Post by America and Politics on Jan 25, 2008 7:16:36 GMT -5
Jan. 24 (Bloomberg) -- President George W. Bush's proposal to issue tax-rebate checks to millions of Americans as part of a plan to avoid a recession is drawing fire from Republicans who say the plan hikes spending and doesn't focus on tax cuts.
Some Republican lawmakers are urging the administration to scale back or dump proposals to provide up to $800 to individual taxpayers and $1,600 to families and instead emphasize cutting taxes for businesses, which they say would do more to boost the slowing economy.
``Washington politicians are always tempted to buy votes by handing out checks,'' said Senator Jim DeMint, a South Carolina Republican. ``We should instead focus on policies that spur growth and encourage businesses to make long-term investments.''
The complaints may not slow the passage of a $150 billion stimulus plan, which has the backing of Bush, congressional Democrats and some Republicans. Still, Bush's support for rebates threatens to expose a philosophical split with some of his most loyal remaining supporters.
``If the president and the White House don't force through a cut in the corporate income rate, it would be extremely disappointing to us who believe in incentive-oriented economics,'' said Jack Kemp, a former Reagan administration official and 1996 vice presidential candidate. ``It's valid to try to prevent a recession, but what's being pursued now smacks of Jimmy Carter.''
Most Effective
Some economists, including Congressional Budget Office Director Peter Orszag, have said such rebates are one of the most effective ways of priming the economy. Even some lawmakers critical of rebates said they may not vote against a stimulus package that includes such payments.
Congressional leaders plan to rush the stimulus plan through Congress, bypassing the committee system and therefore avoiding some opportunities for critics to object.
Republicans widely backed sending $300 checks to millions of taxpayers when they were part of Bush's 2001 tax-cut legislation.
The difference, said Representative Paul Ryan, the top Republican on the House Budget Committee, was that the 2001 checks were an advance on the savings from the lower marginal income tax rates included in the plan. By contrast, he said, this year's proposal would be a check from the Treasury that would provide only a passing ``blip'' in the economy.
The Republican Study Committee, a group of more than 100 self-described conservatives in the House, introduced an alternative stimulus plan yesterday that focused exclusively on cutting taxes on businesses. The proposal would pare the top corporate income tax rate to 25 percent from 35 percent; allow companies to deduct more of the cost of assets from their tax bills; and increase tax breaks for capital gains.
Liberal Principles
``We don't need to apply liberal principles and policies to cure an economic slowdown,'' said Representative Mike Pence, an Indiana Republican and member of the RSC.
In the Senate, Arizona Senator Jon Kyl, the No. 2-ranked Republican, said he isn't yet sold on the rebate checks.
``I am skeptical but I'm going to hold my fire until I see what the House comes up with,'' he said yesterday.
Even if Republicans agree to the checks, lawmakers must decide who gets them. Democrats are pushing to give rebates to millions of poor Americans who are exempt from paying income taxes, because they are more likely to spend rather than save money, which would boost demand.
Republicans are opposed, saying that would amount to redistributing money from the wealthy to the poor.
House Minority Leader John Boehner, an Ohio Republican, said he will have a ``vigorous'' discussion with House Speaker Nancy Pelosi over the proposal.
Brian Faler in Washington
Some Republican lawmakers are urging the administration to scale back or dump proposals to provide up to $800 to individual taxpayers and $1,600 to families and instead emphasize cutting taxes for businesses, which they say would do more to boost the slowing economy.
``Washington politicians are always tempted to buy votes by handing out checks,'' said Senator Jim DeMint, a South Carolina Republican. ``We should instead focus on policies that spur growth and encourage businesses to make long-term investments.''
The complaints may not slow the passage of a $150 billion stimulus plan, which has the backing of Bush, congressional Democrats and some Republicans. Still, Bush's support for rebates threatens to expose a philosophical split with some of his most loyal remaining supporters.
``If the president and the White House don't force through a cut in the corporate income rate, it would be extremely disappointing to us who believe in incentive-oriented economics,'' said Jack Kemp, a former Reagan administration official and 1996 vice presidential candidate. ``It's valid to try to prevent a recession, but what's being pursued now smacks of Jimmy Carter.''
Most Effective
Some economists, including Congressional Budget Office Director Peter Orszag, have said such rebates are one of the most effective ways of priming the economy. Even some lawmakers critical of rebates said they may not vote against a stimulus package that includes such payments.
Congressional leaders plan to rush the stimulus plan through Congress, bypassing the committee system and therefore avoiding some opportunities for critics to object.
Republicans widely backed sending $300 checks to millions of taxpayers when they were part of Bush's 2001 tax-cut legislation.
The difference, said Representative Paul Ryan, the top Republican on the House Budget Committee, was that the 2001 checks were an advance on the savings from the lower marginal income tax rates included in the plan. By contrast, he said, this year's proposal would be a check from the Treasury that would provide only a passing ``blip'' in the economy.
The Republican Study Committee, a group of more than 100 self-described conservatives in the House, introduced an alternative stimulus plan yesterday that focused exclusively on cutting taxes on businesses. The proposal would pare the top corporate income tax rate to 25 percent from 35 percent; allow companies to deduct more of the cost of assets from their tax bills; and increase tax breaks for capital gains.
Liberal Principles
``We don't need to apply liberal principles and policies to cure an economic slowdown,'' said Representative Mike Pence, an Indiana Republican and member of the RSC.
In the Senate, Arizona Senator Jon Kyl, the No. 2-ranked Republican, said he isn't yet sold on the rebate checks.
``I am skeptical but I'm going to hold my fire until I see what the House comes up with,'' he said yesterday.
Even if Republicans agree to the checks, lawmakers must decide who gets them. Democrats are pushing to give rebates to millions of poor Americans who are exempt from paying income taxes, because they are more likely to spend rather than save money, which would boost demand.
Republicans are opposed, saying that would amount to redistributing money from the wealthy to the poor.
House Minority Leader John Boehner, an Ohio Republican, said he will have a ``vigorous'' discussion with House Speaker Nancy Pelosi over the proposal.
Brian Faler in Washington