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PAGE 6A
Opinion
Candidates should
address looming
budget deficits
By Isabel V. Sawhill
(MCT)
Congress is poised to
approve a budget blueprint that
would kick many long-term
spending issues to next year.
This budget offers no realistic
way to pay for extending tax
cuts for the middle class or for
growing entitlement programs.
In short, a fiscal tsunami looms
on the horizon and little is
being done to prevent a disas
ter.
The 2008 election cam¬
paign is an opportunity to begin
to reshape the nation’s fiscal
priorities and return to a more
responsible path. So far,
though, the candidates are
avoiding the issue of the grow¬
ing long-run deficit. Unless
something is done, deficits will
swell to at least $700 billion
within a decade and then keep
rising indefinitely.
Much of the nation’s debt is
now owed to foreigners.
Eventually we will need to pay
them back, with interest.
The large tax cuts enacted
in recent years have deprived
the government of revenues
needed to pay for the war, pre¬
scription drugs for the elderly
and other commitments. The
budget surpluses achieved in
the late 1990s have spiraled
into deficits and the nation’s
fiscal future is in grave jeop¬
ardy.
Social Security, Medicare
and Medicaid already comprise
42 percent of the budget, even
before the massive demograph¬
ic shift that is about to occur as
the first baby boomers begin to
draw benefits from these enti¬
tlement programs.
Health care spending per
person has been growing about
one-third faster than the econo¬
my. If this continues, the three
large entitlement programs will
have absorbed all of the federal
government’s projected rev¬
enues before the mid-century.
At that point, the government
will be able to pay for these
programs — and nothing else.
Despite the warning signs,
presidential candidates and
other national leaders are not
seriously addressing the tsuna¬
mi in the near distance.
They prefer to discuss "bold
ideas for new spending and to
hint that they can end deficits
by cutting waste or “growing
the economy” or by rolling
back tax cuts just for the very
wealthy.
The problem is solvable. A
deficit reduction plan that I
helped to develop would end
the deficit in five years while
still investing $37 billion more
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FORSYTH COUNTY NEWS — Wednesday, May 28, 2008
each year in the nation’s future.
This plan has several features
to control spending and
increase revenue.
The plan includes an overall
cap on discretionary spending.
With an overall cap, some pro¬
grams could enjoy increases, as
long as they were offset by cuts
to other programs. Because it
would be limited to discre¬
tionary programs, the cap
would not affect the huge enti¬
tlement programs — Medicare,
Social Security, and Medicaid.
These entitlement programs
must also be reformed over the
longer run. One option is to
increase the payroll, taxes that
fund Medicare and Social
Security. Another is to gradual¬
ly reduce benefits promised to
future generations by, for
example, raising the retirement
age or asking the affluent elder¬
ly to accept smaller increases in
their benefits.
Increased revenues must
also be part ot the solution,
Congress could tighten almost
all ot the 14,000 tax loopholes
adopted in the past 20 years
(replacing them with a 15-per¬
cent tax credit). Policy-makers
could also toughen enforce
ment of existing taxes, so law
abiding taxpayers will not sub
sidize large-scale tax cheaters.
Another worthy idea would
be to phase in a carbon tax that
would promote energy efficien
cy, combat global warming and
stimulate energy alternatives to
reduce our dependence on for
eign oil, while bringing in $35
billion per year in revenue.
Other plans and strategies
are possible, ot course. But the
approach outlined here illus
trates that the presidential can¬
didates and other leaders can
propose fair and reasonable
ways to shield America from
fiscal collapse.
In short, it is time for the
candidates to articulate how to
prevent a catastrophe that could
be far worse than the recession
we now fear. What should the
voters of 2008 demand from
the candidates? Voters should
expect office-seekers to state
unequivocally that deficits mat
ter, to commit to ending deficit
spending and fiscally irrespon
sible tax cuts, and to pledge
bipartisan cooperation to meet
this goal.
Will this historic chance be
realized? Ask the candidates —
and press them for an answer
that is truly believable.
Isabel V. Sawhill, a senior
fellow at the Brookings
Institution, was an associate
director at the Office of
Management and Budget dur¬
ing the Clinton administration.
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Yes on 98, no on 99
In 2005, the U.S. Supreme
Court upheld a Connecticut
city’s right to seize through
eminent domain the water
front homes of longtime resi
dents for private develop
ment.
