Monday, November 12, 2001

President Bush has sharply reminded Senate Democrats to hold the line on emergency stimulus spending and wisely reminded them of their Oct. 2 agreement to hold next year’s discretionary spending to $686 billion and rightly so. While there are not enough dollars in the Treasury to fill the void left by a single individual who perished in the attacks of September 11, there are more than enough dollars to set America on the right track for fighting the war and battling the recession. In fact, there is a real danger that a flood of federal spending could extinguish the sparks of individual innovation and flames of capitalism, which are so needed to move the economy forward.
Governments simply cannot spend their way out of recessions. Were it otherwise, Congress would have done so long ago, Japan would have experienced a wildly prosperous 1990s and communism would have worked. Rather, “yes” is almost the inevitable answer to the question posed by one wag: “If ‘con’ is the opposite of ‘pro’, is Congress the opposite of progress?”
While Congress should certainly use taxpayer dollars for taxpayer relief, it can generate great economic progress simply by stepping out of the way. To that end, the president’s proposals make a great deal of sense. Mr. Bush proposes accelerating to 2002 the tax-rate reductions scheduled for 2004 and 2006, and providing supplemental cash payments to taxpayers who didn’t qualify for last summer’s tax rebates. Both initiatives would provide taxpayers with fiscal security for additional spending in the upcoming holiday season. The president also proposes repealing the corporate alternative-minimum tax, a move that would put additional investment money in the hands of corporate innovators, and accelerating depreciation schedules for capital acquisitions.
Many features of the president’s plan were incorporated in the House-passed stimulus plan. However, most of the laudable features in that bill have gotten bogged down in the version in the Senate, where Majority Leader Tom Daschle has not only ruled out accelerating individual rate cuts, but also rejected any repeal of the alternative-minimum tax. Indeed, the bill drawn up by Senate Democrats is heavy on federal handouts and provides only a trickle of additional financial relief to taxpayers. As John Feehery, spokesman for House Speaker Dennis Hastert said, the Democrat-controlled Senate legislation “subsidizes bison meat and watermelons,” and no one really and truly “thinks those measures would stimulate the economy.”
According to a recent analysis by the Heritage Foundation, Mr. Bush’s plan could help stimulate the production of an average of 10 times more jobs than the Senate plan by fiscal 2006, increase disposable family income five times as much as the Senate plan and lead to 10 times as much investment. So, it seems, Congress should get out of the way so that investors and innovators can get the economy going again.

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