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Key Leaders Talk of Possible Deals to Reduce Taxes
New York Times ^ | Tuesday, September 11, 2001 | ALISON MITCHELL and RICHARD W. STEVENSON

Posted on 09/10/2001 8:52:06 PM PDT by JohnHuang2

WASHINGTON, Sept. 10 — Key figures in both parties responded to the darkening economic outlook today by exploring possible compromises on additional tax cuts, and the Democratic chairman of the Senate Budget Committee suggested that such a deal could involve the politically perilous step of tapping temporarily into the Social Security surplus.

Pressure mounted on President Bush to drop his cautious approach to dealing with the weakening economy, much of it from within his own party. Republicans are voicing growing concern that the White House has underestimated public unease about the economy and the threat it poses to members of Congress up for re-election next year.

Confronted with polls showing that support for Republicans was eroding even before the government reported on Friday that the unemployment rate had surged, nervous Republicans moved on a variety of fronts.

In the House, Republican leaders agreed tonight to take up legislation in committee on Tuesday that would require automatic spending cuts if any Social Security money is spent on other government programs in the current fiscal year.

After accounting for the slowing economy and the tax cut signed into law by Mr. Bush in June, the Congressional Budget Office projected last month that the government would spend $9 billion of Social Security receipts in the fiscal year that ends Sept. 30. Both parties now expect that figure to be higher.

The White House today sent a memorandum to all cabinet agencies asking them to look for possible budget cuts as the administration develops tax and spending proposals for its next budget.

In the Senate, Trent Lott of Mississippi, the Republican minority leader, said he was open to an idea floated by Democrats for a new tax cut for workers who did not qualify for the current rebate. Workers who do not make enough money to pay federal income taxes but who still pay the payroll taxes that finance Social Security and Medicare will not receive rebate checks this year.

Mr. Lott said he would like to see the idea linked to a reduction in the capital gains tax.

"I would like to at least see how that would work, discuss it with Democrats," Mr. Lott said.

Mr. Bush, who met with the Australian prime minister this morning in Washington and then flew to Florida to promote his education bill, was silent on the economy today.

His spokesman, Ari Fleischer, said Mr. Bush remained confident that actions already taken, including the tax rebates and the Federal Reserve's interest rate cuts, would put the economy back on track. At the same time, Mr. Fleischer said, Mr. Bush is "open-minded about possible other ideas."


Today, at the Justina Elementary School in Jacksonville, Fla., Mr. Bush repeated his plea for the Senate to take up his education initiative, highlighting $900 million in new money for reading programs. He gave no hint of backing off on that financing, or anything else in his budget plan.

"One of my dreams is to make sure that schools understand and have the resources available for schools within schools," he said.

On Capitol Hill, Democrats and Republicans alike groped for ways to address the economic slowdown and the attendant political risks.

The Senate Budget Committee chairman, Kent Conrad, Democrat of North Dakota, hinted that he would be willing to consider using Social Security money to address the economic slowdown if Republicans were willing to scale back some elements of Mr. Bush's 10-year tax cut. But Mr. Conrad's approach was quickly dismissed by an aide to Senator Tom Daschle of South Dakota, the majority leader.

Mr. Conrad said Congress's response to the weakening economy should be "more fiscal stimulus in the short run, more fiscal discipline in the long run."

Asked if that meant a willingness to dip into the Social Security surplus — a step that both parties have so far promised to avoid — Mr. Conrad said the focus for now had to be on the economy, since the United States, Japan and Germany were either in a recession or on the brink of one.

"What we really have to keep our eye on here is the economy," he said. "The critical thing is that you have fiscal discipline over time, that you're not taking Social Security and Medicare payroll tax money for other purposes over time."

In the short run, he said, more fiscal stimulus could be critical to keeping the economy from worsening. The details, he said, "could be worked out with Republicans."

Mr. Conrad said his position had been the same throughout this year's budget debate, but his language represented a clear shift in emphasis from the longstanding Democratic position that the Social Security surplus was sacrosanct.

Mr. Conrad's views are not widely shared among Democrats. Tonight, a senior aide to Mr. Daschle was cool to Mr. Conrad's idea, saying, "Senator Daschle opposes using the Social Security surplus and believes that since the president rejected our budget approach and our short-term stimulus approach earlier this year, it is his responsibility to come forward with a plan."

In taking up the measure to cut spending across the board to repay any Social Security money spent for general government operations, Republicans in the House said they did not intend to be first to break their pledge.

"We'll send it over to the Senate," said Representative Dick Armey of Texas, the House majority leader, referring to the spending-cut legislation. "If Daschle is really worried about it he can pick it up and pass it."

But Mr. Conrad's views are similar to the position taken by Mr. Bush, who has said he would consider using Social Security money if the economy lapsed into recession.

The flurry of tax plans and economic prescriptions come as Republicans are expressing frustration that Mr. Bush is not addressing the slowdown forcefully enough.

Some Republicans are drawing a comparison to the midterm elections of 1982 when President Ronald Reagan told the nation to "stay the course" in a recession. House Republicans lost a slew of seats in that election even though Mr. Reagan was re-elected in a landslide two years later.

Last week, on the same night that Mr. Bush was toasting the Mexican president at a state dinner, Congressional Republicans huddled at a dinner of their own that turned into a gripe session about Mr. Bush's passivity during his monthlong vacation.

Republicans said the session began with a grim polling presentation from David Winston, a Republican consultant. The presentation showed that more people now believed that the nation was heading in the wrong direction than in the right direction. Support for Republicans is slipping as next year's election approaches, the survey found.

Particularly worrisome to the Republicans was evidence that voters aged 55 to 64 were defecting from the party in large numbers, because of declines in the value of 401(k) plans that many people are counting on to finance their retirements.

Mr. Winston was followed by Nicholas Calio, Mr. Bush's Congressional liaison. Republicans said Mr. Calio gave a pep talk about Mr. Bush's economic plan, telling the group that the Bush agenda — tax cuts, trade promotion and an energy plan — was geared toward economic growth.

But then a string of Republicans rose to express frustration with the economy, and in some cases irritation with Mr. Bush's long vacation in Texas. According to several Republicans, Representative J. D. Hayworth, Republican of Arizona, complained that it was hard for Mr. Bush to get his message out if the White House lectern had a "Gone fishing" sign on it. Mr. Hayworth's office declined to comment.

Mr. Calio said today that the White House had heard those concerns.

"We're talking to our members," he said, "we're listening and we're doing some thinking ourselves."

But Congressional Republicans continued to describe Mr. Bush and themselves as on different political timetables for 2002 and 2004; they said they could not afford to wait to take action on the economy and the budget situation.

For Education And Discussion Only. Not For Commercial Use.



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1 posted on 09/10/2001 8:52:06 PM PDT by JohnHuang2
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To: JohnHuang2
"According to several Republicans, Representative J. D. Hayworth, Republican of Arizona, complained that it was hard for Mr. Bush to get his message out if the White House lectern had a 'Gone fishing' sign on it. Mr. Hayworth's office declined to comment."

What could Bush have done in August while they were not in session?

2 posted on 09/10/2001 9:10:10 PM PDT by marajade (maraskywalker@earthlink.net)
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