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Daschle criticizes Bush tax cut, offers economic boost plan

Sen. Tom Daschle  

WASHINGTON (CNN) -- Senate Majority Leader Tom Daschle launched a new offensive against the GOP on Friday in a speech that outlined an agenda to stimulate the economy and blamed the tax cut backed by President Bush last year for worsening the nation's economic woes.

The speech comes at the start of a year that will be marked by crucial midterm elections, which could sway the balance of power on Capitol Hill, where Democrats hold a one-seat majority in the Senate and Republicans hold a slim lead in the House. It also comes on the heels of polls that show the recession uppermost on voters' minds this winter, surpassing woes over terrorism.

With President Bush enjoying strong popularity numbers as the nation fights a war in Afghanistan, Daschle avoided leveling direct criticisms against him. In fact, the nation's top elected Democrat began his comments at the Center for National Policy, a Washington think tank, by praising Bush for doing a "superb" job in the battle against terrorism.

U.S. Senate Majority Leader Tom Daschle blames the tax cut backed by President Bush for the nation's economic woes. CNN's Jonathan Karl reports (January 4)

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Yet he did not balk at bashing Republican economic policies backed by Bush.

"When it comes to our second battle, our economic battle, I think most Americans would probably agree that the news hasn't been so good lately. But there's no reason we can't win both our battles," said Daschle, of South Dakota. "If we can root out a network of terrorists half a world away, we can solve the problems in our own economy."

Daschle blamed the federal government's projected return to deficits on the $1.3 trillion tax cut backed by Bush and congressional Republicans. And he disagreed with those who would say that the government's fiscal troubles are the result of the September 11 terrorist attacks and the ensuing war in Afghanistan.

While the terrorist attacks have been devastating to some industries, he said, the attacks and the war are not the only reasons the surplus is nearly gone. "They're not even the biggest reasons. The biggest reason is the tax cut."

"Unfortunately, last spring, Republicans chose exactly the wrong solution. They made a huge tax cut their No. 1 priority -- ahead of everything else -- and discarded the framework of fiscal responsibility," he said.

"Not only did the tax cut fail to prevent a recession, as its supporters said it would, it probably made the recession worse," he said.

Daschle outlined a series of proposals, which included two items aimed at reviving the stalled talks for an economic stimulus package. Those talks fell apart in December amid strong partisan bickering on Capitol Hill. Senate Democrats, led by Daschle, refused to take up a House bill they believed relied too strongly on business tax cuts without doing enough for unemployed workers.

Daschle's proposals outlined Friday call for a tax credit for businesses that create new jobs. Under this proposal, if payroll taxes were higher for such companies this year over last year, they would be refunded the difference through the corporate income tax. He also called for larger business depreciation bonuses for 12 months in an effort to stimulate investment.

Yet, any stimulus package, he said, should include health care benefits for workers who lost their jobs. Democrats and Republicans disagreed in December over how best to achieve that.

In addition, Daschle called for strengthening homeland security. He asked Bush to present his own long-term economic plan. He proposed greater investments in education, training and technology. He called for opening new markets, saying he supports pending legislation to give the president more authority in negotiating trade deals. And he called for crafting a balanced national energy plan and a renewed commitment to retirement security.

Still, Republicans greeted Daschle's proposals with skepticism.

"We have already passed legislation in the House -- we've sent it to Mr. Daschle not once, but we've sent it to him twice," said Rep. J.C. Watts, R-Oklahoma, referring to the economic stimulus package.

Watts said he was "encouraged" that Daschle's speech might indicate the possibility of some movement on economic stimulus. But, he said, "We don't need speeches. We need action, and we need the House and the Senate to work together to get that done."

Speaking to reporters in Austin, Texas -- where she traveled with Bush on Friday -- White House Counselor Karen Hughes said she was encouraged by initial accounts of Daschle's speech.

"I'm hoping that Senator Daschle went home over the holidays, listened to the people and decided that President Bush may be right about the need for an economic security package," Hughes said.

White House officials have said Bush intends to focus on the economy and education as the new year gets under way. On Saturday, he plans to attend a town hall meeting on the economy in California, and also is scheduled to visit a job center in Oregon that day.

Aides have said the West Coast trip marks the start of a series of road trips around the country aimed at pressuring lawmakers to pass the economic stimulus package.




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