Lieberman says Congress should postpone tax cuts
Washington (CNN) -- Former Democratic Vice Presidential candidate Joe Lieberman, D-Connecticut, is calling on Congress to postpone part of President Bush's 10-year tax cut if the economic outlook remains weak.
In a speech to the Detroit Economic Club Monday, Sen. Lieberman -- a potential presidential contender -- said it would be "irresponsible to let the next big tax cuts, which are mostly for the wealthiest Americans, go into effect."
"If this Administration doesn't show some economic leadership soon, the American Dream will be harder and harder for millions of Americans to realize," warned Lieberman, pointing to what he says is a budget that has gone from $260 billion in surplus in 2000 to a projected $100 billion deficit this year.
The $1.35 billion tax cut is scheduled to be implemented over 10 years. Lieberman says if the economy is still bleak, the reduction of the top tax bracket from 38.6 percent to 35 percent scheduled in 2004 and then down to 33 percent in 2006 "should both be put off."
He said postponing these tax cuts would save $1 trillion over 20 years and that money should go to: reducing the deficit, "pro-growth" tax cuts for research and development and education, and homeland defense.
"[Bush's] economic plan could fit on the back of a shampoo bottle: 'cut taxes, increase spending, borrow, repeat.' If he keeps repeating that plan, he will surely endanger Social Security benefits and slow our economy to a halt, just when we need the most economic strength we can muster to fight and win the war against terrorism," said Lieberman.
He added that the first phase of tax cuts, which kicked in last year, should, instead, be made permanent. These cuts were the least expensive and were aimed at lower income Americans, said Lieberman.
This includes a new 10 percent tax bracket, which benefits lower income Americans, as well as the reduction of the 39.6, 26, 31, 28 percent brakets by one point each.
Although Democratic leaders consistently slam the tax cut as bad policy, they have stopped short of demanding a postponement or repeal. Until now, Sen. Edward Kennedy, D-Massachusetts, was one of the few prominent Democrats to call for any postponement of the tax cut.
Sen. Evan Bayh, D-Indiana and Sen. Hillary Clinton, D-New York, have each endorsed limiting the tax cut should the deficits rise even further.
But the fight the Congressional Democratic leadership is trying to wage now is against making parts of the Bush tax plan, like the estate tax repeal, permanent.
The reaction in the Democratic ranks was decidely mixed.
"Bush is in the White House, he's not going to retreat," said one senior Demoratic aide, "so you're waging a battle for what purpose? It doesn't help Democrats coming into this election, feeding into GOP attacks for being pro-spending, anti-tax cut."
But a Democratic strategist said she was "surprised and pleased" with Lieberman's speech.
"Most Democrats think the tax cut was a bad idea, so when you see someone with good conservative credentials stand up and say so, its a good thing."
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