- The Washington Times - Wednesday, March 28, 2001

KALAMAZOO, Mich. President Bush yesterday made his most forceful defense to date of his tax-cut proposal, saying overburdened Americans need more than just a one-time rebate offered by Democrats to help rejuvenate the "winded" economy.
"They need tax relief fast in fact they need it yesterday… . Yet our economy needs more than a pick-me-up, more than a one-time boost," Mr. Bush told a small group of local business leaders gathered in a Western Michigan University gymnasium.
"Our economic health depends on people feeling comfort and confidence about long-term decisions to start a new business, to invest in a new idea, to buy a new home. And the people who make those decisions don't care only about this year's tax rate, they care about next year's tax rate, and the year after that," he said to cheers from the crowd.
Bush spokesman Ari Fleischer said after the speech that the president supports lowering tax rates retroactively to Jan. 1 as do Democrats but only as part of a long-term plan to reform the entire U.S. tax code.
"You can't do one in exchange for the other because he thinks that would do harm in the long term," Mr. Fleischer told The Washington Times.
The first phase of the Bush plan passed by the House and soon to be debated in the Senate would revamp the tax code, eliminating tax payments altogether for more than 6 million Americans and reducing rates across the board. When fully implemented in 10 years, the average married couple with two children would pay $1,600 less in federal income tax.
A competing plan from Senate Democrats would retroactively lower just the 15 percent bracket to 10 percent, returning $300 in a one-time rebate to individuals and twice that to couples, retroactive to Jan. 1.
Mr. Bush's plan would pump $6 billion into the economy this year $1.6 trillion over 10 years while the Democrats' plan would return $60 billion this year, but less than $500 billion over 11 years.
"Immediate tax relief is good news," Mr. Bush said yesterday in his 30-minute speech. "But tax relief that gets yanked away next year is not such good news. Lower rates do not stimulate much economic activity unless people can rely on them for years down the road."
Mr. Bush spoke on an up day for the economy one of few over his 66 days as president.
The New York-based Conference Board said yesterday that its Consumer Confidence Index rose to 117 in March, up from a revised 109.2 in February.
Analysts were expecting a reading of 104.1 in the index, which is based on a monthly survey of some 5,000 U.S. households. The index compares results to its base year, 1985, which it defines as 100.
Boosted by those numbers, the Dow Jones Industrial Average yesterday rose 260.01 points, the second-biggest point gain of the year, to close at 9,947.54. It has now risen more than 558 points in three days, offsetting more than one-third of the losses suffered the previous 10 days.
Other stock indexes gained yesterday, with the Nasdaq climbing 53.77 points to 1,972.26 and the Standard & Poor's 500 index rising 29.48 to 1,182.17.
But Mr. Bush said a quick fix is not the way to solve problems with the economy, which has been souring for the last few months, or the stock market, which has been doing poorly for longer than that.
"The Nasdaq peaked a year ago, last March; Standard & Poor's 500 did the same. The Dow Jones Industrial Average peaked 15 months ago in January of 2000. Since those peaks, the Dow has lost nearly 20 percent of its value, the S&P; more than a quarter of its value and the Nasdaq more than half of its values," he said.
"These declines have hurt almost all investors and they've surprised and worried many new investors."
He noted that some sectors of the economy have been hard hit and forced to lay off workers, making his choice of venues for the "major policy speech" clear unemployment in Michigan increased more "over the past year than in any other state of the union."
Despite a stream of bad economic news, the president said great promise lies ahead.
"The American economy is like a great athlete at the end of the first leg of a long, long race somewhat winded, but fundamentally strong… . It's on the verge of even greater accomplishments and achievements."
Mr. Bush disputed warnings from Democrats that his tax-rate cut would eat up nearly everything left over in a projected $5.6 trillion surplus after the federal government meets its spending needs.
Citing a Congressional Budget Office report, he said even if the country were to fall into a recession the likes of 1990 and 1991, the surplus would drop only 2 percent to just under $5.5 trillion.
"We can proceed with tax relief without fear of budget deficits, even if the economy softens," he said.
While neither of Michigan's senators Carl Levin and Debbie Stabenow, both Democrats attended the university event, the president issued a stern warning to the Senate.
"I strongly urge the United States Senate to remember where that money came from," said Mr. Bush, stabbing a finger loudly into the podium for emphasis. "It's the people's money and we need to send it back to the people who pay the bills in this country."
At another point, he said: "Some in Congress want America to choose between these goals, to think of the moment and not the future. But lasting prosperity requires long-term thinking."
And he faced head-on charges by Democrats that he is "talking down" the economy in order to sell his tax-rate-cut plan.
"You see, it's the president's job to look for warnings of economic trouble ahead and to heed them and to act. I got elected because people want the president to act and that's exactly what I'm going to do."
At the university, a small group of protesters shouted at the president's motorcade as he arrived. Some held signs that said, "No Tax Cut For The Rich" and "Stay Out Of Alaska."
Back in Washington, Treasury Secretary Paul H. O'Neill said Congress must pass all of Mr. Bush's tax-cut plan and not settle for a onetime stimulus that would have no long-term impact on the economy.
"Some suggest we send a rebate to taxpayers now, and stop there," Mr. O'Neill said in a speech to the National Association of Business Economists. "That's not good enough. If we want to change consumption patterns, we need to make a permanent change in people's tax burdens."
Calling the Democrats' proposal a tested technique that "just didn't work," Mr. O'Neill called the president's plan the "cleanest and simplest instrument that we have available to have an impact quickly. And we must cut every rate."
But Senate Minority Leader Tom Daschle of South Dakota said his proposal to immediately lower the bottom 15 percent income tax rate to 10 percent, retroactive to Jan. 1, has broad support among Democrats, and Republicans and should move to the top of the Senate's agenda.
"We can act now to take these two widely agreed-upon proposals off of the table, and get them to the president's desk," Mr. Daschle told reporters yesterday. "Let's get this done now."
Later this week, House Republicans are planning votes on pieces of the Bush plan that would ease the tax marriage penalty paid by an estimated 25 million two-income couples and gradually double the $500 child tax credit. Neither of those, however, would take effect in 2001.


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