Bush Dismisses Short-Term Tax Break

Bush Dismisses Short-Term Tax Break

NewsMax.com Wires
Wednesday, March 28, 2001

KALAMAZOO, Mich. (UPI) – President Bush, saying the economy needed "more than a one-time boost," on Tuesday dismissed alternative proposals by Democrats to his 10-year, $1.6 trillion tax cuts to stimulate the economy.

"Immediate tax relief is good news," Bush said. "But tax relief that gets yanked away next year is not such good news. Lower rates do not stimulate activity, unless people can rely on them for years down the road."

Bush's appeal comes in the wake of a $60 billion tax relief plan outlined Tuesday by Senate Democrats. The proposal, first floated earlier this week by Sen. Joseph Lieberman, D-Conn., calls for the IRS to issue a $300 refund to every taxpayer this year to spur the economy, which Bush said needed "an immediate stimulus."

Lieberman told reporters on Capitol Hill Tuesday that Bush's sweeping plan would not "do anything to help the economy in the short term" because it would require a lengthy Capitol Hill debate and because of the way it was structured to kick in increasingly over a decade.

Senate Minority Leader Tom Daschle, D-S.D., added that if Bush and his GOP allies on Capitol Hill were committed to averting a recession they would move to implement an emergency tax relief package while continuing debate on the long-range plan.

"We're prepared to look at a larger and more comprehensive approach to tax cutting once we get this fiscal stimulus package in place," Daschle said.

White House spokesman Ari Fleischer said Bush "will not support anything that does not permanently cut taxes," effectively delivering a veto threat for the Democrats' plan. Bush has called for retroactivity for his own plan, which, if passed by Congress, would go into effect this fall with tax cuts rolled back through January 2001.

Bush's stance in Kalamazoo was in step with congressional Republicans, who have so far refused to break up the president's plan for fear of losing momentum on debates over elimination of the estate tax and the lowering of the uppermost income tax rate, among other contentious elements in the plan that threatens to snarl Capitol Hill debate.

Delay Repeal of the Death Tax?

But news today that a senior Bush aide had hinted at delaying the repeal of the estate tax, by up to two years, suggested that a variety of approaches are still being considered by the White House.

Bush's leading economic adviser, Lawrence Lindsey, said in an interview with USA Today that the estate-tax repeal ''might be something you might want to delay'' to offset the cost of putting more of the tax cut into effect this year.

The Kalamazoo speech, billed by the White House as a major economic address, was the third and final stop for Bush, who on Monday began a three-state budget promotion tour that took him through Missouri and Montana as well. But little in Bush's speech was new as he pointed to slow economic growth and repeated his call for passage of the tax cut, which he first proposed when the economy's growth was at an all-time high.

Bush compared the economy to a long-distance runner.

"The American economy is like a great athlete at the end of the first leg of a long, long race," Bush said. "Somewhat winded but fundamentally strong."

The analogy was Bush's latest attempt in recent weeks to describe the state of the economy, which he has previously said was "sputtering" and in a slowdown. Bush's characterization was slightly more upbeat than his other comments, but he still kept a focus on dips in the stock markets, "sluggish" economic growth and layoffs, to underscore the need for tax relief to spur the economy.

In the last fiscal quarter of 2000, the GDP grew at a 1.1 percent annual rate, down from highs that hovered near 4 percent roughly a year ago. By most economic measures, a healthy GDP growth rate is in the 3 percent range. Lower rates tend to spur unemployment. Higher rates risk sparking inflation.

White House spokesman Ari Fleischer said the GDP dip was concrete evidence of the economic ills the administration had been warning of for months.

"There is no dispute that we are in an economic downturn now," Fleischer told reporters Monday. "That's the facts."

Consumer Confidence Up

But recent statistics showing increased consumer confidence, continued growth in the housing market and unemployment steady at 30-year lows offered evidence that the economy is not as soft as the White House's assessment suggests.

The Conference Board, a private research group, said Tuesday that consumer confidence rebounded in March after posting five consecutive monthly declines. Economists watch the index because high confidence readings suggest consumers are in a mood to spend, and such spending accounts for about two-thirds of economic output.

The Commerce Department said Monday that sales of new single-family homes fell 2.4 percent in February to a seasonally adjusted annual rate of 911,000 units. The sector, considered a fundamental indicator of economic health, has shown some signs of moderation in recent months, analysts noted, but continues to be fueled by healthy consumer demand as falling mortgage rates continue to attract homebuyers.

The Labor Department earlier this month reported that unemployment, another key economic bellwether, remained at 4.2 percent, matching forecasts from economists. The number of workers hired was larger than expected at 135,000. Average hourly wages climbed 0.5 percent, compared with estimates for a 0.3 percent increase.

Meanwhile, Bush's approval rating for handling the economy has dropped, according to polls by ABC News and the Washington Post. About 50 percent of 903 randomly selected adults said they approved of Bush's economic policies. Seven out of 10 people polled said they thought Bush's 10-year budget projections of a $5.6 trillion surplus were unrealistic.

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