- The Washington Times - Sunday, April 27, 2003

The economy's anemic growth rate sharply increases political pressure on the White House to pass its tax-cut stimulus plan soon, administration officials say.
The government's latest report on the health of the economy, showing persistent weakness over the first quarter, indicates that "it's probably going to take longer to turn things around," a senior official said Friday, speaking on the condition of anonymity.
The Commerce Department's announcement Friday that the economy grew at a rate of only 1.6 percent came as a deep disappointment to the White House. It also handed Democrats new ammunition to attack President Bush's economic policies as he fights for his plan to get the economy growing faster and producing jobs before the 2004 elections.
The administration had hoped the growth rate would come in closer to 2 percent or more, but the gross domestic product turned out to be little better than the preceding quarter's 1.4 percent suggesting the slump may last longer than White House economic advisers feared.
Mr. Bush yesterday continued to press Congress to support his stimulus plan, saying "it doesn't make sense" for lawmakers to support some tax cuts but not the amount he argues is needed to reinvigorate the economy.
"America's economy is not meeting its full potential," Mr. Bush said in his weekly radio address. "The right policies in Washington can unleash the great strengths of this economy, and create the conditions for growth and prosperity."
With his original 10-year, $726 billion tax-cut proposal in trouble, Mr. Bush has tried to turn up the heat on Congress.
Lawmakers significantly scaled back Mr. Bush's tax cut, with the House capping new tax relief at $550 billion and the Senate agreeing to no more than $350 billion. That led the White House to lower its expectations and say that at least $550 billion in new relief is now the president's goal.
Democrats charge that Mr. Bush's plan favors the rich and offers low- and middle-income Americans just a few hundred dollars in savings.
"They can dress up this tax cut any way they want, and it's still just that a tax cut for the wealthiest 1 percent of Americans that does nothing to create jobs and will only sink our nation further into debt," Rep. Stephanie Tubbs Jones of Ohio said yesterday in the Democrats' radio address.
Democrats jumped on the Commerce Department report Friday and went on the offensive.
"Average economic growth under Bush has averaged only 1.5 percent, the worst record of any administration since World War II," said Rep. John M. Spratt Jr. of South Carolina, the assistant Democratic leader.
"Since Bush took office, the economy has lost 2.6 million private-sector jobs also the worst performance for any administration since World War II," Mr. Spratt said.
A Democratic National Committee fund-raising appeal sent out Friday, signed by campaign strategist James Carville, said Mr. Bush and the Republicans have "wrecked the economy."
Administration officials countered that the continued weakness of the economy reinforced the need for quick action on Mr. Bush's tax-cut plan to boost business investment and consumer spending.
"The pressure's growing to get this plan passed," a Treasury official said.
"We're focused on improving the economy with an all-out offensive to pass the president's program. The big question is, what are the Democrats offering as their solution? What's their plan to improve the economy? They don't have one," another official said.
"One of their plans is a universal health-care plan by repealing the tax cuts. Well, that doesn't make any sense if you are trying to create jobs," he said.
A key business economist rejected the Democrats' attacks, saying that they were playing politics with an issue that they see subsiding by the end of the year.
"It is the Democrats for the most part that have put us in the situation we are in now," said Martin Regalia, chief economist at the U.S. Chamber of Commerce.
"Coming into this year, we faced a war; uncertainty was high; people were not spending as they were before. The president said at the beginning of the year that we need a tax cut to get this economy growing faster, and we've been sitting around while they're nibbling the plan around the edges in the Senate," Mr. Regalia said.
"But there is time to turn the economy around before next year, especially if we get a tax cut," Mr. Regalia said, and he already sees some good signs in the aftermath of the war in Iraq.
Among them: improved corporate profits that sparked a rally on Wall Street last week, reduced oil and gas prices, continued low interest rates, a surge in new home sales and a slow but gradual rise in consumer confidence.
Mr. Bush's economic advisers will hold their regular weekly meeting tomorrow in the White House to go over the latest economic numbers and to plot strategy on getting the largest tax-cut package possible through Congress by late spring at the earliest, officials said.
Congress returns from its two-week Easter recess Tuesday, and House and Senate Republican leaders plan to meet to discuss legislative and political strategy. The House Ways and Means Committee is expected to report a tax-cut bill to the floor by the second week in May.
A major political worry in the short run is the unemployment rate, which stands at 5.8 percent.
"Given the growth rates in the first quarter, it could go higher," Mr. Regalia warned. "We are likely to see increasing weakness in the labor market until the middle of the year."
This article is based in part on wire service reports.



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