Bush warms to capital gains cut - [Poll: Bush’s job approval remains Solid]

MSNBC ^ | Monday, September 10, 2001

[JohnHuang2]

Sept. 10 — Under pressure from Democrats and even leaders of his own party to refocus his tax policies, President Bush signaled Monday that he would side with top congressional Republicans and consider further tax cuts to jolt the stagnant economy, including a reduction in the capital gains tax rate.

SENATE REPUBLICAN LEADER Trent Lott of Mississippi on Monday renewed his push, echoed by House Speaker Dennis Hastert, R-Ill., for a two-year cut in the capital gains tax rate from the current 20 percent to 15 percent.

“We need to look at some other additional spur. I’ve been talking all year about the need to cut the capital gains tax rate,” Lott told reporters in Washington.

“... I think it may be necessary for us to act on the capital gains rate cut, because it will clearly cause a growth in the economy. It always does,” Lott said. “And as an aside, it brings in more revenue to the government, particularly in the first couple of years.”

Acknowledging Democratic complaints that such a tax cut would favor the wealthy, Lott suggested pairing a capital gains rate cut with a reduction in the Social Security payroll tax.

“There are people, at the entry level, who are hit very hard by the payroll tax,” Lott said. “If you’re trying to get money into working people’s pockets quickly, that’s one option you could consider.”

Bush has sought a middle ground between Republicans pushing for deeper tax cuts and top Democrats who say he has cut taxes too much already. Aides have said repeatedly that he was determined to wait to see whether the 10-year, $1.35 trillion income tax cut enacted this year would revive the economy first.

But recent plunges in the stock market and other economic indicators have raised pressure on the president, especially after his own White House Office of Management and Budget projected last week that the non-Social Security part of the nation’s budget surplus had essentially evaporated.

Monday, Bush’s spokesman confirmed that the president was willing to reverse his earlier rejection of a capital gains rate cut, NBC News’ Antoine Sanfuentes reported from Jacksonville, Fla., where Bush attended a forum on education.

White House press secretary Ari Fleischer told reporters that “the president remains open-minded about ideas on how to promote growth.” Asked whether that applied to cutting taxes on capital gains, Fleischer replied “correct,”

Bush will find support for the idea within his own administration.

Glenn Hubbard, chairman of the White House Council of Economic Advisers, said Monday that the government was actively considering options to stimulate the economy — including lower capital gains taxes.

Hubbard said at a conference of the National Association for Business Economics in New York that further moves were needed because it would take at least a few more months before $38 billion in tax rebates mailed to Americans this summer would have any measurable effect.

“The president is always looking at new policies,” Hubbard said.

Other Republicans argued that cutting the capital gains rate would increase tax revenue and help Congress deal with the shrinking budget surplus.

Official congressional estimates of a bill sponsored by Rep. Paul Ryan, R-Wis., say this “unlocking” effect could raise $1.2 billion in 2002, $1.6 billion in 2003 and $7.6 billion in 2004. That would help the government avoid dipping into Social Security next year to pay for other federal programs.

Ryan, a member of the tax-writing Ways and Means Committee, said a capital gains rate cut would lower the cost of investment, leading to greater job creation and an improved economic picture.

“The sagging economy is making this almost mandatory,” Ryan said. “It will not only boost revenues, but it will boost investment.”

But Democrats said they saw several problems with a capital gains rate cut. One is the long-term cost: After the early years’ increase, Ryan’s bill would reduce revenue by a net $10.5 billion over 10 years. A permanent cut would be far more costly.

Democrats also said reducing the capital gains tax rate would primarily benefit the wealthy, adding to what they called an upper-income tilt in Bush’s tax cut. According to the nonpartisan Joint Committee on Taxation, more than three-quarters of capital gains taxes in 1999 were paid by taxpayers earning more than $200,000 a year.

“Why we would want to more top-load tax cuts, given the circumstances we’re facing already, is something I can’t understand,” said Senate Majority Leader Tom Daschle, D-S.D.

Lott said Bush favored the idea but perhaps not implementing it right away.

“It’s not a question of if. It’s when,” Lott said.

The White House is also coming under public pressure. A majority of Americans in a new poll being published Tuesday blamed lower budget surpluses on Bush, who had suggested last week that they were actually the fault of former President Clinton.

The new Washington Post/ABC News poll found that by 66 percent to 33 percent, Americans believed the economy was falling into worse shape, and 53 percent said the blame lay with Bush. Nearly four in 10, 38 percent, blamed Democrats in Congress.

But public sentiment ran counter to Republican calls to cut taxes further. Nearly 6 in 10 of respondents — 57 percent — said they supported reducing the size of the tax cut that passed last spring.

The poll of 1,009 adults, conducted Thursday through Sunday, reported a margin of sampling error of plus or minus 3 percentage points.

Bush’s overall job approval remained at a healthy 55 percent, bolstered by 2-to-1 approval of his handling of education. People were evenly split on whether they approved of his handling of the economy.

For Education And Discussion Only. Not For Commercial Use.

[gfactor]

lets tax money made by putting money somewhere less than we tax work. sounds like the right idea... People who invest don't take that big a hit when they do can't do it. but people who work certainly take a hit when they can't work. So we should tax the desparate -- there's no way for them to avoid the tax.

