Lawmakers Hope War Bonds Boost Economy

Congress isn't counting on consumer cash to put the nation back on track.

It is fast-tracking a bill to introduce war bonds, the first of their kind since World War II.

The House is likely to take up a bill this week as part of the annual appropriations bill for the Treasury Department.  The Senate approved an identical measure last month after attacks on the World Trade Center and Pentagon prompted President Bush to declare a war on terror.

Supporters say bonds sold in the name of the anti-terrorism effort would be an important morale booster, giving ordinary Americans a way to help.

"War bonds will give voice to countless Americans who are looking for opportunities to make a difference in this time of need," said Sen. Mitch McConnell, R-Ky., the main Senate sponsor.

The president will have to decide later this fall whether to sign off on the bill, but many economists argue the economy would get a bigger boost simply by Americans' spending money.

Treasury Department officials have praised the legislation's sponsors for their "patriotic intent and sentiment" but support for the idea is said to be lukewarm.

"A strong economy is perhaps our greatest asset as we move forward with this effort," said Treasury Department spokeswoman Tara Bradshaw. "We hope that consumers anxious to put their money to work for the nation will make the purchases planned before Sept. 11 as consumer spending is vital to the economy."

Tom Ochsenschlager, tax partner at Grant Thornton LLP, said the legislation was mostly symbolic because the government has the cash to fight a war and will otherwise do whatever it takes to finance the anti-terrorism effort.  He said more likely the bonds could become a popular way for people to invest safely in this time of economic uncertainty.

"It's better than a mattress," Ochsenschlager said. "My guess is, they could do fairly well with it. People are looking for any place to put their money."

Proceeds from Treasury bonds go into a general pot of money that can be used for any government expenditure. 

The U.S. government first sold war bonds to the general public to help finance the Union effort in the Civil War. World War II bonds started out as defense savings bonds in May 1941 but turned into war bonds after the Japanese attacked Pearl Harbor.

More than $185 billion in war bonds were purchased during World War II, according to Rep. John Sweeney, R-N.Y., the main House sponsor of the war bonds bill.

Even if the measure wins quick approval in Congress, it could take months for the Treasury Department to develop a new series of bonds for America's anti-terror war. The most recent new savings bond offering, the Series I bond, took 18 months to put together before its debut in 1998, according to officials at the Bureau of the Public Debt.

The Associated Press contributed to this report.