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Senate Democrats Propose Slimmed-Down Economic Stimulus Package

Senate Democrats proposed setting aside some of their priorities, as well as some Republican ones, to immediately approve parts of an economic stimulus package that have broad bipartisan support.

Senate Majority Leader Tom Daschle, D-S.D., said Tuesday in a letter to President Bush that lawmakers returning to the Capitol this week are eager to take steps aimed at shoring up an economy battered by recession and the Sept. 11 terror attacks.

"Let's immediately pass what we agree on, and keep working to find common ground in the areas where we still disagree," Daschle said in the letter.

Republicans reacted with skepticism but not outright condemnation. Daschle aides said they were encouraged after meeting with the Senate GOP leader, Sen. Trent Lott of Mississippi. Sen. Charles Grassley, R-Iowa, said he would prefer Senate votes on "full-fledged" GOP and Democratic plans before resorting to a slimmed-down version.

"The Senate hasn't been given a chance ... If both of those fail, then a scaled-back stimulus package probably could be a viable option," said Grassley, ranking Republican on the Senate Finance Committee.

The new Democratic plan, which would provide about $69 billion in stimulus in 2002, focuses on extending unemployment benefits, giving tax rebate checks to people who missed out last year, allowing businesses more generous tax write-offs for new investment and increasing federal Medicaid money to cash-strapped states.

Omitted are Democratic proposals to raise unemployment benefits, subsidize health care premiums for the newly jobless and Daschle's idea of giving business a temporary tax credit equal to the increase on Social Security taxes they pay when hiring new workers or giving them raises.

The plan, which could come up in the Senate this week, also leaves out Republican priorities such as accelerating the income tax cuts enacted last year and repealing the corporate alternative minimum tax.

Lawmakers are due back in town Wednesday, fretting in an election year over an economic recession that has resulted in tens of thousands of job losses. This latest plan could still come to naught -- but politicians of both parties want to be viewed as responding to the downturn.

Bush is staging campaign-style events around the country to pressure the Democratic-run Senate into approving an economic package passed by the Republican-led House that would provide $87 billion in tax relief and unemployment aid in 2002 alone.

"It's time for a vote," Bush said Tuesday in a speech in West Virginia. "Let's quit talking about it. Let's get the bill going."

White House spokesman Scott McClellan said the president "appreciates the willingness" of Senate Democrats and Republicans to work out a compromise but that he wants a comprehensive package that encourages job creation and extends unemployment benefits.

But the House-passed legislation was pronounced dead late last year by Daschle in a dispute over its tax credit to help the jobless afford health insurance and its acceleration of income tax cuts now set to take effect in 2004. It also contains corporate tax breaks viewed by many Democrats as excessive.

Republicans, who promise to make the stimulus package their top congressional priority, have accused Daschle of blocking the GOP plan for political advantage — and Democrats do not want blame for the recession laid at their door.

The Democratic bill would focus on a handful of popular items in an attempt to win quick approval. It would include a 13-week extension of unemployment benefits and $14 billion rebate checks of up to $600 for lower-income people who did not receive one last year or got less than the full amount.

In addition, the legislation would provide $42 billion for a one-year, 30 percent immediate depreciation writeoff that businesses can use to defray the costs of new investments. It would boost the federal match for Medicaid by 1.5 percent for all states and 3 percent for those experiencing high unemployment.

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