- The Washington Times - Thursday, October 25, 2001

The House passed a nearly $100 billion tax-cut stimulus package yesterday that President Bush said would boost the anemic American economy battered by the Sept. 11 terrorist attacks.
The administration-backed bill, passed on a largely party line vote of 216-214, came just a few hours after the Federal Reserve Board issued a gloomy report saying that the economy nearly ground to a halt after the devastating Sept. 11 assault that most economists believe has pushed the country into a recession.
The White House hailed the House's action and, earlier in the day, Mr. Bush directly linked the need for more tax cuts to America's war against terrorism, saying they were a strategic part of the nation's response and "an important part of the home-front security."
"One of the effects of the attacks has been on our economy. Make no mistake about it: September 11 affected economic growth, and our government must respond in an effective way," Mr. Bush said in a speech at the Dixie Printing Co. in Glen Burnie, Md.
"I strongly believe it's time to balance" government spending for emergency aid "with additional tax relief," Mr. Bush told workers at the company. Cutting business taxes is "a good way to make sure that we enhance the employment opportunities of America."
The administration had initially given the House bill a lukewarm reception, in part because it was larger than the $75 billion package Mr. Bush wanted. Treasury Secretary Paul O'Neill had ridiculed parts of it as "show business." But with new evidence that the national economy was growing weaker in every major sector, the president made it clear yesterday that he was largely behind what the House had done, though he still wanted it reduced in size.
The House bill's one-year cost would come to $99.5 billion, but over 10 years it would cost $180 billion, according to congressional budget officials.
The bill contains all of the economic recovery proposals sought by the White House, including partially accelerating the individual tax-rate cuts passed earlier this year and giving rebates to low-to-moderate income workers to spur consumer spending. It also contains business tax breaks to boost new investment and expansion.
The bill would repeal the corporate alternative minimum income tax and allow businesses to write off costs of equipment and plant expansion much faster. It also changes the holding rules for capital gains that would effectively cut the tax rate from 20 percent to 18 percent.
The measure would also make $12 billion available to the states to raise or extend unemployment benefits, provide worker training or additional aid for health care costs.
The plan now goes to the Senate, where it faces strong opposition from Democratic leaders, who have proposed a smaller $70 billion stimulus bill, half of which would go to increase benefits and health care premium payments for the unemployed. The rest would mostly go to tax rebates for low-income workers who did not get rebates earlier this year because they paid no income taxes, as well as some business tax breaks.
Mr. O'Neill said last week that he would urge the president to veto the Senate Democratic bill if it reaches his desk in its present form.
In a statement expressing "strong support" for the House bill, the administration said it was "pleased that the House has started the process of acting on a stimulus package to help get the economy going again following the terrorist attacks on Sept. 11."
"The administration commends the fact that this bill is focused primarily on tax relief, since Congress has already adopted adequate spending measures to address the economic disruption caused by" the attacks, the statement said.
But a coalition of liberal, trade-union and other special-interest groups, led by AFL-CIO President John Sweeney, attacked the House tax-cut bill, saying that it would divide the country and do little to combat a growing recession.
"This economic stimulus package is heavily skewed toward long-term tax breaks for those who least need them and will negatively impact the long-term fiscal health of our nation," said Joe Theissen, executive director of Taxpayers for Common Sense.


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