- The Washington Times - Tuesday, November 20, 2001

Congress, running out of time this year to help the faltering economy, is looking favorably on a proposal to suspend Social Security payroll taxes for one month.
The top Republican and Democrat on the House Ways and Means Committee say they like the plan, which would pump about $40 billion into the economy almost immediately.
"We're looking for mechanisms that will actually affect [the economy] fairly quickly," said Ways and Means Chairman Bill Thomas, California Republican. "That's why we're really attracted to that as an option."
Said Rep. Charles B. Rangel, New York Democrat: "To strengthen consumer consumption, this would be one of the better ways to do it. I think it's an exciting way to stimulate the economy."
The idea was promoted by Republican Sens. Pete V. Domenici of New Mexico and Christopher S. Bond of Missouri before Congress adjourned Friday for a weeklong recess from the partisan gridlock that had stalled a bill.
"It's quick," Mr. Domenici said of his proposal. "It doesn't have any administrative costs associated with it. It helps cities, counties, states and private sector, and indeed every working man and woman in America that pays payroll tax for Social Security. There are a lot of people beginning to ask about it and starting to support it."
White House economic adviser Lawrence Lindsey last week said the idea has "a lot more merit than a lot of what is being proposed by our friends on the other side of the aisle." A Senate Republican source said Republicans expect opposition to the plan from big labor, although some top Senate Democrats have expressed interest in the proposal.
The Senate last week killed a $69 billion Democratic bill that the White House said devoted too much to new spending and not enough to tax relief. Senate Majority Leader Tom Daschle also is insisting that a $15 billion homeland security package be part of any deal to rejuvenate the economy.
The House approved a bill three weeks ago that would inject about $100 billion into the economy this year, mostly through tax relief for businesses. The Senate Democrats' plan focused more on extending unemployment compensation and providing health care benefits to laid-off workers and their families.
The impasse in the Senate has so frustrated Mr. Thomas that he refers to Mr. Daschle in conversations with reporters as "the coalition leader," refusing to call him "majority leader."
"Why can't Senator Daschle put together a modest bipartisan package with the 10 or 15 Republicans who seem to go with the Democrats on almost every other measure if it's reasonable?" Mr. Thomas said on CNN's "Novak, Hunt & Shields."
But he "might be a bit receptive behind closed doors" to the Democrats' position on unemployment benefits in the interests of getting a deal.
The 12.4 percent payroll tax is shared evenly between employees and employers. For a worker earning $50,000, the one-month savings would be about $250.
Mr. Domenici had said he wanted the payroll tax "holiday" to replace the $300 credit for low-income workers and an acceleration in rate cuts for upper-income taxpayers that Congress approved earlier this year.
If the payroll tax break gains momentum next week when lawmakers return, Democrats are certain to push for unemployment compensation as part of any overall package.
"The question would be, what priority would you give it as it relates to unemployment compensation and health care?" Mr. Rangel said. "It would be too much if you added up all the other tax cuts that Republicans were talking about."
One hitch in the proposal is that money would have to be transferred from general revenue to the Social Security trust fund to cover the cost.
"Some people would have a [negative] reaction to general fund money being used to replace payroll tax money it's kind of a precedent," Mr. Thomas said. "Obviously, you're going to have to use general fund money to replace the payroll tax that would otherwise be lost, or you'd really put forward the insolvency of the Social Security trust fund."


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