Earmark Taxes to Break Budget Deadlock : Revenue: The people will go along if they get something they want for the money they pay.

Spring has once again stirred the minds, if not the hearts, of the President and members of Congress to thoughts of how to cut the federal budget deficit. This annual ritual reminds the rest of us that the federal government’s policy is in a state of prolonged gridlock with grave consequences for the health and welfare of the country. To end this impasse, Congress and the Bush Administration should look to the success of state governments in tackling problems through targeted taxes, or earmarked revenue increases.

The President and Congress seem to agree that the United States faces prodigious challenges to becoming more competitive and productive. To surmount these challenges will require increased investments in education, research and development, job training, drug control, health care and early childhood intervention, roads, bridges and water systems, the environment and energy.

The deficit does require cutting, but deficit reduction will not educate tomorrow’s work force, provide health care for the uninsured or modernize factories.

Behind the immobility of national policy lies the paradox that the benefits from a better-trained and healthier work force supported by efficient factories and a modern infrastructure are diffuse and deferred, while the discomfort of paying for them through higher taxes is palpable and immediate. Moreover, the American people distrust the federal government’s ability to use increased tax revenues wisely, believing that revenues disappear into a black hole with little accountability.

No such paralysis grips state governments. They have found that their voters will support higher taxes if the additional revenues are clearly targeted for specific uses people want.

Earmarked taxes on motor fuels and auto registration have long been used to build and maintain state roads and highways. More than half the states earmark their general sales tax and their tobacco and alcohol excise taxes for specific purposes, often health-related.

The judicious use of earmarked taxes would provide a way for Congress to break the hypnotic spell cast by the federal deficit that has so far prevented serious consideration of solutions to the accumulation of environmental, educational, health and other domestic problems--and may provide an out for President Bush since they are not general income-tax increases.

Without doubt, excessive use of earmarking threatens what in recent years has become an oxymoron--rational budget planning. It violates the generally sound budget principle that taxes should be deposited in general revenues and allocated by Congress and the President according to national need. The risks--and they are real--mean that earmarking should be used only if the targeted problem is likely to last indefinitely and will require continuing outlays. The earmarked tax should be clearly connected to the problem it is meant to address.

Several generally recognized problems match up well with earmarked taxes. An increase in taxes on cigarettes and alcohol could be earmarked for drug control and rehabilitation or for early childhood health care. As Senate Minority Leader Bob Dole has suggested, an increased gasoline tax could be earmarked for infrastructure improvements. An increase in estate and gift taxes could be used to help support an increase in long-term care benefits, as Senate Majority Leader George J. Mitchell (D-Me.) and Reps. Pete Stark (D-Oakland) and Henry A. Waxman (D-Los Angeles) have suggested. A value-added tax could be used to underwrite and consolidate current federal health programs for a major extension of health benefits for the uninsured, and for the expansion of initiatives to control health costs.

Earmarked taxes also would encourage deficit reduction in instances where current spending financed by general revenues could be shifted to a new program supported by earmarked taxes.

The main point is that earmarked taxes could break the Washington deadlock. The American people will go along if they get something they want for the money they pay and if they can see the specific use to which their taxes will be put. In his inaugural address, President Bush talked of the nation having more “will than wallet.” In fact, Americans have the wallet if their leaders have the will.