$75 billion sought to jolt economy

President wants Congress to enact tax relief package

Budget deficit accepted

Democrats express support

GOP seeks more for businesses

Terrorism Strikes America

The Nation

October 04, 2001|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON - President Bush called on Congress yesterday to enact a package of up to $75 billion in tax relief for individuals, businesses and laid-off workers suffering from an economic slowdown made worse by last month's terrorist attacks.

After a period of rising surpluses, the president's proposal would put the federal budget into deficit for the first time since 1998. But with the economy seemingly sliding into recession as the nation prepares for war, Bush said the standard he had set during his presidential campaign for deficit spending had easily been met.

"We've now got a reason to do what it takes to not only provide security at home [and] to win the war on terrorism, but we've also got to do what it takes to make sure this economy gets growing so people can find work," he said at a meeting with business executives in New York - not far from the site of the destroyed World Trade Center.

"We've just got to be aggressive and make sure we do what we need to do," Bush said.

Bush's request for $60 billion to $75 billion comes on top of a $40 billion package of emergency aid for recovery and military efforts, and a $15 billion airline bailout plan, both of which Congress has approved.

Alan Greenspan, the Federal Reserve chairman, met with congressional leaders yesterday, urging them to act quickly to provide the economy with a further jumpstart, lawmakers said. Just two weeks ago, the Fed chairman had urged Congress not to act hastily on an economic stimulus plan.

"We all agree that our economy needs some help," House Speaker Dennis Hastert said after the meeting with Greenspan. "Both consumer confidence and investor confidence are down."

`We've got to be realistic'

Bush said his goal in offering his proposal was to provide the "parameters" for the effort in Congress to shape legislation that would provide quick relief to the economy without imposing a long-term burden on the federal budget.

Democrats were more enthusiastic about Bush's specific proposals than were Republicans.

Many Republicans favor a larger stimulus package, with permanent tax relief geared toward businesses and corporate investors who create jobs and wealth. But a consensus seems to be developing roughly along the lines the president suggested.

"I think the president has offered a framework for a bipartisan agreement," said Rep. Benjamin L. Cardin, a Baltimore Democrat who serves on the House Ways and Means Committee.

Cardin said he would prefer to avoid deficit spending by repealing portions of the Bush tax cut enacted this year that have not taken effect and are geared toward wealthier taxpayers.

But Senate Majority Leader Tom Daschle said that while he, too, would prefer to take such steps to avoid the return to red ink, he is resigned to the reality that a deficit can't be avoided.

"I think we've got to be realistic here," said Daschle, a South Dakota Democrat. "This is an emergency. I don't want to get hung up for weeks about finding offsets or opening up the tax-cut debate of last spring all over again."

Treasury Secretary Paul H. O'Neill told the Senate Finance Committee that he now expects the economy to show negative growth, when inflation is taken into account, in the current quarter. But O'Neill said the outlook could brighten in the fourth quarter if consumer confidence rebounds.

Bush deflected a question about whether the economy is already in a recession, saying that was a matter for economic statisticians to decide.

"Here's my attitude: One person laid off is one person too many," the president said. "And therefore, we've got to do what it takes to make sure that that person who got laid off is able to find work."

The size of Bush's stimulus proposal fell about midway in the range of plans being discussed on Capitol Hill. The president also chose a middle ground between the Democrats' insistence on helping low-income people and the Republicans' push for business tax relief and investment incentives.

`Christmas bonus'

As part of his package, Bush called for additional "tax relief to individuals to boost consumer confidence" beyond the $1.35 trillion in income tax cuts enacted last spring.

Administration officials say the president is open to a second round of rebate checks - similar to those mailed out this summer - that have been dubbed a "Christmas bonus" because they would arrive in time to encourage fourth-quarter holiday spending.

"We believe there ought to be more [tax relief] to make sure that the consumer has got money to spend - money to spend in the short term," Bush said.

Democrats have proposed that such checks - of perhaps $300 for individuals and $600 for couples - go to the 30 million Americans who did not receive the earlier checks because they earn too little money to pay income tax. The new round of rebates would be considered a credit against their payroll deductions for Medicare and Social Security.

According to a White House estimate, the cost of a "Christmas bonus" rebate would be about $16 billion.

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