Wednesday, November 21, 2001

Treasury Secretary Paul H. O’Neill said yesterday that a $75 billion plan by a coalition of Democratic and Republican senators to stimulate the economy contains “the basis for a deal.”
Mr. O’Neill discussed the proposal with six members of the Senate’s Centrist Coalition, which has included in the compromise plan aspects from both the Republican and Democratic bills that do not have enough votes to pass the Senate.
Speaking on ABC’s “Good Morning America,” Mr. O’Neill said the Centrist Coalition’s plan “has most of the elements in it the president has proposed.”
“I think there’s a basis here for a deal,” Mr. O’Neill said.
The Senate last week killed a $69 billion Democratic bill that the White House said would have devoted too much to new spending and not enough to tax relief. But Senate Republicans acknowledge they do not have enough votes to get the passage of their proposal either.
White House spokesman Ari Fleischer called the talks “very fruitful” between Mr. O’Neill and “a group of Senate Democrats who are willing to think differently about taxes and spending.”
“The president is very pleased by the possibility of making progress with a group of centrist Democrats who think that the best way to have [an] economic stimulus package is through tax cuts, not spending increases,” Mr. Fleischer said.
“The president understands that there will be some, out of deep, heartfelt belief, who think that the best way to stimulate the economy is through more spending, and the president simply disagrees with those Democrats,” he said.
The proposal would leave out in the cold an amendment by Sen. Robert C. Byrd, West Virginia Democrat and chairman of the Appropriations Committee, to spend an additional $15 billion on homeland security. Senate Majority Leader Tom Daschle has insisted that the amendment be included in any deal to stimulate the economy. But Sen. John B. Breaux, Louisiana Democrat and a key member of the Centrist Coalition, has said the extra spending should be negotiated separately and included only if it is feasible.
President Bush has threatened to veto the extra spending on homeland security.
The Centrist Coalition’s plan provides tax cuts of $26 billion for a bonus 20 percent depreciation write-off for businesses for one year, $4.5 billion for businesses to deduct current losses against taxes paid up to five years ago and $852 million in enhanced expenses deductions for small businesses.
The plan would accelerate reduction in the 27 percent income-tax bracket to 26 percent from 2004 to 2002, and authorize $14 billion for a new round of rebate checks aimed at lower-income workers.
Taking from the Democratic bill, the proposal also would create a new tax credit to help laid-off workers with 50 percent of the costs of COBRA health insurance policies. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1986. The proposal would extend all unemployment benefits by 13 weeks and allow $5 billion in grants to states for jobless assistance.
Other Senate Republicans are proposing a one-month suspension of Social Security payroll taxes, which would add about $40 billion to the economy almost immediately. The top Democrat and Republican on the House Ways and Means Committee have expressed support for that proposal, which would likely have to include aid for the unemployed as well.
Other senators promoting the Centrist Coalition’s plan include Sens. Olympia J. Snowe, Maine Republican, and Zell Miller, Georgia Democrat.
“We’re working quietly this week while they’re all at home to see if when they come back next Monday and Tuesday we could get this thing rolling and get it done,” Mr. O’Neill said.
The House approved a bill three weeks ago that would add about $100 billion to the economy in its first year, mostly through tax cuts for businesses.
This article is based in part on wire service reports.

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