[gfactor]

lets tax money made by putting money somewhere less than we tax work. sounds like the right idea... People who invest don't take that big a hit when they do can't do it. but people who work certainly take a hit when they can't work. So we should tax the desparate -- there's no way for them to avoid the tax.

[Miss Marple]

Correct me if I am wrong, John, but wasn't the capital gains tax cut part of the original package, along with the death tax? And weren't those two parts dropped at the suggestion of the House so as to get the income tax cut passed quickly?

And wasn't the talk at the time that they would be brought up later in the year?

So now, the President is "warming" to them? These stupid reporters aren't even realizing what's going on.

Heheheh. Yes, President Bush is so stupid, isn't he? Heheheh.

[deport]

The new Washington Post/ABC News poll .... the questions and numbers..

[FlyVet]

But public sentiment ran counter to Republican calls to cut taxes further. Nearly 6 in 10 of respondents — 57 percent — said they supported reducing the size of the tax cut that passed last spring.

6 in 10 have been brainwashed. I'm not rich by any stretch of the imagination. But the capital gains tax is nothing but legalized robbery. I've already paid tax on those wages, then I risk them in the market, and FedGov gets a 20-28% cut off the top, with no risk on its part? Shameless Thief.

[Republican Wildcat]

“Why we would want to more top-load tax cuts, given the circumstances we’re facing already, is something I can’t understand,” said Senate Majority Leader Tom Daschle, D-S.D.

Um...uh, gee, you don't think because they are the ones that provide the jobs?

[Judge Me]

Regarding the latest ABC-Washington Post Poll: "The poll suggests that the public so far is not impressed with Bush's signature prescription for the economy, the 10-year $1.35 trillion tax cut approved in May. Even as rebate checks continue to arrive in mailboxes around the country, six in 10 surveyed said they do not believe the tax cut has had an impact on the economy to date. Twenty-one percent said it had hurt and eighteen percent said it is helping."

[Republican Wildcat]

I would love to hear the rational as to how a tax cut could be bad for the economy.

[JohnHuang2]

And wasn't the talk at the time that they would be brought up later in the year?

Exactly right, Miss Marple.

So now, the President is "warming" to them?

Ridiculous, isn't it? Bush knew -- all the way back during the campaign -- that the economy was headed towards a not-so-soft-landing.

"Economists" -- these pointed-headed "experts" who wouldn't know their orifice from a hole in the ground -- derisively scoffed at Bush's prediction.

They owe Bush an apology.

[FlyVet]

Twenty-one percent said it had hurt and eighteen percent said it is helping."

The only thing this "poll" shows me is how impatient, shortsighted, and ill-informed the general public is. This economy is a behemoth, too big to be turned around on a dime, measured in years, not months or days. I'll still give some credit to Reagan for the prosperity of the 90's. I think his tax cuts in the early 80's did it, despite Congress' useless and irresponsible social spending increases at the time. The only thing wrong with Jr.'s tax cuts is that they weren't big enough. Reduce taxes, hold spending to the inflation rate (although I really believe they ought to be held steady for about 10 yrs), and watch the economy skyrocket again. Congenital liars such as Daschle, Kennedy and Clinton (both of them) know this is a fact, but it doesn't fit their agenda.

[gfactor]

I would love to hear the rational as to how a tax cut could be bad for the economy.

If a recession is what you are afraid of, then a tax cut may not help -- you give people money, and they save some of it, whereas the govt would have spent it all -- more economic activity is generated by the govt spending the money than people. Also, a tax cut may increase the debt/defict, causing the govt to borrow more, which raises the market price for money (interest rates) thus slowing down the economy. Pretty basic stuff you would be able to figure out after a 101-102 type course.

[Hidy]

Even as rebate checks continue to arrive in mailboxes around the country, six in 10 surveyed said they do not believe the tax cut has had an impact on the economy to date. Twenty-one percent said it had hurt and eighteen percent said it is helping."

Whoosh! There goes all the air out of Bush's best bean -- his highly promoted, highly-hyped, highly inflated tax cut.

Look at those numbers! Ouch!

Six out of ten say the tax cut has done squat for the economy, two out of the remaining four say it has hurt, and only the last two say it is helping.

Golly, only 18% approval for the cornerstone of Bush's economic plan? Why, that's less than the 33% of the public who can almost ALWAYS be counted on to support a conservative.

With these numbers, if you're pulling for Bush, you gotta hope that somebody is lying. Or that enough somebodies are going to start.

[Judge Me]

"The poll found that only 33 percent of those surveyed have a positive view of the economy, a 17-point drop since late July and a 37-point drop since January, when 70 percent of those surveyed gave the economy positive ratings."

[Judge Me]

Majority Hold Bush Responsible for Dwindling Budget Surplus

"But when asked who is more responsible for what has happened to the surplus, Bush or congressional Democrats, those surveyed said Bush by 52 percent to 38 percent."

[Judge Me]

"Budget director Mitchell E. Daniels, Jr. warned congressional Republicans on Friday that it was likely the government would tap the Social Security surplus this year, contradicting what he had been saying only a few weeks earlier."