The court held that, like
the construction of schools
and roads, economic devel
0 pment itself constitutes a
“public use” under the Fifth
Amendment. Both liberals
an( j conservatives were out
raged. As dissenting Justice
Sandra Day O’Connor wrote,
“The specter of condemna
t i on hangs over all property,
Nothing is to prevent the
state from replacing any
Motel 6 with a Ritz-Carlton,
an y home with a shopping
ma ll, G r any farm with a fac
tory.
Some 40 states responded
by passing laws to tightly
define “public use so that
the government could not
take land from one taxpayer
an d hand it to a richer one.
Despite strong voter disap
proval of the Kelo decision,
as the Connecticut case is
known, California lawmakers
have failed to act. Thanks to
Sacramento’s three-year
void, various groups have
p i ace d three different initia
tives on the ballot, including
two voters must choose
between on June 3.
The first, which property
rights advocates put together
for 2006, was Proposition
90. j t banned eminent
domain takings for private
developers. California voters
rejected the measure because
it delved into other issues,
and at an unpredictable cost.
Don’t worry, groups rep¬
resenting local governments,
Debra 1
Saunders
COLUMNIST ,
it
Local governments
should not be able
to take prime loca¬
tion from one tax
paying business and
give it to a pet
developer. 99
such as the League of
California Cities, told critics.
They promised that if vot¬
ers rejected Proposition 90,
then they would work with
the legislature to craft a bet¬
ter measure that would cor¬
rect the private-use abuse
made infamous in Kelo.
Didn't happen.
Instead, when the legisla¬
ture again failed to pass a
reform bill, property-rights
advocates and government
groups trotted out rival
measures, Propositions 98
and 99.
According to its ballot
argument, Proposition 99
represents “real eminent
domain reform — no hidden
agenda.”
Bunk. Sure, it protects
homeowners from having the
government transfer their
houses to private developers.
But Proposition 99 does not
protect business owners, the
usual target of such takings.
Proposition 98 would pro¬
hibit state and local govern¬
ments from taking private
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land from homeowners and
businesses and transferring it
to another private party. As
Joel Fox of the Small
Business Action Committee
noted, Proposition 98 is the
only measure that helps
small businesses.
The bonus for the proper¬
ty owners' lobby: Added lan¬
guage would phase out local
rent-control ordinances and
might limit laws that require
developers to build afford¬
able housing.
For many Californians,
the rent-control provision,
which also applies to mobile
home parks, is a deal killer.
If Proposition 98 fails, it will
be because the authors were
greedy in adding rent control
to the mix. So be it.
That said, ending rent
control would be good for
Californians. Landowners
would have more of an
incentive to maintain their
properties well. As former
state legislative analyst Bill
Hamm noted, rent control
“discourages the construc¬
tion of housing. If we’re try¬
ing to help people get decent
housing, we want to encour¬
age it.”
UC Berkeley’s Center for
Environmental Law & Policy
warned that Proposition 98
would spawn countless law¬
suits. The center’s executive
director, Rick Frank, told
me, “If Proposition 98 pass¬
es, it will be the property
rights and eminent-domain
lawyers full employment
act.'
But the status quo is unac¬
ceptable. Local governments
should not be able to take
prime location from one tax
paying business and give it to
a pet developer.
The Proposition 99 folks
claim there is no hidden
agenda in their measure. Not
so. The nonpartisan legisla¬
tive analyst reported that
“government seldom uses
eminent domain to take sin¬
gle-family homes” — so it
safeguards property seldom
seized.
Worse. A “poison pill M
provision means that if both
propositions pass, but 99 gets
more votes, 98 is null and
void. This puts property
rights advocate like Howard
Jarvis Taxpayers Association
President Jon Coupal in the
awful position of telling vot¬
ers to reject a measure that
could save Suzette Kelo’s
home (if she lived in
California) in order to pass a
measure that would protect
homes and small businesses
like Revelli Tire Company in
Oakland and Bernard
Luggage Company in Los
Angeles.
Keep in mind that if
Proposition 98 passes, local
governments still will be able
to use eminent domain to
take land for schools and
roads, as well as to curb
urban blight and crime. Local
governments will even be
able to use eminent domain
for private development - if
they present a sufficiently
attractive price for the prop¬
erty.
But they won’t be able to
force law-abiding small busi¬
ness owners to forfeit their
place of business so that gov¬
ernment can hand it over to a
well-connected corporation.
Debra J. Saunders is a
nationally syndicated colum¬
nist.