Senate defeats effort to give businesses generous tax break in stimulus bill
Friday, January 25th 2002, 12:00 am
By: News On 6
WASHINGTON (AP) _ An effort to give businesses a generous, three-year tax write-off as part of economic stimulus legislation was defeated Friday by the Senate despite strong support from President Bush and much of corporate America.
The amendment by Sen. Gordon Smith, R-Ore., fell 21 votes short of the 60 needed to overcome a Senate budget rule. It would have provided companies with a 30 percent immediate depreciation write-off for new investments over the next three years, instead of only during one year.
Opponents argue that a depreciation write-off longer than one year would encourage companies to put off immediate job-creating investments and would add to the federal government's near-term budget deficit.
``That is directly contrary to what a stimulus ought to be,'' said Senate Budget Committee Chairman Kent Conrad, D-N.D.
Treasury Secretary Paul O'Neill had endorsed the amendment in a written statement, saying it ``greatly enhances the job creation that will be generated'' by an immediate depreciation write-off. Business lobbyists also wanted it.
The Senate continued to debate the stimulus package even as Federal Reserve Chairman Alan Greenspan and leading lawmakers were raising questions about whether one is necessary to help the nation out of recession.
``There are a lot of mixed feelings about it,'' Senate Minority Leader Trent Lott, R-Miss., said. ``Is there less certainty about its need now to help the economy? Yes, there is.''
Lott spoke Thursday after Greenspan told the Senate Budget Committee that a stimulus bill would have been ``a clearly desirable action'' three months ago _ but that he is ``conflicted'' about whether one would do any good now that the recession is 10 months old.
``I don't think it is critically important to do,'' Greenspan said. ``I think the economy will recover in any event.''
Nonetheless, the Senate forged ahead on a scaled-back, $69 billion stimulus package introduced by Majority Leader Tom Daschle, D-S.D., as an attempt to blend common elements of previous Democratic and Republican plans.
As demonstrated by O'Neill's statement, the Bush administration remained committed to pushing for stimulus legislation.
White House spokesman Ari Fleischer said Bush would continue to pressure the Democratic-led Senate to act on broader legislation costing about $90 billion that would also accelerate income tax cuts set to take effect in 2004, give businesses more generous investment write-offs and provide the jobless with a tax credit to help them afford health insurance.
``There are still clouds on the horizon ... and the president prefers to err on the side of creating jobs,'' Fleischer said.
The Daschle bill would extend unemployment benefits by 13 weeks; provide a new round of rebate checks of up to $600 aimed at lower-income workers; allow the one-year, 30 percent depreciation write-off; and boost the federal match for what states pay for Medicaid.
Many Democrats also said it was important to do something.
``Most businesses believe we are not out of the woods,'' Senate Finance Committee Chairman Max Baucus, D-Mont., said.
Economists generally peg March as when the recession began, a downturn that was made worse by the Sept. 11 terror attacks. Bush proposed a stimulus package in October and the GOP-led House has acted on two different packages, but the partisan differences prevented the Senate from following suit before recessing at the end of 2001.