WASHINGTON, (UPI) — One day before President George W. Bush is set to detail his newly crafted economic stimulus package, Democratic lawmakers on Sunday balked at the proposal they say will provide benefits only for wealthier Americans and do little to rejuvenate the nation’s fiscal health.
Bush is expected to announce his economic stimulus package during a speech at the Chicago Economics Club on Tuesday as the Republican-controlled 108th Congress convenes.
The plan will likely include aid for cash-poor states, tax incentives for businesses, expanded unemployment benefits and an acceleration of the president’s tax cuts approved last year.
Reports estimate the cost of the plan at between $300 billion and $600 billion over the next decade.
The debate brewing between Democratic lawmakers and their GOP counterparts will likely focus on what is increasingly described as a class warfare argument. Democrats claim the president’s proposal will benefit the wealthy while the middle class and lower income Americans are left out. Republicans waved off the notion that they were catering to the well-to-do.
Senate Democratic leader Tom Daschle of South Dakota in his party’s radio address called Bush’s plan “the wrong idea at the wrong time to help the wrong people.” Democrats are vowing to craft their own plan which they say they will unveil in the upcoming weeks.
Bush told reporters visiting his Crawford, Texas ranch last week that he was worried about job created and those who remain unemployed.
“So next week when I talk about the economic stimulus package, I will talk about how to create jobs … as well as to take care of those who don’t have a job,” Bush said.
According to administration aides, the centerpiece of the plan is 50 percent reduction of the tax on stock dividends received by individual taxpayers. Since dividends are paid from after tax corporate income, they are currently effectively taxed twice — at the corporate level as profits and at the individual level — so that, for example under common tax rates, $1 of corporate pre-tax income becomes less than 40 cents in the individual taxpayer’s pocket.
Democrats, most of whom say they have yet to see the details of the package, agreed lawmakers needed to reach a resolution on an economic stimulus plan, but said they were at odds with Republicans on how it should be done.
Incoming House Minority Leader Nancy Pelosi, D-Calif., on Friday told reporters she did not know what was in the plan but said she has received no indication that “there’s much stimulus in the package.”
“I think what you see is the administration perhaps using the term stimulus as a Trojan horse to wheel in some favorite tax breaks for the high-end that they’re so fond of. So, it remains to be seen what the president will do,” Pelosi said. “As far as the unemployment benefits that are supposed to be contained in the package, it’s certainly going to be too little, too late. But we’ll just see how little it is.”
Sen. Evan Bayh, D-Ind., told CNN that the plan must meet three tests. First, he said, it must give the “biggest bang for the buck” in terms of job creation and investment. Second, Bayh said it must help ease the burden of those who have suffered because of the downturn in the economy, and provide assistance for the unemployed and aid to states so they will not have to slash their school budgets.
“Then finally (it has to address) long-term fiscal discipline, to make sure we get the budget back into balance and don’t go back to the days of just running up huge debts with higher interest rates,” said Bayh.
Republican Sen. Chuck Hagel of Nebraska, appearing on the same program said the president would likely focus on child tax credits for parents, investments, and businesses.
“I’m anxious to see what the president’s laying out. As Senator Bayh said, there may be some fine-tuning, but I think generally the president’s on the right track,” Hagel said.
Sen. John Edwards, D-N.C., told ABC News accused Bush of “trying to pull a fast one” by using what he called the “Bush recession” to “put money in the pockets of the richest Americans over a long period of time while providing little help for regular people.”
“If this is what he thinks is going to help regular people in times of an economic downturn, it just shows how out of touch he is,” said Edwards who announced last week he would challenge Bush for the presidency in 2004.
Sen. Harry Reid, D-Nev., told NBC’s “Meet the Press” that any plan put forth by the administration should address long-term deficits and take care of people working for large corporations. Republican Sen. Don Nichols of Okla., also on “Meet the Press” said it was important for an stimulus plan to encourage investment and help grow the economy. He pointed to what he called “gross inequities” in the tax codes and said allowing small businesses to expense investments would increase stock values. That, he said, would in turn help return Americans to work.
Sen. John McCain, I-Ariz., said on CBS’ “Face the Nation” that cutting taxes on stock dividends was a good idea, but that the administration should also give low-income Americans a break in the form of an income tax holiday.
Copyright 2003 by United Press International. All rights reserved.