House Readies $100B Stimulus Bill

By: Curt Anderson

House Republicans say a $100 billion economic stimulus package focused on business and investment tax cuts is the right tonic for the ailing economy. Senate Democrats are countering with greater assistance for laid-off workers and more spending on homeland security.

With President Bush urging them on, congressional leaders are attempting to come up with a package to address an economic downturn worsened by the Sept. 11 terrorist attacks. The House was expected to approve the GOP plan Wednesday.

"This tax relief package will help jump-start our lagging economy and give Americans much-needed jobs", said House Majority Leader Dick Armey, R-TX.

Passage of the House proposal will set up a confrontation with Senate Democrats, who say the package is too heavy on business tax cuts, too costly in the long term and too light on help for individuals affected by the economic woes.

"It's clear the House bill cannot pass the Senate as it is", said Sen. John Breaux, D-LA.

The House legislation, which would cost an estimated $99.5 billion in 2002 and more than $159 billion over 10 years, includes four key items sought by Bush: repeal of the corporate alternative minimum tax, a new round of tax rebate checks of up to $600 for lower-income workers, a cut in the 27 percent income tax rate to 25 percent in 2002 instead of 2006 and greater expensing write-offs for business equipment purchases.

Among other things, the bill also cuts long-term capital gains rates from 20 percent to 18 percent for most taxpayers, gives major corporations refunds for alternative minimum taxes they paid as far back as 1986, and permanently extends a tax break for financial services firms that do business overseas. The alternative minimum tax ensures that people or businesses that take many deductions and credits still pay a minimum amount of taxes.

While there is bipartisan support for some House items, Senate Democrats have been pushing for expanded unemployment benefits and assistance for workers who lose employer-provided health insurance.

Sen. Max Baucus, chairman of the Senate Finance Committee, unveiled a $70 billion proposal Tuesday that extends unemployment benefits by 13 weeks, provides a 50 percent federal match for COBRA health insurance policies and allows more workers to qualify for Medicaid.

The legislation also includes the rebate checks and some business items similar to the House bill, but not the capital gains reduction or the alternative minimum tax repeal. Tax cuts in the Baucus measure total $35 billion in 2002, far less than the House GOP wants.

"This proposal appropriately responds to the sign of the times, helping this nation get back to work and recover quickly", said Baucus, D-MT.

But the Bush administration reacted with displeasure. Treasury Secretary Paul O'Neill said he was "disappointed" with the Baucus proposal because it would add some $50 billion in new spending to the package already approved by Congress in the aftermath of the Sept. 11 attacks.

"This is a spending package, not a stimulus package", O'Neill said in prepared statement.

Yet other Democrats were working on even more spending programs. Senate Appropriations Committee Chairman Robert Byrd, D-WV, said he was putting together a $20 billion package that included hiring extra customs and border agents and food inspectors, enhancing nuclear plant security and purchasing more vaccines.