WASHINGTON – Democrats sought Friday to shift voters' attention from Iraq to the economy, signaling an all-out effort to replace national security with pocketbook issues in the Nov. 5 election. Republicans responded with an investor tax cut package and an extension of unemployment benefits.
House and Senate Democrats held a Capitol Hill forum featuring economists aligned with both parties to discuss the need for additional stimulus for the struggling economy.
Senate Majority Leader Tom Daschle ticked off a list of woes including relatively high unemployment, the sharp stock market drop and lower consumer confidence.
Daschle, D-S.D., said now that Congress has given President Bush authority to act militarily against Iraq, he should hold bipartisan talks on tackling economic problems instead of spending much of the next three weeks campaigning for Republican congressional candidates.
"I would urge the president to cancel his political trip today. Show the American people you're more concerned about their jobs than Republican ones,'' Daschle told reporters.
The White House dismissed the suggestion — spokesman Ari Fleischer described it has having "little, little point.''
But the exchange underscored the degree to which both parties are concerned that the struggling economy is emerging as a key issue in the Nov. 5 election, with control of the House and Senate at stake.
Democrats at the three-hour forum made few new economic proposals, arguing instead that the main point was to start a debate.
"It is our belief that we must act now,'' said House Minority Leader Dick Gephardt, D-Mo. "It can't be put off.''
Republicans, however, criticized the Democratic event as entirely political, saying Democrats are unwilling to pass any legislation on the economy.
"What exactly is it the Democrats want to congratulate themselves on?'' asked House Majority Leader Dick Armey, R-Texas.
To demonstrate GOP resolve, Rep. Bill Thomas, chairman of the House Ways and Means Committee, outlined a modest economic package for investors and the unemployed that the House is expected to consider next week.
The measure would raise the tax deduction for net investment losses from $3,000 to $8,250, increase contribution limits beginning next year for individual retirement accounts and 401(k) plans and gradually raise the age for mandatory withdrawals from retirement accounts from 70 1/2 to 75.
It also would ensure that unemployed people facing a Dec. 28 cutoff would get their full 13 extra weeks of benefits promised in legislation passed earlier this year, and extend the ability of states with high jobless rates to offer extensions. Small business would get a more generous tax deduction for new investment.
The bill also would give Republicans a chance to blunt Democratic claims that the GOP is doing too little to stop corporations from moving to overseas tax havens. The bill would impose a three-year moratorium on these moves and subject executives' stock options to the same capital gains tax as regular shareholders when a company relocates.
Democrats have been pushing a 13-week extension of jobless benefits but reject any further tax cuts. Many contend the economy's problems are more fundamental, starting with last year's massive tax cut that has depleted the government's surplus and threatens long-term interest rates while enriching high-income people.
Gene Sperling, former President Clinton's top economic adviser, recommended freezing parts of that tax cut affecting upper-income people that take effect in future years. That way, Congress could afford such things as a temporary business investment credit, a new round of tax rebate checks for lower-income people, relief to states to prevent them from raising taxes and extending unemployment benefits.
"We need a pro-growth grand bargain'' with Bush, Sperling said.
But no Democratic leader openly embraced that plan Friday. Top Democrats and candidates in competitive races will not call for halting parts of the tax cut, which opens them to GOP charges that they want to raise taxes.
"What they want to do is look like they're doing something,'' Thomas said.