- The Washington Times - Tuesday, December 19, 2000

President-elect George W. Bush and his advisers believe that the weakening economy and the threat of a recession is going to help build political support for an income-tax cut that he wants passed early next year.
Mr. Bush and his top advisers sought to blunt Democratic criticism that his $1.3 trillion tax-cut plan is too costly, and quell doubts among Republican debt hawks, by making the case that tax-rate cuts are needed to strengthen investment and business expansion to keep the economy from slipping further.
Mr. Bush underscored his concerns about a rapidly weakening economy on the first day of a two-day visit here, first by meeting with Federal Reserve Board Chairman Alan Greenspan who has expressed similar concerns and then with Republican House and Senate leaders.
When Mr. Bush had finished his round of meetings, it was clear that he had gotten Republican leaders to sing from the same songbook about the need for tax cuts to get the economy moving again.
Rep. Phillip M. Crane, Illinois Republican, a strong supporter of the Bush tax-cut plan who is next in line to become chairman of the tax-writing Ways and Means Committee, said, "Now that the economy appears to be slipping, tax cuts are even more important.
"I expect the Ways and Means Committee to hold hearings as early as the second week of January to see what other tax cuts would be most effective in returning the economy to a strong growth path. We need to be ready to move quickly, just in case," Mr. Crane told The Washington Times.
"Members of Congress are very sensitive to economic downturns and once this new Congress comes in session, I think you'll see them at the forefront of the tax-cutting bandwagon," said John Feehery, chief spokesman for House Speaker J. Dennis Hastert, Illinois Republican.
"The speaker's obviously concerned about the economic slowdown and I think he wants to work with the Bush team to get an economic program and policies in place," Mr. Feehery told the Times.
Mr. Greenspan, who has indicated that he is more interested in paying down the public debt than in cutting taxes, had nothing to say in public after their meeting. But Mr. Bush, who was accompanied by his chief economic adviser, Larry Lindsey, a former Federal Reserve board member who supported Mr. Greenspan's anti-inflation policies, said afterward, "We had a very strong discussion about my confidence in his abilities."
Mr. Greenspan acknowledged in a speech a couple of weeks ago that he is now as concerned about the sagging economy as with inflation, which remains modest. The Federal Reserve Board meets today to decide if it will lower interest rates to halt the economy's slide.
"I do think that the economy is slowing down and there's evidence of that in the third quarter and it will probably continue," said Hoover Institution economist John Taylor, a top Bush adviser who is expected to become the chairman of the White House Council of Economic Advisers. "The [economic] risks are no longer something to worry about, they are actually here."
While Mr. Bush was telling Republican congressional leaders that he was prepared to fight hard for his tax cuts and "knock heads … and twist arms" to get them, Vice President-elect Richard B. Cheney was also tying the need for Mr. Bush's tax cuts to the sagging economy.
"I think the economic outlook makes tax reform, tax cuts, more important than ever. If anything, I think it's probably a stronger case to be made today for an across-the-board tax cut, a reduction in rates, than was true even six months ago, because it does look as though the economy has slowed significantly," Mr. Cheney said last night on CNN.
Democrats have argued that if the economy is slowing, that means that tax revenues will also decline, which in turn will reduce the size of the budget surplus, now estimated at nearly $5 trillion over the next 10 years.
But Mr. Cheney said that government forecasters "anticipate $4.6 trillion over the next 10 years based on the structure that's already in place. And a most likely scenario, even if you have a recession, is that it's relative short-term, and doesn't affect the long-term, 10-year projection."
"But the fact of the matter is that it does look like the economy is going to slow, is slowing already. A lot of evidence of that out there. And, therefore, it's probably more important than it's ever been to" cut taxes, he said.
Mr. Bush said in an interview in this week's Time magazine that he would not want to compromise on the $1.3 trillion in tax cuts he has proposed.
Mr. Cheney, echoing Mr. Bush's resolve to stick to his tax-cut agenda, said, "It's important, I think, to stay true to our principles, which we will do."

LOAD COMMENTS ()

 

Click to Read More

Click to Hide