature, smart

BY David White

MONTGOMERY Tobin Bernard "Toby" Roth rubbed elbows 18 years ago with President Reagan, Vice President Bush and other Republican stars such as Bob Dole, Jack Kemp and Phil Gramm, and it changed his life. The 16-year-old student volunteer at the Republican National Convention decided then and there that politics would be a big part of his future. Last week he flew to Washington, where he met Colin Powell, John Ashcroft, Tom Ridge, Gale Norton, Christine Todd Whitman, Rod Paige and other top presidential advisers, including chief of staff Andrew Card

12/22/2002

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