Well, you knew the other shoe was going to drop and it did! The Senate Ways & Means Committee pushed out a bill that will hike the general excise tax rate from 4 percent to 4.5 percent.

To soften the blow on the poor, the Committee has also included the re-establishment of the food tax credit for those at the bottom end of the income scale. The reason? Funding for education, or so lawmakers explained. Lawmakers are relying on a poll conducted by one of the major Honolulu dailies, which quoted that readers would be willing to pay more in taxes to improve education and fix school facilities.

Well, that excuse was quickly dispelled when the same paper noted in its editorial page that the question really focused on the point that people would be willing to pay more in taxes to improve education if policy makers and education administrators had a solution. However, at this time the paper noted, there does not appear to be a solution that either the Legislature or school administrators have that will promise improvement of public education in Hawaii. So why the tax hike? It appears that lawmakers are afraid that war will break out in the Middle East, which will have a severe impact not only on the economy but on state tax revenues. Lawmakers believe that by raising the general excise tax, the increased tax burden will be passed on to visitors as opposed to residents. But what if war breaks out and visitors stop coming to Hawaii, who then will pay the increased general excise tax?

Of all the taxes levied in Hawaii, the general excise tax is the most regressive, taking more of a percentage out of lower income household budgets than it does from a middle or high income family budgets. As a result, any hike in the general excise tax hurts the poor, a fact that seems to have been lost on social service agencies who appeared at the hearing.

They not only supported the hike but asked that the rate be raised another half percent to 5 percent to ensure social services are adequately funded to help the poor(?). So much for helping the poor by raising the tax that hurts the poor the most.

To a large degree, the financial crisis facing lawmakers is a creation of their own. While lawmakers would like to blame the lack of tax revenues on a poor economy, all indicators seem to point in the other direction. In fact, one of the brighter spots in the state’s economy is construction, especially construction of new homes. As a result of lower interest rates, there is little inventory in the residential category. What it appears is that lawmakers have given away the store in recent years in the form of those darn tax credits.

This is evidenced in the fact that general excise tax collections are increasing while net income tax collections are trailing last year’s collections. No doubt those tax incentives called tax credits have made a big dent on the state’s fiscal picture. Now lawmakers have to find other ways to pay for the state’s spending.

Since lawmakers also don’t like cutting spending and state administrators, in particular education officials, scream every time there is another round of spending cut directives, lawmakers believe they can justify a tax increase. Saying that it is for education makes it sound even better. But the long and short of it is that all the rest of us are being asked to pick up the tab so that a few chosen taxpayers can take a free ride on the tax credits. This point was made to lawmakers when they first started down the tax credit path. But lawmakers chose to ignore that advice believing that they could stimulate the economy with these tax credits while refusing to make concurrent reductions in spending.

So now the only alternative seems to be to raise taxes, especially if the governor is unwilling to tap the hurricane relief fund. Of course, that assumes that no more cuts will be considered by the Legislature.

That also assumes that lawmakers don’t give away more of the store this session by handing out even more tax credits. Even one of Hawaii’s former governors has expressed alarm at how current leaders of the state spent the state’s meager resources in the form of tax credits and tax incentives.

He notes that both liberals and conservatives have collaborated to raid the state treasury, raids that would go unnoticed if there was a lot of money but are painfully obvious when there are no resources. So it is now up to taxpayers across the state. They can agree to support the tax hike, or they can tell their lawmakers to find another alternative. In any case, it seems that lawmakers need to exercise a lot more fiscal discipline and restraint.

”’Lowell L. Kalapa is the president of the Tax Foundation of Hawaii, a private, non-profit educational organization. For more information, please call 536-4587 or log on to”’ https://www.tfhawaii.org

“Dick Rowland Image”

”Shoots (News, Views and Quotes)”

– Meanwhile, SUV Owners to the Rescue in the Nation’s Capital

In an ironic twist, in the same week that the Sierra Club was calling on the IRS to use its audit power to target small business SUV owners for harassment, Washington D.C. area hospitals and nursing homes hit by the 6th largest snow storm in the city’s history put out urgent appeals via local media asking 4×4 owners to help them get their emergency personnel in to work. There was no word as to whether the Sierra Club believes the IRS should consider the good Samaritans’ efforts to be tax deductible. Nor was Ariana Huffington’s legion of hybrid cars seen racing the SUV’s to the rescue.

– North Dakotans Tell Their Congressional Delegation to Get With the Tax Cut Program

North Dakota’s State House recently passed a resolution instructing their federally elected officials to stop stalling and get to work for North Dakota — and to pass the President’s Economic Growth Package. Tired of their U.S. Senators (Byron Dorgan and Kent Conrad) partisan, obstructionist activities, the resolution was overwhelmingly passed by voice vote in the North Dakota State House. It explains the provisions of the package, as well as instructs Dorgan, Conrad and Congressman Earl Pomeroy to support and vote to enact President Bush’s Growth and Tax Relief Plan. It now moves to the state Senate for consideration.

Above articles are quoted from Small Business Survival Committee 2/20/03 www.membership@sbsc.org

”Roots (Food for Thought)”

– Political Parties Take Opposing Sides in Health-care Debate

Author: Robert Goldberg

Published: The Heartland Institute 02/01/2003

The debate between Democrats and Republicans over health-care issues in 2003 promises to be more productive than it has been in quite some time.

Republicans may finally show some interest in a topic that is near the top of voters’ lists of concerns, though early mishaps suggest they may once again blow the chance to lead. Democrats will update their version of the Fear Factor — emitting visions of people who are sick, dying, or dead without health care coverage — and offer Americans the opportunity to get medical coverage through Medicaid, mandates, and higher taxes.

Democrats Offer Bigger Government

The Democrat proposal — shaped largely by its liberal wing with the help of Families USA — bumps up against the state Medicaid programs already facing large deficits and comprising the largest portion of state budgets.

There are already 37 million adults and children served by Medicaid each year, and Democrats want to add 40 million more. The idea of having nearly half of all Americans enrolled in government-run health programs (if you include 35 million senior citizens receiving Medicare) might excite Families USA and others, but it’s highly unlikely states will want to take on the new burden. Medicaid spending is increasing at twice the rate of overall state government spending.

The Democrats will respond to state concerns by calling for higher taxes or mandates requiring private-sector firms either to cover their employees or pay into Medicaid. The other “choice” will be “allowing” the uninsured to buy into Medicaid with their own money, federal subsidies, or some combination of the two.

But states are already planning ways to scale back Medicaid to save money, including limits on who is eligible, cuts in fees paid to doctors, restrictions on access to new drugs, and reduced services to disabled children and the mentally ill.

Unlike people with private health insurance, Medicaid recipients must fight with other interest groups for scarce public dollars. Indeed, over the years, health services under Medicaid have taken on a Hobbesian form: nasty, brutish, and short-lived.

As Medicaid and the state-run CHIP program have become the insurers of first resort, they have crowded out appropriate care for the poor and disabled, placing inordinate demands on the public treasury. Now, real and ugly rationing is taking place at the very moment Democrats want to shove millions more Americans into these programs.

The right response is to make a wide range of health care plans more affordable and available, not to prop up Medicaid or scapegoat the usual suspect, the pharmaceutical industry. But Democrats will blame Medicaid’s woes on rising drug costs, ignoring the facts that (a) prescription drugs represent only 9 percent of federal Medicaid costs and 12 percent of total Medicaid program spending and (b) drugs are far less expensive than the alternative, in many cases hospitalization.

Republicans Send Mixed Signals

Since battling the Clinton health plan in 1993, Republicans have been largely bereft of any real conviction about health care issues. Rather, the past Republican accomplishments — including the expansion of Medicaid and the creation of the State Children’s Health Insurance Program — can best be characterized as Ted Kennedy with half the calories.

Today, President George W. Bush appears ready to lead congressional Republicans in a much different direction: giving Americans the money and tax breaks they need to choose their own health care and preserve their relationships with doctors and hospitals they trust.

But poor political habits are difficult to break. Tom Scully, director of the Centers for Medicare and Medicaid Services, has all but handed the Democrats their talking points by telling hospital executives the way for states to control Medicaid spending is to take on the drug companies. “Not many states have the courage to take this on,” Scully said. “I love the drug companies, but I think it’s insane (for Medicaid) to charge a $1 to $3 co-payment to buy Celebrex and Vioxx. … Celebrex and Vioxx are no better than Motrin. It’s a joke.”

What’s a joke is that the bleeding ulcers and stomach problems associated with long-term Motrin use used to be one of the primary reasons the elderly were admitted to the hospital, and Scully apparently doesn’t know it. It’s also a joke he doesn’t realize many of the “courageous” actions states are using to control drug spending — such as limiting access to new drugs for schizophrenia — are causing untold unnecessary suffering and driving up total Medicaid expenditures. Scully’s words and ignorance will come back to hurt Republicans as they seek to wage and win a principled fight on health care.

Medicaid is falling apart because it is a government-run health plan — not because of prescription drug costs. The sooner Republicans and moderate Democrats find and stick to that message, the better it will be for Americans in search of better health care.

Robert Goldberg is senior fellow and director of the Center for Medical Progress at the Manhattan Institute for Policy Research.

