- The Washington Times - Saturday, January 26, 2002

The Senate yesterday rejected a Republican proposal to give tax breaks to businesses to create jobs as prospects dimmed for an economic recovery bill favored by the White House.

The amendment to create a 30 percent tax write-off for businesses over the next three years, supported by Treasury Secretary Paul H. O'Neill, received only 39 votes. It would have required 60 votes to overcome Democrats' objections.

Democrats favor a one-year depreciation bonus for businesses and said the proposal by Sen. Gordon H. Smith, Oregon Republican, would have added too much to the budget deficit $66 billion. Senate Majority Leader Tom Daschle said it "would have exacerbated the debt."

The vote came amid increasing uncertainty among lawmakers about the need for an economic recovery bill. Federal Reserve Chairman Alan Greenspan told Congress on Thursday that he is "conflicted" about whether it is needed.

Mr. Greenspan said the economy probably will improve with or without congressional action.

But the White House said President Bush will continue to press the Senate for an economic-stimulus package costing about $90 billion that would accelerate income-tax cuts, give businesses more generous investment write-offs and provide tax credits to the unemployed for health insurance.

White House spokesman Ari Fleischer said Mr. Bush would rather "err on the side of creating jobs."

The president reached a bipartisan agreement in December on a $110 billion package to revive the economy, mostly through tax breaks for businesses to create jobs. But Mr. Daschle refused to allow a vote on the House-passed bill, saying it devoted too much to tax relief.

Mr. Daschle said the Senate is heading toward passage of his $69 billion proposal within the next two weeks. That plan would extend unemployment benefits by 13 weeks; give rebate checks of up to $600 to low-income people who did not qualify for tax relief last year; provide the one-year depreciation bonus and increase Medicaid payments to states.

Mr. Daschle said he was "very appreciative" of Mr. Greenspan's comments and did not believe the Federal Reserve chairman was arguing against an economic bill.

"He said he believes we have to continue to be concerned about the unemployed workers and that we have to be able to provide them with some relief," Mr. Daschle said. "So I thought that Chairman Greenspan's comments were very much in keeping with what it is we are trying to do on the Senate floor right now. We are trying to help those who are the victims of the recession."

Sen. Don Nickles, Oklahoma Republican and assistant minority leader, said Mr. Greenspan's testimony "does not increase the likelihood that [a bill] will pass."

Mr. Nickles said the Daschle plan contains "next to nothing" to stimulate the economy. He said the proposal includes $14 billion in rebate checks "to people who never paid taxes."

"There's no beef there," Mr. Nickles said. "I'd like to get more jobs. I'm not convinced that Senator Daschle wants a package."

Mr. Daschle has resisted Republican efforts to accelerate the income-tax cuts scheduled to take effect in 2004. Some Democrats have called for freezing the tax cuts for families earning $130,000 or more.

In the House, Republican leaders this week signed on to a proposal by Rep. Spencer Bachus, Alabama Republican, to reaffirm support for the administration's tax cuts.

"If these members of Congress truly believe we should raise taxes, my resolution gives them an opportunity to record their vote in favor of a tax increase," Mr. Bachus said. "My resolution states the tax cuts should proceed. If they want to raise taxes, they will have to vote against my resolution."

House Majority Leader Dick Armey, Texas Republican, is co-sponsoring the measure even though he said this week that such a vote would be largely a political ploy.

"That is not a policy vote," Mr. Armey said. "We ought to spend our energies on the serious policy matter, but I do understand. Political impulses will always be a part of this body. … I advise my colleagues, if you want to see Democrats squirming over the position they have taken on taxes, just stand back and watch. The squirming is there. They are already hurting."

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