Democrats want to expedite $60 billion tax rebate
WASHINGTON (CNN) -- Senate Democrats say they are on board with a Republican plan to stimulate the economy with a $60 billion tax rebate this year, but only if it is done separately from President Bush's long-term tax cut plan.
In an effort to spark the slumping economy, Senate Republicans decided Thursday to move a tax bill combining the $60 billion tax rebate using 2001 surplus dollars with Bush's across-the-board marginal rate cut, which amounts to some $983 billion.
But Senate Minority Leader Tom Daschle, D-South Dakota, proposed Friday that a free-standing $60 billion economic plan be brought before the Senate the first week in April to expedite the process.
"We shouldn't hold hostage the $60 billion that we might really use for fiscal stimulus purposes to the larger package that the administration has proposed now for some time that really, in most cases, doesn't take effect until the out years and would have no fiscal stimulus value," Daschle said.
Meanwhile, Vice President Dick Cheney and Treasury Secretary Paul O'Neill came to Capitol Hill on Friday for a private meeting with Senate Majority Leader Trent Lott, R-Mississippi, Finance Chairman Charles Grassley, R-Iowa, Banking Chairman Phil Gramm, R-Texas, and others to discuss details of the rebate and tax-cut proposals.
Bush said Friday that while he likes he idea of a $60 billion tax cut this year, he would prefer it not to be over and above his $1.6 trillion 10-year plan, as Senate Republicans are proposing.
Lott said Thursday the combined $60 billion rate cut and 10-year across-the-board cut could be sent to the president's desk by Memorial Day, May 28.
But Democrats said Friday that Memorial Day would not be soon enough to stimulate the economy, and a stand-alone economic stimulus package they are proposing could be signed into law by the end of April.
Sen. Kent Conrad, D-North Dakota, suggested that since there is lukewarm support for Bush's across-the-board tax cut, attaching it to a rebate would delay and possibly kill the plan.
"The problem with that is, it is the whole enchilada, the whole 10-year package, it's highly controversial and it's going to be delayed," Conrad said. "We ought to seize this agreement and put it in place as soon as possible to put money back in the pockets of the American people."
Although Daschle said he still advocates the kind of rebate he proposed to the president earlier this week, one aimed at low-income Americans, he would not rule out supporting a break for all taxpayers as Republicans are proposing.
Grassley, whose committee is charged with drafting the mechanism to put the money in taxpayers' hands, said he is working with the Treasury Department to figure out how to distribute the rebate.
The Finance Committee chairman said he is leaning toward having the IRS adjust withholdings, but he has not ruled out having the government send all taxpayers a one-time check of some $300.
While there may be broad consensus for a one-time rebate, Republicans are still working out how to get Bush's 10-year, $1.6 trillion dollar tax cut through an evenly split Senate.
Grassley, whose committee will begin crafting the long-term tax bill in early May, is floating a compromise that includes a trigger mechanism, or "mid-course review" in the third year of the 10-year plan.
Moderate Republicans and Democrats skeptical of projected surpluses call a trigger to stop spending and tax cuts essential for any tax-cut plan.
Grassley told CNN his "trigger" proposal would have four parts: it would allow tax cuts to be accelerated if surpluses are higher than projected; it would cut off spending as well as tax cuts should surpluses be lower than expected; it would prevent a tax increase should there be an economic recession; and it would probably include a presidential waiver.
Grassley said the White House had not yet signed onto his idea, but on Friday Bush signaled for the first time that he is open to a trigger mechanism to suspend tax cuts should surpluses not materialize.
Bush warmed to the idea while traveling in Maine with the state's two Republican senators, Olympia Snowe and Susan Collins, both advocates of a trigger.
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