Bush Lobbies Congress on Economy

Wednesday, January 23rd 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ As the new congressional session began, Republican and Democratic leaders emerged from their meeting with President Bush on Wednesday expressing commitment on both sides to a compromise economic package.

Senate Republican Leader Trent Lott told reporters in the White House driveway that the middle-ground plan offered by Senate Majority Leader Tom Daschle has potential to break the long partisan stalemate over how to boost the economy and help millions of unemployed Americans.

``It is a focus of our attention. It's a process that could get us into considering the bill and reaching a conclusion,'' said Lott, R-Miss.

House Speaker Dennis Hastert agreed, for the most part.

``We made a commitment to at least start the discussion and try to work things out. I'm committed and I think other leaders are that we need some type of a stimulus package,'' said Hastert, R-Ill.

White House press secretary Ari Fleischer said Bush, in turn, pressed lawmakers for action on what he called ``job-creators:'' his free-trade and energy legislation focusing on increased production.

Daschle, who for much of the holiday recess was locked in a long-distance war of words with the White House over economic policy, suggested detente was in the works.

Bush invited Daschle and the other leaders to continue the weekly White House breakfast meetings he began after launching the anti-terror war in Afghanistan, Daschle said.

``A new year brings a new opportunity to start over. We're going to do that and work, hopefully, in a very positive and a bipartisan spirit,'' Daschle said.

``We talked today about the areas for which we both have a high priority and it was amazing. I thought it was identical _ trade, energy the economy, election reform, prescription drugs, patients bill of rights, agriculture.''

Laying the groundwork for his State of the Union address next week, Bush gathered House and Senate leaders in the Cabinet Room to make his priorities clear for this congressional election year.

As the meeting began, White House aides abruptly reversed course and shut the doors to any press coverage.

Bush wants tens of billions of dollars more for homeland defense and military spending. On the economic front, he's pushing to break the stalemate over his economic revival package of tax cuts _ mostly for businesses _ and extended unemployment benefits.

Daschle, D-S.D., proposes that Republicans and Democrats work on a compromise economic plan requiring both sides to make concessions.

``Let's immediately pass what we agree on and keep working to find common ground in the areas where we still disagree,'' Daschle urged in a letter to Bush on Tuesday.

Democrats would shelve raising unemployment benefits and subsidizing health care premiums for the newly unemployed under the Daschle plan, while Republicans would drop accelerating the income tax cuts enacted last year and repealing the corporate alternative minimum tax.

The Democratic proposal focuses on extending unemployment benefits, giving tax rebate checks to people who missed out last year, allowing businesses more generous tax write-offs for new investment and increasing federal Medicaid money to cash-strapped states.

For weeks, senior administration officials privately insisted that Bush would reject any effort to pass the noncontroversial unemployment extension separately, because doing so would forfeit any leverage he has to get the business tax cuts. Those tax cuts will create jobs, Bush says.

Asked Tuesday about a slimmed-down package, White House spokesman Scott McClellan said the president ``appreciates the willingness'' of Senate Democrats and Republicans to work out a compromise but that he wants ``a comprehensive package that encourages job creation and extends unemployment benefits.''

After his closed-door summit with lawmakers, Bush was outlining his agenda for the year to a luncheon of the Reserve Officers Association.

At the top of the list is fighting terrorism and bolstering America's security.

The $2 trillion budget that Bush submits to Congress on Feb. 4 will call for roughly doubling the current $13 billion for homeland security, a spending item that did not exist a year ago. Aides said Bush's spending plan for the budget year that starts on Oct. 1 also will seek an increase of more $30 billion for the Pentagon, bringing its budget within range of $360 billion.

For the first time in four years, the budget is expected to be in deficit _ by just over $100 billion for this year and about $80 billion for 2003.

Later Wednesday, Bush was signing legislation waiving income tax liability for two years for families of victims of the Sept. 11 terrorist attacks, last fall's anthrax attacks and the 1995 Oklahoma City bombing.

The new law also creates a New York ``Liberty Zone'' around the lower-Manhattan site of the former World Trade Center, where some $6.1 billion in fresh tax breaks will apply for businesses struggling to recover from the attacks.