Above article is quoted from https://www.heartland.org Health Care News February 2003

”Evergreen (Today’s Quote)”

“As a man is said to have a right to his property, he may be equally said to have a property in his rights. Where an excess of power prevails, property of no sort is duly respected. No man is sage in his opinions, his person, his faculties, or his possessions.” — James Madison, National Gazzette [1792]

”’Edited by Richard O. Rowland, president of Grassroot Institute of Hawaii. He can be reached at (808) 487-4959 or by email at:”’ mailto:grassroot@hawaii.rr.com ”’For more information, see its Web site at:”’ https://www.grassrootinstitute.org/

WASHINGTON, March 7 (UPI) — President George W. Bush’s spending proposals for fiscal year 2004 would boost the federal budget deficit to $1.8 trillion over 10 years, according to congressional budget analysts.

The nonpartisan Congressional Budget Office on Friday released an analysis of the president’s budget proposals for next year that determined that changes to the tax laws would significantly reduce revenues.

The CBO estimates that Bush’s proposals would reduce revenues by $35 billion and increase outlays by $4 billion. Between 2004 and 2013, analysts anticipate the proposals would reduce revenues by $1.5 trillion and increase outlays by $96 billion. The president’s proposals would add $621 billion to mandatory spending between 2004 and 2013, the CBO estimates, with Medicare and Medicaid, the federal-state healthcare plan for low-income individuals, accounting for 75 percent of that increase.

The news comes as unemployment figures for February were released showing 5.8 percent joblessness, up from 5.7 percent in January.

“The president views today’s unemployment report as an important message to the Congress to keep busy and focus on the domestic agenda, particularly the package of the president’s economic stimulus plan and job-creation plan. The president views this as an important matter for Congress to take up no matter what the international situation may be,” said White House press secretary Ari Fleischer.

The president’s approval ratings on economic policy have been wavering. A poll by the Pew Research Center last month showed that 43 percent of Americans approved of his handling of the economy, while 48 percent disapproved.

The polls showed Bush’s approval rating on tax policy was equally low, 42 percent, despite a high-profile campaign on behalf of his tax plan, the center said.

In his moves to strengthen the economy, the 2004 budget estimates that 92 million Americans will receive an average tax cut of $1,083 and that the increased economic activity will create 2.1 million jobs. Bush proposed spending $3.6 billion for “Re-employment Accounts” in 2003 and 2004 to give the unemployed a $3,000 fund to help them find work, and he is asking for $7.1 billion in 2003 to pay for a five-month extension in unemployment insurance.

Bush asked for nearly $1 billion in increased enforcement costs to protect shareholders from corporate crime. The Securities and Exchange Commission would receive $842 million, the Federal Bureau of Investigation $16 million — and there would be additional funding for U.S. attorneys’ offices to prosecute business crime.

He is seeking $400 billion to revamp Medicare, the health insurance program for seniors, so that it will include a prescription drug program. Last week he trotted out a three-level reform program that would allow seniors to stay in traditional Medicare, move into an enhanced program with choices of different health plans or to move into a managed care program. Bush has left it up to Congress to hammer out the details of the prescription drug plan.

Bush raised the Department of Defense budget by 4 percent, up $15 billion over last year, the highest increase since the Reagan administration, but one that still does not include the costs of military action in Iraq or in the North Korea nuclear crisis. But the Pentagon’s $379.9 billion does include assistance for several key partners in the war against terrorism, including Jordan, $250 million; Pakistan and Turkey, $200 million each; Afghanistan, $150 million; and Colombia, $463 million.

Copyright 2003 by United Press International. All rights reserved.

ANKARA, Turkey, March 9 (UPI) — By-election results Sunday made Tayyip Erdogan eligible to form a new government that is likely to change lawmakers vote to allow the stationing U.S. troops in the country for a possible northern front against Iraq.

According to unofficial results of local elections in the eastern province of Siirt, the leader of the ruling Justice and Development Party, Erdogan won about 84 percent of the votes cast and became a member of the Parliament.

Prime Minister Abdullah Gul is now expected to resign and the president, under the constitution, would ask the leader of the majority party — Erdogan — to form a new government.

As the electors in Siirt cast their votes today Erdogan was talking with U.S. Ambassador Robert Pearson regarding plans for any war against Iraq.

On March 1, Parliament narrowly rejected a resolution to allow up 62,000 U.S. troops to be stationed on Turkish soil. Washington hoped to use its fellow NATO member as a staging point for a possible northern front against Iraq. A revised resolution is expected to be placed before the Parliament next week.

Erdogan’s new government with expected reshuffle as well as last week’s Turkish military declaration clearly backing the resolution, are likely to increase the chances of approval, political analysts noted.

Pearson, after the talks at the ruling AK party headquarters, said that he did not bring any proposal but came “to explain and clarify” certain misunderstandings.

Pearson also said that they have gone through all the details in the document on the three areas — economic, political and military — on which we have number of questions, he added.

