Economy needs a jumpstart

Stimulus: President's proposal is right and deserves quick congressional action.

October 07, 2001

THE TIMES cry out for the economic stimulus that President Bush proposed to Congress. It should be large, immediate and temporary.

The package entails one year of federal deficit spending, whether that is admitted or not.

It should not be allowed to usher in a new decade of deficit addition that would raise interest rates and curtail growth.

The conversion of Federal Reserve Board Chairman Alan Greenspan to sooner rather than later paves the way to agreement. The president wisely offered parameters that meet the concerns of his political opponents.

The economy was flirting with recession before terrorism struck the financial capital of the world Sept. 11. Deficit spending is a proper tool to use against this calamity, to hold down the terrorists' damage and to restore the world's confidence in the United States.

The ideas bruited include bringing forward some of the marginal income tax rate reductions already enacted; sending another rebate to taxpayers by Christmas, or one to 34 million households earning too little to have received the last rebate; extending unemployment compensation; making health insurance payments for the suddenly unemployed; and creating business investment tax credits that can be tailored to industry or to location.

The president's target of $60 to $75 billion stimulus, added to the $40 billion emergency spending and $15 billion airline industry bailout already enacted, makes deficit spending for the fiscal year that began last week a certainty. The projection made before the terrorism was for a $52 billion surplus, which the business slowdown alone would wipe out.

Congress will wrestle with the Republican bias toward cuts for the investing class that pays the taxes and Democratic preference for relieving poverty. A politically viable and economically useful package would have some of both. The devil is in the mix.

At first blush, Democrats on Capitol Hill were happier than Republicans with the president's package. That's a positive sign.

Bipartisan and executive-legislative cooperation should provide a stimulus that puts the nation quickly back on its feet. Ideological struggle over permanent fiscal policy - refighting the 2000 election campaign - is a luxury that should await better times.

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