| Two big things in today's Lee story on the budget. First, the Senate Dems say if the House continues to implode that they will clean up the mess. Second, Republican House leadership says they'll consider reviving HB 2 as long as a provision is made for permanent tax cuts.
Is that a worthwhile trade for HB 2?
It depends. Does permanent tax cuts mean permanent for resident homeowners who have been experiencing an increasing share of the tax load or is it an across-the-board cut that gives a nod to homeowners while moving the bulk of the cuts to corporations that have already been experiencing the bulk of the cuts offered under the Republican reign of '94-'04?
So the first question is what would the permanent cut look like.
The second question is whether a "permanent" cut is a sound move. The business cycle is basically an economic fact -- the economy grows and contracts (or at least stagnates). During economic expansion, tax revenues grow. During economic stagnation or recession, tax revenues stagnate or decline (at least, relative to inflation). A permanent cut during a time of fat is a poor way to be ready for a time of lean. It's mildly fiscally irresponsible.
Still, the fact that Republicans said they would be willing to revive HB 2 says that they are crying "Uncle!" Luckily, the Dems are standing up and expressing a willingness to get things done. Ultimately, this fight might come down to an issue of about 6% of the projected budget surplus. If that's the case, it's not the end of the world. |
