- The Washington Times - Friday, January 25, 2002

Senate Majority Leader Tom Daschle has offered a "compromise" on the long-stymied economic stimulus package that both the White House and Senate Republicans should reject. "Let's immediately pass what we agree on," Mr. Daschle wrote in a letter this week to President Bush, "and keep working to find common ground in the areas where we disagree." In fact, what Mr. Daschle has essentially done is repackage a series of concessions Republicans made last year. Now he's trying to present them as a fair-minded compromise. Flagrantly missing from what amounts to a massive expansion of social-welfare spending is any measure that might significantly stimulate the economy.

It's worth recalling that last year, in an effort to craft a stimulus package that would attract bipartisan support, Republicans pre-emptively included several items that were on top of the Democrats' wish list. The first concession was a 13-week extension of unemployment benefits.

The second pre-emptive concession Republicans made last year was to Mr. Daschle's demand to send a tax-rebate check to workers who not only paid no income taxes but often received thousands of dollars annually from the welfare-styled earned income tax credit program. Mr. Daschle seeks to masquerade this Republican concession as a "payroll-tax credit." Interestingly, however, it isn't available to all workers who pay payroll (i.e., Social Security and Medicare) taxes. Rather, it is available only to those who either paid no income taxes at all or who paid an insufficient level of income taxes to qualify for the full amount of the income-tax-refund checks. By referring to last year's checks as one-time rebates, Democrats seek to equate them with Mr. Daschle's payroll-tax "rebate," which far more closely resembles a welfare transfer payment. In fact, the checks income-tax payers received last year represented a permanent income-tax cut generated by Mr. Bush's tax-relief plan, which introduced a new 10 percent tax rate. Moreover, the refund checks will be financed from general revenues so that the sacrosanct Social Security and Medicare trust funds will not be depleted.

Mr. Daschle's "compromise" stimulus package also includes a significant increase in the federal government's payment to states for the Medicaid program, which provides health care to the poor. What this has to do with economic stimulus is highly questionable, though it does advance the Democrats' goal of expanding the federal welfare commitment.

Conspicuously absent from Mr. Daschle's compromise is the one stimulus proposal the acceleration of permanent income-tax rate reductions that a bipartisan Congress passed last year that would do the most to stimulate the economy. As Mr. Bush argued Wednesday, "Jobs ought to be the central core of any economic development plan" passed by Congress. By this standard, Mr. Daschle's "compromise" fails miserably and ought to be rejected.

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