Battle Lines Drawn On Economy

The rift grew deeper Thursday between Democrats and Republicans over government spending versus tax cuts, as the Senate Finance Committee approved a $66.4 billion Democratic economic recovery plan over strong GOP opposition calling it a "collage of political giveaways."

The measure, approved by a 11-10 party-line vote, is vastly different from the tax relief proposals made by President Bush and the $100 billion package passed last month by the GOP-led House.

Democrats said the measure was the right medicine for the economy because it would spur consumer spending and would do more for laid-off workers than Republican alternatives. But GOP senators called it a partisan exercise filled with unnecessary spending that has little chance of becoming law.

"In the end, I think this bill is pitiful, It's insulting. I'm glad I don't have to vote for it," said Sen. Phil Gramm, R-Texas. "This is a collage of political giveaways and doesn't have enough for stimulus and we would be much, much better off not to pass any bill than to pass this bill."

Senate Majority Leader Tom Daschle earlier defended the Democratic plan and provisions that would expand unemployment benefits and subsidize health insurance costs for laid-off workers.

"What could be more stimulative than to give money to unemployed workers in this country who have no way to participate in the economy without some help? I think that is probably the most stimulative thing we have in our whole package, frankly," the South Dakota Democrat told reporters.

Daschle said debate could begin as early as Friday on the Senate floor, where Democrats may attempt to attach $20 billion more in spending for homeland security items — extra spending that Bush says he would veto.

Despite the differences, Daschle told reporters that Congress could still meet Mr. Bush's deadline of Nov. 30 for final passage of a bill. But it will not be easy and could require 60 votes in the 100-member Senate to overcome blocking tactics.

Treasury Secretary Paul O'Neill said the Democratic bill, authored by Finance Committee Chairman Max Baucus, was "heavy on new spending that will have little, if any, stimulative effect on the economy."

The president has four main priorities: a repeal of the corporate alternative minimum tax; a new round of rebate checks aimed at lower-income workers; acceleration of income tax cuts now scheduled to take effect in 2004 and 2006, and enhanced expensing write-offs for business investment.

The House bill reflects those priorities, but GOP leaders added many other Republican tax-cut priorities, such as capital gains tax relief, and were barely able to pass their measure. The Senate Democratic bill includes the rebate checks and some business tax relief but contains much more spending.

At a cost of nearly $34 billion over 10 years, it would extend unemployment benefits by 13 weeks for all laid-off workers, provide them a 75 percent federal match for health insurance plicies and temporarily boost federal Medicaid payments to states. Mr. Bush prefers a more limited unemployment benefit extension and grants to states for health insurance or other needs.

To solidify Democratic votes, Baucus added numerous other provisions that Republicans say would have questionable economic impact.

For New York Democratic Sens. Charles Schumer and Hillary Rodham Clinton, there is a 10-year, $5.3 billion package aimed at helping New York City recover from the Sept. 11 terror attacks. It includes a $4,800 wage credit — normally reserved for companies that hire disadvantaged people — for businesses in lower Manhattan that hire anyone.

For Sen. Robert Torricelli, D-N.J., the bill authorizes $7 billion in bonds for Amtrak high-speed rail projects and $2 billion in bonds for a new Hudson River crossing from New Jersey to New York.

For farm-state senators, the Democratic bill provides $200 million for government purchase of farm products "that have experienced low prices" in 2000 and 2001, including apples, asparagus, bell peppers, pears, pumpkins and strawberries.

There's another $3 billion to clear a backlog of rural development projects such as wastewater plants, $3 million to exempt crop dusters from excise taxes, a $10 million break for citrus growers and a $25 million sugar beet disaster program.

"I thought this was going to be a stimulus package, instead of a pork package," said Senate Minority Leader Trent Lott, R-Miss.

Still, there is some common ground that could produce an eventual compromise. All plans feature the $14 billion in rebate checks for lower-income people and those who didn't get the full $300, $500 or $600 checks the first time. All include enhanced expensing for businesses in some form and all provide aid to the unemployed.

Sen. John Breaux, D-La., said the committee action amounted to lawmakers "kind of dancing around each other," rather than real compromise.

"The American people don't want us to fight over who's wrong and who's right, and produce nothing," he said.

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