- The Washington Times - Wednesday, October 10, 2001

House Republican leaders are writing an economic-stimulus bill based on President Bush's call for immediate tax relief to revive consumer confidence and jump-start the nation's stalled economy.

After weeks of fruitless negotiations between the administration and Democratic leaders, House Speaker Dennis J. Hastert and other Republicans leaders concluded that they would never get a bipartisan agreement on a stimulus package and agreed with the White House's approval that the time had come to put together a Republican-crafted package made up largely, if not entirely, of tax cuts. They plan to have the bill ready by the end of the week.

"The House Ways and Means Committee is already working on this and we're going to pass legislation to help grow the economy in the next couple of weeks," said John Feehery, spokesman for Mr. Hastert.

Democrats have been insisting for weeks that any stimulus bill must be split 50-50 between new social welfare and public works spending and tax cuts aimed at lower-income people, a position that the White House and Republican leaders opposed. The decision to begin writing a tax bill this week and bring it to the House floor meant that the administration has given up any further hopes to hammer out a grand compromise.

Meanwhile, Senate Democratic tax writers signaled yesterday that they, too, would be writing their own bill and that partisan differences between the two houses would have to be ironed out in a House-Senate conference committee.

"Generally, [the stimulus package] is going to have to pass the balance test for everybody," said Senate Finance Committee Chairman Max Baucus, Montana Democrat.

But House Republican leaders made it clear yesterday that they could not support a package that was tilted toward more spending, as Democrats want.

"Democrats conveniently forget that we passed nearly $60 billion in new spending in the aftermath of Sept. 11 for relief efforts and the airline industry. All of those things add up to stimulus, but none of them add up to growth," said a House leadership official.

It was not clear yesterday just what was going to be in the tax-cut package being drawn up by Ways and Means Chairman Bill Thomas, California Republican. House Republican leadership officials said they would be taking their cue from Mr. Bush's call last Friday for between $60 billion and $75 billion in tax cuts aimed at businesses and individual taxpayers to stimulate consumer spending.

House and Senate tax writers were to meet late last night with Treasury Secretary Paul H. O'Neill to discuss what should be in the bill.

Mr. Feehery said that the bill would probably include tax breaks to encourage businesses to buy new equipment and expand plant capacity and possibly a capital-gains tax cut to spur new investment. Other House officials said it could also contain an additional tax rebate tied to payroll taxes and acceleration of the income-tax rate cuts enacted earlier this year.

Republican leaders have been pushing a capital-gains tax cut as a way to boost stock market values that have plummeted in the past six months, but most Democrats remain adamantly opposed to it.

Until last week, the White House was hoping it could work out an agreement with Senate Majority Leader Tom Daschle, South Dakota Democrat, and House Minority Leader Richard A. Gephardt, Missouri Democrat.

But in a White House meeting with Mr. Bush Thursday, Republican leaders told him that it was waste of time to continue negotiations that were going nowhere.

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