- The Washington Times - Wednesday, October 3, 2001

President Bush signaled yesterday the question is not whether to push an economic stimulus package through Congress but when and how.

"There is agreement that we've got to come together with a vision about how big the package ought to be to make sure that we affect the economy in the short run in a positive way, but don't affect it in the long run in a negative way," Mr. Bush said yesterday morning after a meeting with congressional leaders.

House Minority Leader Richard A. Gephardt, Missouri Democrat, said "there's a growing agreement that we need to do something. That's first. Second, there is the beginning of conversations about the size that the package might have."

While some lawmakers have suggested an economic stimulus package should include as much as $150 billion in additional tax cuts and spending for fiscal 2002, there appears to be growing consensus the number should be closer to $50 billion the estimated budget surplus.

Coincidentally, Federal Reserve Chairman Alan Greenspan has said another $50 billion in spending and tax cuts is necessary to have a significant impact on the stagnant economy.

Congress already has appropriated $50 billion in response to the terrorist attacks, which have crippled the airline industry and sent shock waves through a struggling economy.

Mr. Bush said he and lawmakers have agreed the plan should stimulate both consumer demand and corporate investments.

"The best way to stimulate demand is give people some money so they can spend it," Mr. Bush said.

Senate Minority Leader Trent Lott, Mississippi Republican, said his goal is to keep the legislation tightly focused on promoting economic growth.

"I am concerned that what we are doing could get out of control, that we will unleash the dogs of deficit spending," Mr. Lott told reporters back on Capitol Hill.

Mr. Lott said he is sympathetic to the idea of expanding unemployment and health insurance benefits to those directly affected by the Sept. 11 attacks, but he does not want to see the events used as an excuse for a wholesale expansion of the program.

Other Republicans continued to push for a reduction of the capital-gains-tax rate. Mr. Gephardt said that is not one of his favorite proposals, but "everything is on the table."

"There's one thing that the American people must understand: that as we work through these important subjects, we will do so in a spirit of cooperation and consultation," Mr. Bush said.

That discussion continues as White House officials and lawmakers begin to talk openly about the prospects that the economy will slip, if it has not done so already, into a recession.

"The supply-shock consequences of the attacks no doubt will reduce the rate of growth of GDP during the third and fourth quarters of 2001 and, I think it's fair to say, increase significantly the likelihood that the economy is in a recession," the White House's chief economic adviser, Glenn Hubbard, told the Senate Budget Committee yesterday.

"We have a recession, and I'll acknowledge that," said House Majority Leader Dick Armey, Texas Republican.

But bucking the tone of bipartisanship, he rejected outright every major Democratic proposal for economic stimulus including tax rebates, expanded unemployment benefits and "public works" projects.

Mr. Armey said his job is to write legislation that works, not to appease.

"Tax relief is the only engine other than deregulation efforts that can stimulate the economy," Mr. Armey told reporters. "We are not going to buy our way out a recession."

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