- President’s Tax Cut Would
Unduly Harm Rural America, Nation
- By Chuck Hassebrook
Center for Rural Affairs
- The $750 billion long-term tax cut proposed by President Bush poses a threat to the nation’s fiscal integrity and its capacity to address the problems of rural America.
Senate leaders had promised Republican moderates that the cut would be limited to a more reasonable $350 billion 10-year tax cut. But the President and House leaders were continuing their push for a cut of at least $550 billion.
If adopted, that larger cut ($550 billion) would lead to massive federal budget deficits. It would raise this year’s deficit to between $500 and $600 billion on a $2.1 trillion budget (not counting Social Security), said North Dakota Senator Kent Conrad, ranking minority member of the Senate Budget Committee.
Big deficits have big implications for rural America. As in the 1980s, federal borrowing from overseas investors would drive up the strength of the dollar and weaken U.S. exports – particularly farm exports. Growing deficits would ultimately bring harsh spending cuts and cripple the capacity of the federal government to respond to deepening problems in rural America, though this budget largely defers the pain.
There would likely be no money for new initiatives to revitalize rural America through small business development, rural development, and beginning farmer programs. Grant programs for value-added agriculture, conservation programs, Social Security, and federal health care programs rural people rely on would all be on the chopping block. Farm income support programs would come under sharp attack. It would become even more difficult to pass drought and disaster relief bills.
When the federal government faces big budget deficits, it shifts costs to the states. They are already cutting vital education, outreach, and rural development programs in response to their own deepening budget crises. State governments would likely pass more costs on to local governments, which respond by raising property taxes.
There is plenty wrong with the federal government that needs to be fixed. But we need to fix it through reform, rather than crippling it with deficits. The government is still our government. It’s our tool to fix what’s wrong. Without it, we have little means to address deepening problems and worsening rural decline.
