WASHINGTON – Congress and the Bush administration will take a go-slow approach in developing an economic stimulus package based on tax cuts amid uncertainty about what, if any, action would do any good.
Treasury Secretary Paul O'Neill met Friday with Democratic and Republican leaders of the tax-writing committees in Congress to begin discussing options for a possible stimulus plan that would have widespread political support.
The group decided to "wait for the dust to settle regarding the economy" before moving ahead, said Sen. Charles Grassley ongress this week that moving too fast could have an uncertain effect in the immediate aftermath of the terrorist attacks.
Rep. Bill Thomas, chairman of the House Ways and Means Committee, had also initially urged rapid passage of a tax stimulus plan but has now pulled back. Some White House officials were concerned that Thomas was moving too aggressively, according to two aides speaking on condition of anonymity.
According to these aides, President Bush has been peppering advisers with questions in meetings on a possible economic stimulus plan. "If we do this," Bush was quoted as saying, "Will it work?"
Thomas, whose committee originates all tax legislation, said the sentiment now is to "analyze the problem and come up with a solution."
"That's what we will be doing over the next week or two," he said.
Sen. Max Baucus, chairman of the Finance Committee, said the group also agreed to get cost estimates for a long list of options. The components of the bill will depend on whether the economy most needs a boost in consumer activity or a spark on the business and investment side.
"There are so many unknowns ahead of us," Baucus said. "We're not close to anything specific."
Consumer-related proposals that came up, Baucus added, include a second round of tax rebate checks targeted at the millions of workers who didn't qualify for a check this summer. Also discussed was acceleration of the future income tax rate cuts that are part of the just-enacted 10-year, $1.35 trillion tax cut law.
On the business and investment side, ideas that have been floated include a capital gains tax cut, a reduction in corporate income taxes, a business investment tax credit, changes in depreciation rules for business equipment and larger write-offs for investments made by small businesses.
Many of those items were on a list sent Friday to congressional leaders and President Bush by a coalition of conservative and tax reform advocates who want quick action.
"If America is to successfully wage war on terrorism, we will need the resources that only can be generated by an economy firing on all cylinders," they said in a letter.