- The Washington Times - Thursday, November 8, 2001

The Bush administration deserves credit for unilaterally slashing long-term interest rates last week by ending sales of 30-year government bonds. The resulting drop in mortgage rates could provide the average homeowner who refinances with a monthly savings of $150 to $200.

Rival Republican and Democratic stimulus plans would inject far more money into the economy $70 billion to $100 billion but the Internal Revenue Service has announced it cannot process new rebate checks this year, no matter how fast Congress moves.

Congress ought to answer President Bush's call to pass a major recession-fighting stimulus package by the end of the month (and he should start negotiating on it right away), but that wouldn't have an immediate effect. If Congress can't move quickly on a full economic-stimulus package, at least it ought to approve a national sales tax holiday this week if possible to boost Christmas retail sales.

Mr. Bush should endorse the sales tax holiday, too. Under a bill co-sponsored by Sens. Olympia Snowe, Maine Republican, and Patty Murray, Washington Democrat, the federal government would reimburse states for the revenue they would lose by suspending sales taxes for 10 days during the holiday season, which begins Nov. 23. The cost would be about $6.5 billion. Rep. Lindsey Graham, South Carolina Republican, introduced a similar measure in the House and noted that in some states the savings on a new car might amount to $1,000 or more.

With consumer confidence falling to its lowest level since February 1994, and Christmas sales possibly heading for their first year-to-year drop since 1953, the sales tax holiday would seem to be the fastest way to pump money into the economy without diminishing the long-term federal budget surplus.

Moreover, the tax holiday has bipartisan backing, with op-ed pieces written on its behalf by advocates as disparate as Alan Blinder, a former Clinton administration economic adviser, and Grover Norquist, president of the conservative Americans for Tax Reform.

The Washington Post's Glenn Kessler uncovered some potential problems with the proposal. Some state legislatures would have to reconvene to authorize the holiday, and there would be auditing expenses. But sales tax holidays have brought out crowds of shoppers in the seven states where they've been tried.

Besides, some stimulus beats no stimulus. And, at the moment, Congress seems to be caught up in partisan wrangling that will at least delay passage of a broad-gauge stimulus bill until late this month at the earliest. Senate Democrats seem determined to pass a stimulus package almost as heavily skewed to lower-income groups as the House Republican measure is tilted toward rich people and corporations.

The Democrats evidently believe they have to take a hard line in negotiations with the House and with Mr. Bush, who insists that the stimulus limit "spending" even when it comes to a boost in unemployment benefits and help for the jobless to maintain their health insurance coverage.

The Senate Finance Committee is expected to mark up Chairman Max Baucus' $70 billion stimulus bill by year's end. And Democrats want to add $20 billion or more to expand unemployment benefits and help those out of work keep their health insurance.

The Bush administration has issued a veto threat against the health proposal. Republicans are rallying around a measure introduced by Sen. Chuck Grassley, Iowa Republican, that embodies Mr. Bush's stimulus agenda and is composed almost entirely of tax cuts.

Instead of going through weeks of wrangling, both parties could well start negotiating around a proposal being put together by the Senate Centrist Coalition, headed by Mrs. Snowe and Sen. John Breaux, Louisiana Democrat. Mrs. Snowe sensibly maintains that the Senate would be in a stronger bargaining position if it passed a bipartisan package by a large margin instead of matching the House's slim majority for a highly partisan measure. The House bill passed 216-214.

Last week, Sens. Snowe, Breaux, Ben Nelson, Nebaska Democrat, and George Voinovich, Ohio Republican, drafted an agenda of tax cuts and spending that would cost between $85 billion and $90 billion.

According to one GOP aide, a group of 20 senators ranging from Joe Lieberman, Connecticut Democrat, to Bob Bennett, Utah Republican, met on Oct. 31 in an antechamber of Senate Majority Leader Tom Daschle's Capitol office to discuss the agenda, indicating that the push for the draft agenda may be gathering momentum.

The centrist proposal, still far from being in its final form, includes items common to measures backed by House Republicans, Senate Democrats and the president, plus ways of overcoming partisan splits. The measure skirts Mr. Bush's veto threat by giving jobless workers a tax credit instead of a subsidy for health insurance and skews individual tax cuts to middle- and lower-income taxpayers. It drops some of the House's more lavish corporate tax breaks, but grants faster depreciation schedules when companies invest in new plants and equipment.

It's clear Republicans and Democrats are going to have to compromise to produce a final stimulus package. The sooner they do it, the better.

Morton Kondracke is a nationally syndicated columnist.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide