Ohio’s budget cannot afford more tax cuts from Republicans
Gov. Mike DeWine in his first budget proposal broke markedly from previous Gov. John Kasich by not proposing any tax cuts (or hikes).
Ohio House Republicans, in their version of the next two-year budget, which will run from July 1, clearly don’t agree.
They’ve proposed $600 million in tax cuts over the next two years.
Leaving aside any other objections, such a large reduction in state revenues at a time of uncertainty about state income over the next two years is unwise.
The tax cuts also are unlikely to have any substantial impact on jobs and growth.
But there are other reasons they should be sidelined:
*The tax slashing effectively wipes out any additional money toward DeWine’s proposed $900 million H2O fund for Lake Erie and water quality -- a jobs measure in itself, since one result would be to preserve lake-related employment and revenue, including from fishing, boating and other recreation.
*A tax cut of this size will make meaningful school funding reform in the near term more unlikely, although laudably the House version of the budget increases DeWine’s proposed $550 million for wraparound services for at-risk students to $675 million, to help rural kids in need.
*While the House version identifies an overdue number of tax breaks to wipe off the state’s books as partial offsets to its tax cuts, it also proposes eliminating at least one -- the state’s motion picture tax credit -- that’s been shown to generate both jobs and income. The film tax credit has been so successful, there’s support in Northeast Ohio to increase that credit, not eliminate it.
The House budget proposal has praiseworthy provisions, including many of DeWine’s most important and potentially most impactful ideas to give the next generation a leg up. Among them: expanding children’s services funding and addressing the scourge of lead poisoning. Democrats applaud the House budget’s elimination of many unneeded tax breaks.
But the tax cuts are misplaced. Without them, the state budget could earmark more to schools, to jobs programs and to Lake Erie protections.
This budget should be about positioning Ohio for the future. The tax cuts offered by House leadership won’t take us there.
Trade deal with China must have structural reforms
Washington Post: THE TRUMP administration and China appear to be in the final stages of negotiations on what could be a major trade agreement between the two countries. High-level talks move back to Washington today (Wednesday), with a tentative deal foreseeable soon thereafter, to be followed by a wrap-up visit to the United States by President Xi Jinping. It’s not too soon to start defining the minimum conditions of an acceptable deal from the U.S. point of view.
“Structural” is the key concept here, as President Trump has acknowledged. We had our doubts about Mr. Trump’s imposition of tariffs on hundreds of billions of dollars’ worth of Chinese imports, in part because it provoked China’s own tariffs on U.S. goods and in part because the president’s invocation of “national security” as a legal rationale threatened to undermine the reciprocity-based trading system more broadly. Aggressive as they were, his tactics could be redeemed if they force China to change not only such transitory factors as how many soybeans it buys from the United States, but also more deeply embedded trade-distorting practices such as systematic subsidies for state-owned exporters and forced technology transfers imposed on U.S. and other foreign investors.
On this point, there is cause for concern in recent indications that the administration has all but abandoned the goal of greater digital openness in China’s economy. The New York Times reports that the administration is prepared to accept China’s tight regulations that prevent foreign firms from transferring data they gather on Chinese customers for storage outside the country. Instead, it would continue to be stored on servers inside China. This would disadvantage American and other non-Chinese firms in the global competition to create advanced technologies and business methods.
Any trade negotiation requires give and take. So far, Mr. Trump seems to be gaining some ground in areas such as agricultural and energy sales and intellectual property protection; the Chinese seem ready to concede greater latitude for U.S. companies to operate without Chinese joint venture partners. They expect to be rewarded with an end to some or all of the tariffs Mr. Trump imposed.
Yet China may not be bargaining from a position of as much strength, economically, as it would have had a few years ago. Growth is slowing, and debt is rising — creating an opportunity for the Trump administration to achieve goals that have eluded previous administrations. Unfortunately, the president’s fixation on short-term trade deficits, and his inclination to retain tariffs rather than cash them in for deeper Chinese concessions, may lead to an outcome that leaves China unchanged, except cosmetically.
On Sunday, Mr Trump threatened to further raise tariffs Friday if no deal is reached. Undoubtedly, the American people, and the world, will cheer any deal that removes the threat of a trade war, if only because it removes a source of uncertainty hanging over a generally benign economic situation. But that should not be the standard of success.