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Monday, October 29, 2001

Economic bill tangled in debate


Security additions sought

By Brian Tumulty
Gannett News Service

        WASHINGTON — Senate Democrats are pushing for new spending measures to restore public confidence in air travel, the mail service, public buildings and everyday economic activity to stimulate a lagging economy.

        These measures — which add up to $20 billion — come under the general heading of homeland security. House Democrats have a similar proposal totaling about $18.5 billion.

        However, the economic stimulus package that passed the House last week does not have a homeland security component, and President Bush opposes efforts to insert new spending measures.

        “We believe the best way to stimulate and restore confidence to the economy is not through additional spending, but through tax relief,” Mr. Bush told business leaders at the White House Friday.

        “Tax relief arrives quickly. If we can get a bill out of both the House and the Senate, it will happen in quick fashion. Unlike spending programs, we won't have to wait for plans to be drafted and contracts to be let.”

        But the $99.4 billion in tax cuts for 2002 passed by the House are widely expected to undergo major changes in the Senate. House Republicans pushed the plan through in a 216-214 partisan vote, with five New York GOP members voting in favor only after they were promised privately by leaders that additional aid for their state will be inserted to the stimulus package at a later date.

        In the Senate, the top Republican on the Finance Committee, Charles Grassley of Iowa, plans to present the draft of a stimulus plan to his GOP colleagues at a luncheon Tuesday.

        “It will be different from the House Republican plan and help with the negotiations,” said Mr. Grassley's spokeswoman, Jill Kozeny, referring to talks with Democratic Sen. Max Baucus of Montana, chairman of the Finance Committee.

        The evolving Senate Republican plan duplicates the House GOP in calling for a $300 per person supplement tax rebate for those who filed income tax returns and didn't receive a full $300 rebate earlier this year. But it reduces the income tax rates for all upper income brackets, rather than the 28 percent bracket reduction in the House plan.

        And rather than repealing the corporate Alternative Minimum Tax with tax credits retroactive to 1986, the Senate GOP plan would be a more limited reduction in the corporate AMT without a retroactive provision.

        Senate Republicans are sticking with the administration in opposing new spending as part of the economic stimulus — except for the Bush proposals for helping displaced workers. They assert that homeland security and aid for New York would better be handled separately.

        “If this bill ends up with appropriated expenditure items on it, then it's probably never going to pass the Senate because of the 60 vote rule,” said Sen. Pete Domenici of New Mexico, top Republican on the Budget Committee.

        Mr. Domenici said even if additional spending is needed — such as aid for New York — it should not be included in the stimulus package.

        One possible compromise would be to put homeland security into the 2002 defense appropriations bill.

        The House Appropriations Committee last week approved a $320 billion defense bill that left open one section for supplemental spending.

        House Republicans expect that section to be used for the $20 billion the administration would spend for uses ranging from $7.4 billion for defense department to $117.7 for the Department of Energy to improve security at power plants and nuclear stockpiles.

"America Strikes Back" section



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