A Tale of Gridlock City : The untimely death of a would-be urban aid act

At first it seemed as if the Los Angeles riots would prime the urban aid pump in Washington. After all but ignoring the plight of the deteriorating inner cities for years, President Bush promised relief to urban America. So did Congress. Before long all the attention whipped up a $27-billion tax bill. Sounds good, right? There’s one problem: The aid bill is not likely to become law--evidence of the gridlock that has become politics as usual.

The Urban Aid Act that was proposed shortly after the riots promised $2.5 billion to help the cities by creating 50 enterprise zones--special business districts given tax incentives to entice investors into poor, inner-city neighborhoods. Such zones hold out the promise of jobs for the poor. Now those jobs will be on hold because of the stalemate that paralyzes much of Washington.

Politics and greed derailed the bill. By the time it arrived on the President’s desk, it had become a huge tax bill disguised as the proverbial Christmas tree.

In the House, members added a multitude of tax breaks, some worthy, some not so worthy. The so-called urban aid package promised tax relief to real estate developers, veterans, camp counselors, yachtsmen and luxury car fanciers. The horse trading boosted the bill’s cost to $17 billion.

In the Senate, members, proceeding as if there were no mountainous deficit and no lingering recession, also dabbled in tax code revisionism. The bill, sweetened by this and that tax giveaway, spiraled to $31 billion.

When the two versions got to conference, wise old pros Dan Rostenkowski (D-Ill.), the House Ways and Means Committee chairman, and Lloyd Bentsen (D-Tex.), the Senate Finance Committee chairman, managed to whittle the monstrosity down to $27 billion. Even so, to finance the remaining tax cuts there would have to be new fees, revenues and taxes. For that reason alone, President Bush--not wanting voters to doubt his lips just before the election--is not expected to sign it.

The tax bill is not, of course, all bad. The legislation would make permanent the low-income housing tax credit, which encourages investment in affordable housing. The bill also would permanently extend the tax exemption for mortgage revenue bonds, another key source of financing for low-income housing.

The problem was the other proposals--and they eventually overwhelmed the relief promised to the cities. In the final version, only a fraction would have been spent on economic incentives, help for the poor and other aid for the cities.

The urban aid bill promised something for everybody, but delivered nothing. Los Angeles is the biggest loser.