The Bombshell Gray Ignored

the proposal by the House Republican Study Committee (which includes more than two-thirds of House GOP members) to eliminate the federal financial payment that helps compensate the city for burdens associated with being the nation's capital.

This bombshell is contained in the Republican Study Group's proposed Spending Reduction Act, which would cut $100 billion in nondefense discretionary spending for the rest of fiscal 2011.

The provision states the act "would eliminate the general fiscal assistance that the District of Columbia receives from the federal government (a special payment unique to Washington). DC currently receives this payment even though the federal government otherwise provides, just as it does for other states who do not receive this special payment, substantial payments in the form of Medicaid, education money, etc. Savings: $210 Million annually."

If approved, that action would bring the financially strapped nation's capital to its knees.

Yet in Boehner's presence this week, Gray never said a word about this threat. The mayor's press secretary, Linda Wharton Boyd, told me in a brief phone interview Friday that the anti-D.C. proposal "was not discussed."

Gray, however, did use the occasion to tell the speaker that he opposed school vouchers, and Boyd issued a news release touting that point. So what?

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Modern chief executives Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Reagan, George H.W. Bush, Clinton and George W. Bush all recognized the truth that the District's unique status as the seat of the national government carries distinct fiscal disadvantages.

They knew that the city performed the functions of a state as well as those of a local government. They knew that while the city had state-like functions, it lacks full state taxing authority. These arguments, advanced by such noted experts as Alice M. Rivlin of the Brookings Institution and Georgetown University, and former director of the Congressional Budget Office, have carried great weight with lawmakers for decades.

Gray should have told the speaker that the Republican Study Committee doesn't have the facts on the District.

He might have informed the GOP leader that:

l Congress expressly prohibits the District from taxing the income earned within its borders by nonresidents, a power that all states have; two-thirds of the income earned in the District is earned by nonresidents.

l The federal government, the city's largest employer, uses city services but does not pay property, sales or income taxes. Neither do embassies, international institutions or many tax-exempt nonprofits (such as Fannie Mae). Together, they occupy 57 percent of the District's land.

The mayor might have told Boehner - politely, of course - that the GOP study committee's suggestion that the city is receiving unwarranted gifts from Congress is pure hogwash. The city has been receiving partial compensation for being hamstrung by its status as the nation's capital.

But by no means has the federal government come close to paying adequate reimbursement for the services it has been provided by the city. Even the roughly $210 million the city does receive comes unpredictably.

The GOP study committee proposes to end the suspense by stopping payments altogether. A better way to damage the city may be hard to find.

Too bad the mayor couldn't meet and greet the speaker with those words.

Read the full article by clicking the link below:

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http://www.washingtonpost.com/wp-dyn/content/article/2011/01 /28/AR2011012806212_pf.html

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