Washington Watch


Educational Tax Credits vs. Grants

It has been amusing and instructive to see how quickly the Senate Human Resources Education Subcommittee, backed by the Carter administration, has moved to propose their own version of relief for middle-class parents pressed by rising tuition costs. Sen. William Roth (R-DE) and Daniel Moynihan (D-NY) nearly held up approval of December's Social Security tax increases with an amendment to provide tax credits for college tuition. The idea proved so popular that those who want to see as little change as possible in the present system of public education have moved to address the problem.

Tax credits have a number of liberating aspects, especially when applied to education. They allow the taxpayer to spend his own money on education first, and then claim the tax credit with a minimum of bureaucratic oversight. (Presumably it would require one additional line on the 1040 form and the prudence of hanging onto a receipt in case you're audited.) Tax credits could encourage spending on alternatives to the bloated and ineffective public school system. They allow the consumers of education to express their preference first.

Giving more grants for educational assistance, the approach preferred by the Carter administration, leaves the maximum control and discretion in the hands of central bureaucrats. It requires snooping into financial records to determine eligibility, and probably a great deal of pressure as to how the money will be spent and which educational institutions will receive the federal largesse (and the control which goes along with it).

There's a horse race in the Senate now over which approach is likely to be instituted. The Education Subcommittee has passed a bill which would increase federal grants programs and work-study programs, and raise the eligibility level (for a family of four) from $15,000 to $25,000 per year. The Senate Finance Committee has passed a bill which incorporates the tax credit proposal, with a credit of $250 gradually rising to $500, and extending the concept to elementary and secondary education. To do it quickly, they took an unrelated House-passed bill, HR 3946, and replaced it with the tax credit language.

If you want to express your own preference to your Senators, I would suggest that you do it quickly. (US Senate, Washington, DC 20510)


At this writing, it appears likely that the House will pass the Humphrey-Hawkins national economic planning bill with a minimum of opposition, despite the efforts of Libertarian Advocate and a few conservatives not completely subsumed by the Panama Canal issue. If it hasn't already passed when this appears, please write to your Congressman. (US House of Representatives, Washington, DC 20515)

There is a good chance, however, that this may be a replay of last year's energy program. In the Senate there are arguably 13 committees which could claim jurisdiction over parts of this wide-ranging legislation. It is likely that four of them will claim the right to hold hearings and work their will on the bill. If we are lucky, the bill could just be "committeed to death" in the Senate long enough for the emotional support to die down a bit and for people to take a peek at just what the bill really says.

Besides the beginnings of institutionalization of national central economic planning, the bill completely alters the system of committee jurisdiction in Congress and involves several attacks on the independence of the Federal Reserve Board. Besides all this, it reads as if a sophomore student in Utopia 101 had taken his notes, put numbers on the paragraphs and submitted it as a piece of legislation. It's a joke, but it could be a tragic joke if passed.

Letters to Senators opposing Humphrey-Hawkins would be welcome.

Airline Deregulation: On Track?

The cause of airline regulatory reform has been delayed in the House by the insistence of Rep. Glenn Anderson (D-CA), chairman of the Aviation Subcommittee of the House Public Works Committee, that its passage be coupled to a pet project of his, a bill which would provide federal subsidies to airlines to comply with Federal Aviation Administration noise standards which were recently issued and made retroactive. Anderson has been lukewarm on regulatory reform, and he has met some opposition to his own subsidy program.

To get around this logjam, some staffers and strong reform proponents have developed a new piece of "compromise" legislation and secured the support of Anderson, Norman Mineta (D-CA), Phil Crane (R-IL), Elliott Levitas (D-GA) and Harold Johnson (D-CA), chairman of the full Public Works Committee. HR 11145 may be the best reform legislation to emerge, perhaps even better than the Senate version. With this kind of backing, it is likely to be the bill which the Subcommittee chooses as its "markup vehicle" the week of March 8.

With any luck, a bill will have emerged for consideration by the full House sometime in April or May. Letters to Congressmen will be important.

Tax Reform

Carter's tax cut will not even begin to offset the recent increases in Social Security taxes, let alone the increases in rates due to inflation. But the hearings did provide an opportunity for proponents of real reform to have their views heard.

The National Taxpayers Union testified in the House Ways and Means Committee in favor of massive tax reductions, elimination of double taxation of dividends, changes in business taxes and indexing. Heard on a panel which included the Bar Association and the National Association of CPA's, their views may have carried a certain amount of weight.

Libertarian Advocate later in the week proposed massive tax cuts, a flat-rate income tax, and a tax "ballot" which would allow taxpayers to designate which government programs their money could be spent on, coupled with an elimination of withholding.

For a copy of the NTU testimony, write to NTU, 325 Pennsylvania Ave. SE, Washington , DC 20003. For a copy of the Libertarian Advocate testimony, write to Libertarian Advocate, P. O. Box 3117, Falls Church, VA 22043.