Although the negotiations on the document of momentum of understanding are continuing, both sides have started military preparations and buildup near and across the border, in northern Iraq. A number of Turkish armored vehicles entered northern Iraq Sunday and arrived at Bemerni town where the Turkish base is set up, local agencies said.

The Turkish military convoy during the trip was escorted by members of Kurdistan Democratic Party, one of two main factions of the Iraqi Kurds.

Ships carrying U.S. cargo on Sunday unloaded at the southern port of Iskenderun, local media reported. The cargo was put onto trucks, which headed to a base at Gaziantep. Late last week, U.S. equipment was shipped to the southeastern town of Kiziltepe town of Mardin, close to the Iraqi border.

The expected encounter with Iraq aside, Sunday’s voting leaves Erdogan the task of tackled a struggling economy, the problem that soured the electorate on his predecessors. The economy badly needs the billions in compensation the United States is offering for the damage war with Iraq would be sure to cause, as happened after the Gulf War.

Erdogan also must weigh the cost to his popularity of retaining U.S. backing for a resumption of International Monetary Fund aid, even though it is linked to increasingly unpopular reforms, especially in Erdogan’s home region of Siirt.

President Bush has pledged continued support of Turkey regardless, but opposition to the U.S. request for help is widely seen jeopardizing that support.

Turkey is already working for better terms of trade with Saudi Arabia, also experiencing difficulty accommodating the realities of the threatened U.S. attack on Iraq.

Even without war, Turkey’s fledgling democracy, especially its tradition of a secular government, is seen to be at stake. Erdogan’s ruling political party has Islamic roots in a country where religion has traditionally been separated from government.

Copyright 2003 by United Press International. All rights reserved.

ANKARA, Turkey, March 9 (UPI) — By-election results Sunday made Tayyip Erdogan eligible to form a new government that is likely to change lawmakers vote to allow the stationing U.S. troops in the country for a possible northern front against Iraq.

According to unofficial results of local elections in the eastern province of Siirt, the leader of the ruling Justice and Development Party, Erdogan won about 84 percent of the votes cast and became a member of the Parliament.

Prime Minister Abdullah Gul is now expected to resign and the president, under the constitution, would ask the leader of the majority party — Erdogan — to form a new government.

As the electors in Siirt cast their votes today Erdogan was talking with U.S. Ambassador Robert Pearson regarding plans for any war against Iraq.

On March 1, Parliament narrowly rejected a resolution to allow up 62,000 U.S. troops to be stationed on Turkish soil. Washington hoped to use its fellow NATO member as a staging point for a possible northern front against Iraq. A revised resolution is expected to be placed before the Parliament next week.

Erdogan’s new government with expected reshuffle as well as last week’s Turkish military declaration clearly backing the resolution, are likely to increase the chances of approval, political analysts noted.

Pearson, after the talks at the ruling AK party headquarters, said that he did not bring any proposal but came “to explain and clarify” certain misunderstandings.

Pearson also said that they have gone through all the details in the document on the three areas — economic, political and military — on which we have number of questions, he added.

Although the negotiations on the document of momentum of understanding are continuing, both sides have started military preparations and buildup near and across the border, in northern Iraq. A number of Turkish armored vehicles entered northern Iraq Sunday and arrived at Bemerni town where the Turkish base is set up, local agencies said.

The Turkish military convoy during the trip was escorted by members of Kurdistan Democratic Party, one of two main factions of the Iraqi Kurds.

Ships carrying U.S. cargo on Sunday unloaded at the southern port of Iskenderun, local media reported. The cargo was put onto trucks, which headed to a base at Gaziantep. Late last week, U.S. equipment was shipped to the southeastern town of Kiziltepe town of Mardin, close to the Iraqi border.

The expected encounter with Iraq aside, Sunday’s voting leaves Erdogan the task of tackled a struggling economy, the problem that soured the electorate on his predecessors. The economy badly needs the billions in compensation the United States is offering for the damage war with Iraq would be sure to cause, as happened after the Gulf War.

Erdogan also must weigh the cost to his popularity of retaining U.S. backing for a resumption of International Monetary Fund aid, even though it is linked to increasingly unpopular reforms, especially in Erdogan’s home region of Siirt.

President Bush has pledged continued support of Turkey regardless, but opposition to the U.S. request for help is widely seen jeopardizing that support.

Turkey is already working for better terms of trade with Saudi Arabia, also experiencing difficulty accommodating the realities of the threatened U.S. attack on Iraq.

Even without war, Turkey’s fledgling democracy, especially its tradition of a secular government, is seen to be at stake. Erdogan’s ruling political party has Islamic roots in a country where religion has traditionally been separated from government.

Copyright 2003 by United Press International. All rights reserved.