Washington House Republican leaders on Wednesday began sketching out an economic plan heavy on growth-stimulating ideas such as a reduction in capital gains taxes. The White House focused on a new round of tax rebates, an idea backed by many Democrats.
Under a plan floated by the White House, taxpayers who did not qualify for rebates earlier in the year would receive checks for $300 or $600, according to officials who spoke on condition of anonymity. Many of those would be low-income earners. Those who already received a rebate could benefit from accelerated rate cuts. It was unclear whether they would see a check reflecting that, one official said.
Another senior administration official, also speaking on condition of anonymity, said the White House was also considering a flat rebate amount for both those who didn't qualify last time and everyone who received a check this year.
In the House, Majority Leader Dick Armey, R-Tex., said the GOP package could cost well over the $75 billion upper limit suggested by President Bush and would likely be dominated by a blend of temporary and permanent tax cuts, rather than the spending programs many Democrats want.
"We must have a singular agenda as we develop this bill, and it's economic growth," Armey said. "We will not be able to do everything."
Armey and Rep. Rob Portman, a key Bush ally on Capitol Hill, said the emerging package could include a cut in the 20 percent long-term capital gains rate for investments made after the Sept. 11 terrorist attacks. That would discourage an immediate broad stock sell-off that would drive the market lower.
"The incentive would be not selling, but buying," said Portman, R-Ohio.
Other key House GOP items include a repeal of the corporate alternative minimum tax also favored by the president and a new expensing provision allowing businesses to write off up to 30 percent of investments over a three-year period.
Another proposal mentioned by Armey and Portman would allow businesses to deduct current losses against past profits as far back as five years. There is also support for the president's desire to accelerate some of the income tax cuts in the 10-year, $1.35 trillion tax relief package so they take effect in 2002.
According to the Democratic-led Senate Budget Committee, Bush's plan would cost far more than the $75 billion he has suggested. A preliminary estimate from the committee pegged the one-year cost of Bush's stimulus plan at $114 billion, assuming all future income tax rate cuts are brought forward to 2002.
Rep. Bill Thomas, chairman of the tax-writing House Ways and Means Committee, said the panel could begin assembling the measure as early as Friday. Thomas, R-Calif., said he intends to put the bill together in an open process, starting with a nearly blank slate and putting each Democratic and Republican idea to a public vote.
"Decisions behind closed doors ought to be over," Thomas told reporters.
These moves suggest that House Republicans will not wait for a negotiated deal with Democrats and the Senate on the stimulus plan. The upshot is that the initial measure will have a heavy GOP tint but will also probably change when a final compromise is reached with the Democratic-led Senate.
After a breakfast meeting with Bush, House Minority Leader Dick Gephardt, D-Mo., said Democrats mainly want a new round of rebate checks for low- and middle-income workers who did not get one this summer. About 34 million workers did not receive a check, most because their main federal tax liability is the payroll taxes that fund Social Security, not income taxes.
"It could be a $300, $400 check to them," Gephardt said. "That would help them in the holiday season."