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Archive for Wednesday, November 21, 2001

Compromise offered on economic stimulus

November 21, 2001

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— A compromise $75 billion economic stimulus package put forward by a bipartisan group of moderate senators could break the stalemate in the Senate, Bush administration officials said Tuesday.

The proposal, a blend of Democratic and Republican ideas, focuses on the tax cuts that President Bush seeks and does not include most of the Democratic government spending items the president opposes. Republicans last week used a procedural vote to block a Democratic package on the Senate floor but the GOP also doesn't have the votes for the president's plan.

Treasury Secretary Paul O'Neill discussed the centrist package Monday in a conference call with six members of the Senate's Centrist Coalition, including Democrat John Breaux of Louisiana and Republican Olympia Snowe of Maine. O'Neill said Tuesday that the package "has most of the elements in it the president has proposed."

"I think there's a basis here for a deal," O'Neill said on ABC's "Good Morning America."

Later Tuesday, O'Neill said next Monday and Tuesday would be critical in determining if a deal was possible and stressed that worldwide economic health depends on the United States quickly returning to a high rate of growth.

"It is critical we get going as fast as possible. This $75 billion, spent in the right way on stimulus, could accelerate our improvement," O'Neill said.

Administration officials cautioned that O'Neill did not flatly endorse the entire plan but wants to reach out to Democrats interested primarily in tax cuts instead of increasing spending to boost the lagging economy. Democratic Sens. Zell Miller of Georgia and Ben Nelson of Nebraska, along with independent Sen. James Jeffords of Vermont, have also been pushing the package.

Tax cuts in the plan include $26 billion for a bonus 20 percent depreciation write-off for business for one year, $4.5 billion for businesses to deduct current losses against taxes paid up to five years ago and $852 million in enhanced expensing deductions for small businesses.

The plan would accelerate reduction in the 27 percent income tax bracket to 26 percent from 2004 to 2002, enlarge by $1,000 the income subject to the new 10 percent tax bracket and authorize $14 billion for a new round of rebate checks aimed at lower-income workers.

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