Spend less, cut taxes, Bush says

President calls on Congress for economic stimulus

At least $60 billion

Debate shaping up over marginal rates, relief for businesses

October 06, 2001|By David L. Greene and Karen Hosler | David L. Greene and Karen Hosler,SUN NATIONAL STAFF

WASHINGTON - Brushing aside Democratic demands for more spending, President Bush urged Congress yesterday to approve at least $60 billion in additional tax relief to revive an economy that seems headed toward recession.

Bush asserted that Congress has already approved enough new spending - an identical $60 billion - to help the nation recover from the terrorist attacks and their effect on the economy.

Now, to "make sure that the economy gets the boost it needs," the president said, it is time to cut taxes beyond the $1.35 trillion he proposed and Congress enacted earlier this year.

"Congress doesn't need to spend any more money," Bush told reporters in the Rose Garden.

"What they need to do is to cut taxes."

The president made his remarks a day after meeting with House Republicans, some of whom have grown irritated as Bush has continued to support billions of dollars in emergency spending, with little mention of further tax cuts.

These lawmakers hold dear a bedrock conservative conviction: that easing the tax burden on individuals and businesses is the surest way to energize a weak economy.

Bush called on lawmakers to "as quickly as possible, pass tax relief equal to or a little bit greater than the monies that we have already appropriated."

The president noted that Congress has already approved billions to pay for recovery efforts, help the paralyzed airline industry, tighten airport security and extend more benefits to the unemployed.

Bush has now staked out his position in what will likely be a pitched debate among lawmakers, who are expected to move quickly in coming weeks to put together an economic stimulus package.

Harder to forge compromise

Senate Majority Leader Tom Daschle suggested yesterday that Bush's intention to focus solely on tax cuts could make it harder to forge a compromise.

"I fear that some of the more extreme voices in the Congress are now pressuring the administration to take a more divisive approach to the stimulus legislation," the Democratic leader said.

"We must resist those partisan influences and continue to take the best ideas advanced by both parties."

Specifically, Bush said, he would like to see Congress accelerate the cuts in marginal tax rates that were part of his 10-year tax package approved in the spring. Those rate cuts are scheduled to begin taking effect next year.

Relief at low end

Bush also said he supports some kind of relief for low- and moderate-income workers, many of whom were left out of the first tax cut because they earn too little money to owe income tax.

Their primary tax burden, Social Security payroll taxes, was unchanged in the first round of tax cuts.

Administration officials said yesterday that the president was open to direct tax rebates for these workers, an idea favored by many Democrats.

The president also said he wants to ease the burden on corporations, by eliminating the alternative minimum tax on businesses and by implementing faster tax write-offs for corporations when they buy new equipment.

"This is a package which will dovetail nicely with the marginal cuts and the increased child credit that will kick in next year," Bush said.

"The American people expect us to act, and here's a way for us to act."

The president is under pressure from the House Republicans who favor tax relief and who were also unhappy that the White House agreed to a budget this week that, with the additional appropriations, would increase spending by 7 percent over last year.

Before meeting with Bush at the White House on Thursday evening, the House Republican whip, Tom DeLay of Texas, said he would urge the president to support further tax relief as the primary way to reignite the economy.

"If government spending stimulated the economy, Japan would still not be mired in a nearly decade-long recession," DeLay said. "And the Soviet Union would still exist."

Bush had called earlier this week for an economic stimulus package on the order of $60 billion to $75 billion.

His advisers, meanwhile, began floating a plan to split the package evenly between new spending and new tax cuts.

Some Democrats said they could support such an arrangement.

But these Democrats did not want Bush to count the emergency spending already approved as half the package and to call for the rest in tax cuts.

Rather, they had expected some of the relief not yet approved to be in the form of new spending.

"It's not a good compromise," said Rep. Benjamin L. Cardin, a Baltimore Democrat.

Cardin asserted that by trying to rule out further spending, Bush is making it harder for both parties to work together on a final deal, which lawmakers want to enact within a few weeks.

"I don't think it will be helpful in getting an agreement," Cardin said.

"I think it's going to take a little longer now."

Democrats' proposal

Cardin and other Democrats, including Sen. Edward M. Kennedy of Massachusetts, favor a $15 billion package of unemployment benefits, far greater than the $3 billion Bush proposed.

Senate Democratic Whip Harry Reid is also pushing a package of $20 billion worth of public works spending, as a jobs package.

Others want to raise the minimum wage and spend money on Amtrak, high-speed rail and roads.

In calling for further changes to the tax code, the president could also face some opposition from within his own party.

The bipartisan leadership of the House and Senate budget committees, for example, both called this week for the stimulus package to be temporary, perhaps lasting only one year.

They warned that any more long-lasting tax relief could rob the federal government of needed revenue later.

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