Newspaper article The Christian Science Monitor

In Middle America, Mixed Views on Tax Cut

Newspaper article The Christian Science Monitor

In Middle America, Mixed Views on Tax Cut

Article excerpt

Edmund Riccio knows what he wants to do with his share of President Bush's $674 billion economic-stimulus package. His six- person General Foundry LLC needs a new truck, state-of-the-art computers, and extra cash to build up its inventory. "It sure would be a relief," says the former Bethlehem Steel executive.

But not far away in the offices of the United Steelworkers, Local 2599, Lenny Yushko scoffs at the idea of one of his union members hunting for work with the $3,000 proposed by Mr. Bush. "Where are the jobs?" asks Mr. Yushko, who worked 34 years at Bethlehem's coke works before it closed four years ago.

Indeed, as Congress prepares to debate Bush's mix of supply-side tax cuts and compassion for the displaced worker, the city of Bethlehem represents a real-time look at the opportunities and challenges in enacting the far-reaching plan. Some of its citizens are eager to see if things can get moving again with a $1,000 per- person tax reduction, which the president says 92 million people will be eligible for, and the elimination of taxes on dividends. Others are skeptical that anything will trickle down to the significant number of lower- and middle- income workers. And many just want to see if Washington can deliver on its promises.

Everytown USA

Bethlehem is typical of many communities that may be affected by Bush's plan. The unemployment rate in the region is 5.7 percent, not far from the national average of 6 percent. It has a dynamic ethnic mix, from Latinos to the blond-haired descendants of the Moravian settlers. And it has had more than its share of economic ups and downs.

Situated on the banks of the fast-flowing Lehigh River, it used to be one of the great steel- producing cities. Smoke-belching furnaces lined the river for miles. coke works, where Yushko worked, lit up the sky at night.

The steelworks flourished in large part because of a steady supply of hard-working immigrants who lived across from the plant. Bethlehem management, however, eventually shut down the furnaces after the economics of making steel there no longer made sense. This week, International Steel Group offered to take Bethlehem Steel out of bankruptcy by buying the remaining assets for $1.5 billion.

More recently, the Lehigh Valley has turned to telecommunications. Fiber- optics companies such as Agere Systems, a spinoff of Lucent Technologies, have had grand plans. But with the shrinking of companies like AT&T, the suppliers have also had to scale down. Now some of those factories in the Lehigh Valley are empty.

The cyclical slowdown that pushed the national economy into recession hit Bethlehem as well. Thus, for some businesses, the Bush plan is a ray of hope. One of those who's encouraged is florist Mike Kohn, owner of Patti's Petals Inc.

Only 18 months years ago, he built his attractive store on land that used to be part of the steel mill. …

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