Wednesday, June 16, 2010

EDITORIAL >> Bill deserves senators’ vote

Arkansas’ senators are in the enviable position of voting on a hugely important bill in which their little state has less at stake than most other states. That means that they can vote on the “jobs and tax extenders bill,” as it is known, with little but the purest national interest at heart.

The national interest pleads for a vote for the bill, and we hope that’s what Mark Pryor and Blanche Lincoln do.

The bill continues several short-term tax breaks for businesses, extends some economic-stimulus aid to state and local governments and raises a little revenue to offset the business tax breaks by closing the unfairest tax loopholes for rich investment-fund managers and corporations that shift their profits offshore.

The intensely controversial part continues some fiscal relief to the states, which Republicans are opposing as a run on the federal treasury. It will, indeed, continue the enlarged federal deficit a while longer. But the major reason that the deficit has ballooned the past two years is the recession. The collapsed global demand for goods and services and accompanying unemployment shrank the nation’s revenues dramatically while increasing the demand for government assistance, which is the very definition of a recession.

Last year’s stimulus package and similar programs by developing nations kept the country from plunging into another depression. We know that it made a huge difference in Arkansas, which avoided the economic depths of most states. When the stimulus runs out, it will mean layoffs in education and other public services and reductions in medical and unemployment assistance because most states have not yet regained the ground lost since the recession began in 2007 and may not until well into the next fiscal year.

Arkansas, fortunately, is not in such bad shape. Its Medicaid budget, helped immensely by the 2009 stimulus act and some unexpected revenue relief, can survive without extended aid. But the extra relief would extend Medicaid’s health well into the future, until 2014, when the new national health-care reform law will bring even more relief.

That means only that Lincoln and Pryor can vote for the bill without the self-propelled urgency confronting their colleagues from, say, Alabama, Arizona and California, where the human wreckage will be real and immediate if the relief isn’t extended. We notice that Congressmen Vic Snyder, Mike Ross and Marion Berry did the right thing two weeks ago. Rep. John Boozman, of course, voted against it, as required by his party.

There are other good reasons to support the bill. It will make the tax system fairer, and that is good for Arkansas, too. It closes the carried-interest loophole, which allows many investment-fund managers to disguise part of their compensation as capital gains and enjoy a lower tax rate than everyone else pays on their income. It also would stop some corporations that have offshore income from using foreign tax credits to cleverly avoid taxes on their U. S. income.

Finally, it would close the “John Edwards loophole,” named for the philandering former senator and presidential candidate, which allows S corporations (those that subject earnings to personal income taxes instead of corporate income taxes) to avoid paying Social Security and Medicare taxes like other businesses and individuals. Edwards made the loophole famous by forming an S corporation for his law firm and claiming that the asset of his name rather than labor generated the law firm’s income, and thus he didn’t have to pay payroll taxes.

Our senators owe no obligations to John Edwards and we doubt that Walmart, Tyson Foods, Dillard’s, Murphy Corp. or the other titans that swing so much weight with Arkansas delegates have much at stake in the bill except their abiding interest in good government and the common good. Pryor and Lincoln can do the right thing.