Washington Post: House Republicans are peddling a capital-gains tax cut as a possible economic answer to last week's attacks on the World Trade Center and Pentagon. It's a misleading cloak for an old and mostly bad idea whose likely effect would be to exacerbate the problem it purports to solve. Someone -- the president? -- should tell the would-be hitchhikers to back off.
The question the president and Congress face is whether to pass any stimulus. Is it needed? The arguments in favor are that all the world's major economies are struggling, last week's attack was a further blow to waning confidence, the United States needs to be the engine of recovery, and the Federal Reserve, having already cut interest rates repeatedly, is out of ammunition. Fiscal stimulus is all that's left. But the interest-rate cuts, including this week's half-point, are still taking hold; so is the large tax cut that Congress has already passed this year; and last week Congress responded to the attacks by passing a $40 billion emergency spending bill as well.
Those are pretty big infusions, and the problem with fiscal stimulus is that it often takes effect only after the economy has begun to recover on its own, at which point the need is less for stimulus than a renewal of restraint. Though it's possible further action may be needed in the coming months, Congress ought to move cautiously. The measure should be neither a rush job nor a political grab bag; that's what is threatened here.
Buyers: Proponents say a capital-gains tax cut gives the stock market a boost and encourages more saving. But it also stimulates sales of stocks, and the last thing the stock market would seem to need right now is more people seeking to sell; it needs buyers. A gains tax cut wouldn't add to capital so much as rearrange it. Past studies by neutral parties -- the Congressional Budget Office, for one -- have found little basis for believing that capital-gains tax cuts provide much stimulus. Because of the revenue they ultimately cost the government, their net effect can be to reduce the national savings rate on which long-term growth depends.
A capital-gains tax cut would mainly benefit the very rich, who own most of the assets to which the tax applies. Congress' Joint Committee on Taxation has estimated that the highest-income 2 percent of the population generates three-fourths of all capital gains, and that figure could be low. A tax break for people in that bracket is unlikely to be quickly spent. If stimulus is the goal, a rebate for people at the lower end is far more likely to provide it. Such a policy has the virtue of being time-limited as well, not a permanent revenue loss that the government can't afford.
The administration has rightly called for national unity in dealing with last week's attack. Such unity requires, among much else, that neither party use the tragedy as a means of advancing unrelated policies. The capital-gains tax cut should be put back in the museum from which it came.
WRONG MAN FOR THE U.N.
Los Angeles Times: While most of America's attention was diverted to its national tragedy, the Senate managed to find the time to approve the controversial nomination of John D. Negroponte as the man Washington would send to the United Nations as ambassador. There can be no argument that the United States needs an active and highly visible presence at the United Nations at a time of international crisis. But serious questions can be raised as to whether Negroponte is that man.
His appointment could be the wrong message to send to the U.N., a world body whose support this country needs to help rally international opinion against terrorism. Negroponte, 61, has had a long and at times distinguished foreign service career, including stints as U.S. ambassador in key embassies in Latin America and Asia. But his tenure as ambassador to Honduras from 1981 to 1985 -- the height of the Reagan administration's covert war against Nicaragua -- was marred by deeply troubling allegations.
At best, Negroponte did not tell Congress everything he knew about human rights violations by the Honduran government, as he was required by law to do. At worst, some investigations have suggested that Negroponte and other U.S. officials may have been complicit in human rights violations, which included the murders and kidnappings of political activists.
Sham: Negroponte has never really answered the tough questions he could be asked about his tenure in Honduras. The pro forma hearing the Senate Foreign Affairs Committee held on his nomination last week was little more than a sham. There were no opposition witnesses, and the panel approved the nomination 14 to 3. To her credit, California Sen. Barbara Boxer joined two other Democrats on the panel, Paul Wellstone of Minnesota and Russell D. Feingold of Wisconsin, in opposing Negroponte.
After the terrible events of the past week, the Bush administration should know that now is not the time to remind the United Nations of this nation's often sad history of intervention in Latin America, or of the sometimes ugly tactics Washington used to wage the Cold War in many Third World nations. The dirty little Contra war that Negroponte oversaw from the embassy in Honduras was one of the most egregious examples of both.
The unanswered questions about Negroponte and human rights may limit his effectiveness.