House Dems to Map Out Own Economic Plan

By ALAN FRAM, Associated Press Writer

WASHINGTON (AP) -

House Democrats are getting ready to craft an economic recovery plan, knowing that President Bush (news - web sites) will make his own proposal a centerpiece of his legislative agenda next year.

Democratic leaders said Monday they plan to offer their own package early next year when the new Congress convenes. As a starting point for the many decisions they will have to make, about 130 House Democrats were holding closed-door meetings Monday and Tuesday with economists, most of whom are Democratic-leaning.

"We knew the Bush economic package was not working" incoming House Minority Leader Nancy Pelosi, D-Calif., told reporters during a break Monday. "The president's actions on Friday were an admission of that failure."

Pelosi's reference was to Bush's firing of Treasury Secretary Paul O'Neill and Lawrence Lindsey, head of his National Economic Council. On Monday, Bush named John W. Snow, chairman of the railroad conglomerate CSX Corp., to replace O'Neill.

The meetings also came a month after elections that saw Republicans capture Senate control and slightly strengthen their control of the House. Many Democrats have complained that their party lacked a coherent economic theme during the campaign.

Congressional aides and lobbyists said Monday that Bush is considering an economic growth plan costing about $300 billion over 10 years.

Bill Dudley of the Goldman Sachs investment firm, one economist who addressed the Democrats, said afterward that he suggested a $50 billion to $100 billion package for next year that would be temporary, plus steps to buttress the budget over the longer-term. After four years of surpluses, the budget suffered a $159 billion deficit last year, and many analysts think years of $200 billion shortfalls lie ahead.

Rep. Bob Menendez, D-N.J., another leader, said the Democratic agenda would include "economic growth, job creation and tax relief for middle-class Americans."

Besides deciding how to communicate their message, Democrats must choose what their policies will be. In the last few years, rather than flatly opposing GOP tax-cutting proposals, most Democrats have voiced support for smaller tax reductions more targeted on lower- and middle-income workers.

Among the questions Democrats must decide are whether to advocate blocking parts of Bush's $1.35 trillion, 10-year tax cut from phasing in.

Only a few Democrats have proposed preventing those tax reductions from taking effect, with many others reluctant to do so for fear of being accused of favoring higher taxes. That tax package became law last year over the objections of most congressional Democrats.

"I certainly think it's on the table," Rep. Steny Hoyer (news, bio, voting record) of Maryland, who will be the No. 2 House Democrat, told reporters about blocking parts of the tax cut.

Other Democratic options include:

_A payroll tax holiday. A temporary halt in such taxes would help even the lowest-income earners, whose Social Security (news - web sites) and Medicare taxes are deducted from their paychecks. But unless the government recoups the money, the proposal would weaken the two programs' solvency.

_Cuts in taxes stockholders pay on dividends. That would disproportionately help higher-income people who tend to own stocks.

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