- The Washington Times - Monday, September 10, 2001

Leading Senate Democrats and Republicans yesterday pressed for further tax cuts to stimulate the slumping economy and suggested reductions in the Social Security payroll tax as one such option.
In talk show appearances yesterday, Senate Budget Committee Chairman Kent Conrad, North Dakota Democrat, and Sen. John Kerry, Massachusetts Democrat, both identified a payroll-tax cut as a way to put money into people's pockets quickly, and they said the option needs to be examined.
"Fiscal stimulus can take one of two forms. It can be spending or additional tax cuts. And we may need additional tax cuts to give lift to this economy if we see continued weakness," Mr. Conrad said on "Fox News Sunday."
Asked if a cut in the payroll tax would qualify as the kind of relief he is seeking, the chairman responded: "Yes, absolutely."
The Senate's two top Republicans — Minority Leader Trent Lott of Mississippi and Assistant Minority Leader Don Nickles of Oklahoma — both said they would also support such a tax cut. It would be a "good idea," Mr. Nickles said on CBS' "Face the Nation."
"Maybe we should have a temporary reduction in the Social Security payroll tax. That's a middle-income tax cut. That's for anybody that makes up to $80,000. It would be for them and for their employers. It would help the economy," he said.
Mr. Lott said on CNN's "Late Edition": "I've been for reducing the payroll tax for years and years and years. I think the payroll tax is too high and for entry-level people, it does hurt. I would be interested in entertaining a bipartisan effort to consider that."
While Senate Republican leaders see economic benefits in cutting the payroll tax from its current rate of 12.4 percent and in reducing the capital gains tax from 20 percent to 15 percent, Senate Majority Leader Tom Daschle, South Dakota Democrat, may be harder to persuade.
Interviewed yesterday on ABC's "This Week," Mr. Daschle was not asked about the feasibility of a payroll tax reduction. But he was asked about the Republican push to reduce the capital gains tax, and he made it clear that he has strong reservations about the proposal. His remarks seemed to suggest he may be wary of any further tax cuts.
"It's ironic that the very issue that got us into the box we're in right now are tax cuts. Seventy-four percent of the problem we're facing, according to the Congressional Budget Office, is the [$1.35 trillion Bush] tax cut," Mr. Daschle said.
"To propose another tax cut like that, I think, would cause real concern, and, frankly, I'm not sure would get us out of the box," he said.
President Bush has taken a cautious attitude toward reducing the capital gains tax. He wants to wait and see what impact this year's $38 billion in rebates from his sweeping tax-cut package has on the economy.
Asked if the president would support cuts in payroll taxes, White House spokeswoman Jennifer Millerwise said yesterday, "The president remains confident that the tax cut and cuts in interest rates by the Fed are the right remedies, and that they will encourage the [economic] growth needed."
Mr. Kerry, a potential Democratic presidential candidate in 2004, said on "Face the Nation" that he believes a payroll-tax cut holds promise as a "short-term stimulus" to help counter the effects of a worsening economy and lower-than-expected budget revenues.
The Massachusetts Democrat noted that 29 million Americans who contribute payroll taxes missed out on the Bush tax cut because they are too poor to pay income taxes. Mr. Conrad also said those left out were among those "most likely to spend that money to give lift to the economy."
But Mr. Kerry stressed that he would support a cut in the payroll tax or in the capital gains tax only if Mr. Bush "restructures those parts of the tax cut that have not taken effect" and submits a revised version of the proposed fiscal 2001 budget "that is more realistic in the face of what we now face."
"I personally think you've got to be prepared to talk about additional tax cuts now, if they're properly directed, if they're properly focused," Mr. Kerry said.
However, he said everything that's now on the table must be re-examined, "because the president's numbers will not hold up." He charged that Mr. Bush's spending plan will "add $1 trillion of debt to this country over the course of the next six years."
But Mr. Daschle said it is useless to talk about revisiting the Bush tax cut. "The president has said unequivocally he won't even consider looking at revising the tax cut. Our Republican colleagues in the House and Senate have said there is no way they're going to look at it. You can't go somewhere where there isn't any mileage. There isn't any opportunity to do it."
Mr. Daschle also questions the need for a White House budget summit, which has been proposed by Mr. Kerry and House Democratic Leader Richard A. Gephardt of Missouri.
Asked if he has any new ideas for improving the sluggish economy and reversing the dwindling budget surplus, Mr. Daschle said the current economic and budget woes are the president's responsibility. "He's the architect of our current circumstances.
He was the one who passed the budget. He was the one who passed the tax cut. He is the one who created the economy as it exists today. Now we need to look to him for leadership in getting us out," the Senate Democratic leader said.
Mr. Daschle and other Democrats have repeatedly charged that the economic slowdown, combined with the Bush tax cut, would force the administration to tap the Social Security surplus to avoid a budget deficit. Senior administration officials now acknowledge they may need to use about $9 billion of Social Security money for purposes other than paying down the national debt in the current fiscal year.


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