Families See Two Sides to Tax Cuts

Many Americans are of two minds about the federal tax cuts that are moving through Congress.

They would dearly like to have a few hundred more dollars in their pockets. The stumbling economy has left many with credit card balances they have neglected, home repairs they have deferred or vacations they have postponed.

But at the same time, they are leery of what the tax cut might do to the nation as a whole. The federal deficit is soaring, and local government services are being cut -- police forces trimmed, school hours shortened, library doors closed.

A congressional committee will try this week to find a compromise between versions of President Bush’s tax cut plan passed by the House and Senate. As the committee was getting ready for business, Times reporters interviewed three families about their views of taxes and spending.

It’s not a scientific sample, just three voices in a vast country. Although the families are geographically and financially diverse, they expressed views that are remarkably consistent.

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PALO, Iowa -- Four-year-old Halle Galvin pushed her Barbie coloring book aside. President Bush had come to the cereal factory where her daddy worked to chat with a few middle-class families about tax cuts. And Halle was determined to have her say.

She raised her arm high. When the president called on her, she was ready with her question:

“What’s your name?” she demanded.

“George,” the president told her.

“Hi, George!” Halle called out, beaming. Then she went back to Barbie.

The meeting last month was a thrill for Halle and her parents, Terry and Penny Galvin. They were even more excited when Bush mentioned them in the State of the Union address. But even though he cited them as a family that had benefited from his tax policy, the truth is they’re not sure they like the huge tax cut he’s now pushing.

The Galvins saved more than $900 last year and $800 the year before under Bush’s first round of tax cuts. They used the money to finish a basement bedroom for their teenage son, Brandon, and to start college savings for Halle and her 5-year-old sister, Jade.

Sure, they could use a bigger refund this year. But they couldn’t take it in good conscience.

They worry that the tax cut will drive the nation too deeply into debt.

They fear that most of the savings will go only to the richest of the rich.

Most of all, they worry that huge tax cuts now will force huge spending cuts later -- affecting programs such as education, health care and Social Security.

“I struggle with it, because I think President Bush believes in the same things I do, like family values, adoption, helping children,” said Penny Galvin, 37. “But looking at this tax cut, I wonder, how’s it going to impact the average family? How’s it going to impact our children’s education? As a parent, that’s my main concern.”

The Galvins have watched as state and local politicians have struggled with budget deficits requiring deep cuts. The results depress them.

When Jade starts kindergarten in the fall, she will have up to 35 kids in her class because her school had to eliminate several teaching positions. Linn County, which includes this small town in eastern Iowa, has stopped providing health-care services for 1,800 low-income adults.

And the welfare-to-work program Cornerstone -- which employs Penny Galvin as a supervisor -- had to drop 100 families from its rolls, abandoning efforts to provide poor mothers with substance abuse treatment, domestic violence counseling and job training because the state couldn’t come up with enough money to fund the caseload.

“I’m more for putting our money into programs like Cornerstone, so we can build taxpaying citizens and healthy families for the next generation,” she said.

Terry Galvin grew up poor, in a family that often had to rely on welfare and food stamps to get by. He and his wife say they earn between $50,000 and $100,000 a year. Still, he feels strongly about preserving aid for the needy.

“If this tax cut is going to mean cutting programs, and if that hurts lower-income families ... maybe it’s best not to do it,” said the 40-year-old, who makes Honey Nut Cheerios in the General Mills Inc. plant in nearby Cedar Rapids.

The Galvins don’t buy the Bush administration’s argument that cutting taxes will create jobs.

The last time Penny Galvin advertised a job opening for an entry-level social worker at Cornerstone, she was flooded with applicants -- including 16 with master’s degrees. The position pays $19,000 a year and typically draws candidates out of two-year colleges. That experience proved to her that too many people are desperate for work.

She’d like to see any tax cut aimed at giving employers incentives to hire more full-time workers and give them benefits. A cut on dividend taxes for the wealthy does not translate, in her mind, into economic stimulus.

If Bush really wants to help ordinary families, Terry Galvin suggests a one-time, lump sum refund to every American household. That wouldn’t break the federal bank, but it would stimulate the type of consumer spending that could kick-start the economy, he argued.

“It should be the same for every family -- maybe $1,500 across the board, whether you make $10 million or $10,000,” he said.

Penny Galvin already knows where the family would spend it: They’d buy a new pump for their water well, fix up her husband’s carpentry workshop and add to the children’s college fund.

The way things are going, she figures they better build that fund as quickly as possible. She fears the country will be so broke by the time Jade and Halle turn 18 that there won’t be much of a safety net for college scholarships -- or any other need.

“I worry about Social Security being there for us, and then I think, if it’s this bad for us now, what’s going to be there for our kids down the road?” Penny Galvin said. “What will we have to do to get out of the deficit, 10 years or 20 years down the road?

“It’s scary,” she said. “It’s scary.”