Stimulation in the Senate

Just as lower mortgage interest rates have encouraged plenty of homeowners to refinance and free up some of their incomes and zero-interest car loans have persuaded people to buy new vehicles now rather than later, the idea of a 10-day sales tax holiday will likely get more consumers to get out there and shop, shop, shop. Consumer spending is what the economy needs to back out of a recession but Congress should offer broader relief, especially to states, by pulling together several of the ideas Senate centrists are considering and get moving on a substantial stimulus package.

Republican Sen. Olympia Snowe and Washington Democratic Sen. Patty Murray devised the sales tax holiday, from Nov. 23 to Dec. 2, in which the federal government would reimburse states the equivalent of whatever sales taxes they would have collected during that time. In Maine, that would mean a 5 percent drop in the cost of many goods and, as important, would remove the incentive shoppers in southern Maine have to do their economic stimulating in tax-free New Hampshire. The frugal Granite State and four other states that do not have sales taxes would have to find other means to avoid recession.

A period free of sales taxes provides a potential benefit for several reasons. For instance, revenue-short states could feel the benefit in the next four or five months, after they file for reimbursement and the feds get the checks to them. It’s a temporary boost that gets people back out there buying things and keeping manufacturers busy. It benefits low-income families largely ignored by the House plan.

Maine officials, while noting how grateful they are that Congress is starting to take state’s cash problems seriously, point out that Senate centrists have several issues before them that might be even more effective if less obvious. Maine Sens. Snowe and Susan Collins have been supportive of measures such as increasing Medicaid for acute care services, expanding eligibility for unemployment benefits and increasing funds for job training. The National Governors Association also is looking for a one-year extension on grants for Temporary Assistance to Needy Families, health care for dislocated workers and greater federal share in state capital investment programs.

Taxpayers (and voters) and far less likely to notice federal help like these but they are at least as important as more noticeable ideas such as the tax-free days. Maine’s senators have been diligent in not letting politics get in the way of an effective stimulus package. They have good ideas before them now and should lead again in shaping those ideas into law.