Daschle blames GOP for `fiscal deterioration'

Leading Democrat assails Republicans over tax-cut policy


WASHINGTON - Sen. Tom Daschle, the capital's most prominent Democrat, accused President Bush and the Republicans yesterday of causing the "most dramatic fiscal deterioration in our nation's history" when they pushed through a major tax cut last year.

Daschle praised President Bush for his leadership in the war effort. But using pointed language to set out the Democrats' election-year stance on the economy, he said that domestic policy was "being written by a wing of the Republican Party that isn't interested in fiscal discipline." He added, "They have one unchanging, unyielding solution they offer for every problem: tax cuts that go disproportionately to the most affluent."

He said the $1.35 trillion, 10-year tax reduction that was the centerpiece of Bush's domestic program had led to dwindling surpluses, high long-term interest rates and an erosion of investor confidence. "So not only did the tax cut fail to prevent a recession, as its supporters said it would, it probably made the recession worse," Daschle said.

The speech by the Senate majority leader from South Dakota was the opening shot in what is likely to be a fierce election-year struggle over the weak economy. It came just weeks after economic stimulus legislation stalled in Congress when negotiations over its shape collapsed in partisan strife. Also, with Daschle considered a potential presidential contender, the address might also be a first salvo of the 2004 campaign.

Bush plans to travel to California and Oregon this weekend and use his radio address today to promote his economic stimulus measure - a mix of large business tax cuts, benefits for the unemployed and an accelerated reduction in income taxes.

In a sign of the high stakes of the debate, the White House brought out one of Bush's highest-ranking and most influential advisers, Karen Hughes, to respond. A chorus of high-ranking Republicans in Congress also shot back with a barrage of accusations that Daschle wanted to raise taxes by repealing the tax cuts.

Hughes said Daschle "seems to be implying that tax increases might be necessary." She said, "Nothing could be worse for workers who want to keep their jobs."

The office of Sen. Trent Lott, the minority leader from Mississippi, provided a "glossary" for understanding Daschle's speech titled, "Senator Daschle's Economic Speech for Dummies." It said that when Daschle speaks of restoring "fiscal discipline," he really means he favors raising taxes.

Speaker J. Dennis Hastert, an Illinois Republican, said, "Perhaps the most important thing the Congress did last year to promote economic security was to pass the president's tax relief proposal."

Daschle tried to dispel the idea that Sept. 11 and the war on terrorism were the main causes of returning federal deficits. "September 11th and the war aren't the only reasons the surplus is nearly gone," he said. "They're not even the biggest reasons. The biggest reason is the tax cut."

Daschle proposed two ideas to spur renewed economic stimulus talks - a one-year business payroll tax credit and a new business depreciation schedule to encourage companies to replace equipment and technology this year.

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