WASHINGTON — The battle over which tax cuts or government cash payments might help stimulate the economy begins today, as President Bush offers details of his $600 billion plan, the outline of which Democrats decried Monday as ineffective.
This story first appeared in the January 7, 2003 issue of WWD. Subscribe Today.
But there’s one certainty: Bush’s plan will be changed. The GOP’s majority control in both chambers of Congress is slim and Democratic votes will be needed to pass a package, especially in the Senate, where rules favor opposition interference.
Something else is clear: Debate over a stimulus package will be heated, with House Minority Leader Nancy Pelosi (D., Calif.), firing the first salvo Monday when she said “joblessness is rampant” in the Bush administration, and Rep. John Spratt (D., S.C.), a member of Democratic leadership, said the Bush stimulus plan was about the “stock market,” while a competing Democrat plan was about the “job market.”
At the centerpiece of Bush’s 10-year plan is slated to be an elimination of taxes shareholders pay on dividends. He is also expected to call for a speedup of $1.3 trillion in phased-in income and other tax cuts passed in 2000 and a direct $400 tax rebate for middle-class parents.
House Democrats on Monday unveiled their $136 billion stimulus package targeted to be spent only in 2003. Their plan includes a $300 per person or $600 a couple tax rebate for all workers, an increase in new plant and equipment depreciation for the year and $31 billion in funds to states and locales to spend on homeland security, highways, Medicaid cost and “critical needs.”
There is common ground between the parties on one issue: extending unemployment benefits that expired Dec. 28 for some 800,000 people. However, the Democrats want a 26-week extension and the GOP wants 12 weeks.
For their part, retailers are weighing both proposals as to what might be best to jump-start the flagging economy.
“We have to look at it all,” said Steve Pfister, senior vice president of government affairs at the National Retail Federation, not ready to immediately line up behind either program.