WASHINGTON – President Bush argued Saturday that 300,000 potential new jobs will be lost if the Senate won't approve his business investment incentives. Senate Majority Leader Tom Daschle, D-S.D., countered that unemployed Americans need direct help, not "trickle-down" tax cuts.
The two cited differing government studies in separate radio broadcasts as House and Senate negotiators searched for compromise on legislation meant to stimulate the economy.
Talks resumed Saturday between two committee chairmen, Rep. Bill Thomas, R-Calif., and Sen. Max Baucus, D-Mont. An afternoon session with additional lawmakers was expected.
"The holidays are upon us and time is running out," Bush said in his weekly radio speech, laying the blame on the Daschle-run Senate.
"More than two months and more than 700,000 lost jobs ago, I proposed an economic security package to help workers who have been laid off, and to take action to create jobs and promote long-term economic growth," the president said. "While the Senate has failed to do its work, more and more Americans have been thrown out of work."
Nearly 8 million Americans are unemployed, including almost 1 million who lost their jobs after the Sept. 11 terrorist attacks hobbled an already listless economy. The Republican-led House passed its own legislation to jump-start the economy, but Democrats who control the Senate have balked at the GOP's emphasis on tax cuts.
Both sides agree that unemployed people need help paying for their health insurance but differ on how to provide it. They also disagree on whether to accelerate some of the income tax rate cuts enacted earlier this year and whether to repeal the corporate alternative minimum tax.
In an effort to reach middle ground, Bush scaled back his original tax plans earlier this week.
Not enough, Daschle said later in the Democrats' weekly radio address.
"Our Republican friends ... think the way to help the economy is to give billions of dollars in new tax cuts for wealthy individuals and profitable corporations in the hope that money will trickle down to working families," Daschle said.
He shook off the obstructionist label that the White House has tried to pin on him. "Democrats are more than willing to compromise on every detail — as long as the final plan provides real help to families who need it," he said.
To support his party's focus on boosting help to laid-off workers, Daschle said a Labor Department study found that every dollar of unemployment benefits paid out pumps $2.15 back into the U.S. economy.
"We believe that's exactly the kind of immediate stimulus our economy needs now," he said.
Bush had a study of his own, a two-page white paper produced by his Council of Economic Advisers that said, without offering detail:
"The baseline impact of failure to enact the president's stimulus package is to lower economic growth by roughly half a percentage point between the fourth quarter of 2001 and the fourth quarter of 2002, largely due to the loss of investment incentives and accelerating the marginal tax rate."
This slower economic growth — less than what private forecasters already anticipate in an economic recovery early next year — will prevent an estimated 300,000 private-sector jobs from being created, the advisers said.
Bush's proposals for expanded tax deductions on new business investments and for speeding up reduction of the 27 percent tax rate paid by most middle-income families will spur business owners and entrepreneurs to expand operations and hire new workers, the council continued.
So far, Democrats have shown a willingness to consider cutting only the 27 percent rate to 26 percent as soon as 2002. Bush and the Republicans want the rate to drop to 25 percent next year, four years earlier than under current law.
On health care, Democrats favor a direct subsidy, or perhaps a tax credit, that would pay 75 percent of the costs of the COBRA insurance policies available for laid-off people who had employer-provided coverage. They also want to increase Medicaid payments to states so that people not eligible for COBRA also could be covered.
After initially offering only grants to states for health coverage, Bush and congressional Republicans now favor a 50 percent tax credit that would be immediately available for an unemployed person to pay for the health insurance coverage of his or her choosing.