- The Washington Times - Saturday, January 5, 2002

Senate Majority Leader Tom Daschle yesterday fired the Democrats' first volley of the new year on the recession, blaming Republican tax cuts for the poor economy and calling on President Bush to "return to fiscal discipline."
"Not only did the tax cut fail to prevent a recession, as its supporters said it would, it probably made the recession worse," Mr. Daschle said in a 50-minute speech at a liberal think tank in Washington. "The Republican agenda in Washington today is being written by a wing of the Republican Party that isn't interested in fiscal discipline."
Republicans criticized Mr. Daschle's motives, saying that he single-handedly blocked a bipartisan House bill last month that would have created jobs and aided the unemployed.
"We agree that fiscal responsibility is extremely important," presidential counselor Karen Hughes told reporters in Texas. "And that's why President Bush worked with Congress to hold the line on fiscal decisions when many members of Senator Daschle's party wanted to increase spending beyond levels that the president thought was appropriate."
Mr. Daschle's policy speech, televised live against a backdrop of American flags, laid out broad themes for the Democrats' congressional campaign this year as Mr. Bush went on the road to promote his own economic-recovery plan.
The Democratic leader's seven-part plan to stimulate the economy calls for tax credits to businesses that create jobs; increased spending on homeland security measures such as border guards and bioterrorism vaccines; and additional spending on job training and education. He was careful to praise the popular president for his success in the war against terrorism but criticized Mr. Bush for ignoring domestic issues.
"President Bush is absolutely right to use every tool at our disposal to fight the war on terrorism," Mr. Daschle said. "But we also have to use every tool at our disposal, including the right kind of tax cuts, in our battle to strengthen the economy."
Republicans said Mr. Daschle has not backed up his rhetoric with action.
House Speaker J. Dennis Hastert, Illinois Republican, said Mr. Daschle gave "a nice speech that does nothing to help put people back to work."
House Republican Conference Chairman J.C. Watts Jr. of Oklahoma ridiculed Mr. Daschle's call for budget discipline, saying Senate Democrats proposed much higher spending last year than the Republican-led House.
"The hypocrisy from Democratic leaders in the Senate is breathtaking," Mr. Watts said.
The partisan jabs came as the federal government reported that the unemployment rate has climbed to a six-year high of 5.8 percent. Congress returns to work Jan. 23 facing the difficult prospect of compromising on entrenched partisan positions in an election year in which Democrats intend to campaign on the recession.
Mr. Daschle did not call for a repeal of the administration's $1.35 trillion tax cut.
But the South Dakota Democrat repeatedly urged Mr. Bush to follow the Clinton administration's "framework of fiscal discipline" of 1993, when Democrats passed the largest tax increase in American history.
"Over the next eight years, we achieved broad-based economic growth," Mr. Daschle said. He even was flanked by two former top Clinton officials, Leon Panetta and Robert Rubin, as he spoke at the Center for National Policy.
Senate Minority Leader Trent Lott's office put out a tongue-in-cheek "glossary" for Mr. Daschle's speech that defined his call to "restore fiscal discipline" as a code for "raising taxes."
Mr. Hastert said Mr. Daschle "seems to indicate that he wants to repeal" the tax cuts.
"Raising taxes just as our economy is starting to grow again is exactly the wrong way to achieve long-term economic security," Mr. Hastert said.
Mrs. Hughes said that "Senator Daschle seems to be implying that tax increases might be necessary, and nothing would be worse for workers who want to keep their jobs than to increase taxes at a time when our economy, we hope, is just beginning to recover."
Republicans pointed out that 12 Senate Democrats voted for the tax cuts last spring, and that the Democrats' own tax-cut proposal asked for $900 billion.
South Dakota Republican Party Chairman Joel Rosenthal noted that the state's other Democratic senator, Tim Johnson, voted for the tax relief.
"If Senator Daschle is going to hold Bush responsible, he also needs to extend criticism to Senator Johnson and every member of his own party who voted for the tax relief plan," Mr. Rosenthal said. "To blame the president but remain silent on Senator Johnson's support for this measure is hypocritical in the extreme."
Mr. Daschle urged the White House to submit a long-term plan to reverse "the most dramatic fiscal deterioration in our nation's history" and bring down long-term interest rates.
Chris Edwards, director of fiscal policy at the Cato Institute, said Mr. Daschle's reasoning is flawed.
"His plan is a hodgepodge of spending increases and nearly useless tax cuts combined with contradictory rhetoric," Mr. Edwards said.
"Daschle perpetuates an urban myth when he argues that tax cuts cause higher interest rates through the federal budget balance. After all, we went from a huge surplus last year to near-zero surplus this year while interest rates have fallen. Where is Daschle's evidence that Bush's tax cut affected interest rates?"
Joseph Curl contributed to this report from Crawford, Texas.


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