BUSH says capital gains tax cut would 'pile up some revenue' for federal budget

Tuesday, September 4th 2001, 12:00 am
By: News On 6

WASHINGTON (AP) _ President Bush, heading back to work with Congress on Tuesday, said a capital gains tax cut would ``pile up some revenue'' for the cash-strapped federal budget. But he put off Republicans who are pushing now for the additional tax cut to stimulate the limping economy.

``I'd like us to just take a look-see to make sure that the stimulus package that we now are implementing works,'' Bush said as he opened an Oval Office meeting with Senate Minority Leader Trent Lott, R-Miss.

Lott, House Speaker Dennis Hastert, R-Ill., and other congressional Republicans want the president to back a reduction in the tax rate on capital gains, something that Democrats have long opposed, saying it disproportionately benefits the wealthy.

``I'm open-minded,'' Bush said. '' ... I agree with the assessment that a capital gains tax relief would pile up some revenues early in the process.''

Lott told reporters afterward that he will introduce this fall a proposal to reduce the capital gains tax rate to 15 percent for two years. ``It would help with revenue that we would have available to the government to spend for our top priorities, education and defense,'' Lott said.

In his first full day back at work at the White House since his monthlong working vacation in Texas, Bush also took pains to reassure seniors on Social Security.

``There's been a lot of noise about the budget,'' Bush said Tuesday. He said senior citizens need ``to know that every Social Security promise will be fulfilled. Social Security checks will arrive on time.''

His comments reflected fresh worry over the political implications of last month's report by the nonpartisan Congressional Budget Office, which projected that, due to a shrinking budget surplus and slowed economy, Bush will have to tap Social Security reserves this year and next in order to pay for his agenda. White House advisers are keen to emphasize that such a scenario would not alter current benefits. It is the long-term viability of the Social Security trust fund that would be affected.

Bush was meeting later Tuesday with Senate Majority Leader Tom Daschle, D-S.D., who is insisting that Bush rewrite his 2002 budget to fit new, much smaller surplus projections.

Bush countered that the budget is just fine, as long as Congress controls its spending.

``If Washington would only prioritize, we've got plenty of money to spend in Washington, D.C.,'' Bush told union workers at Labor Day rallies in Wisconsin and Michigan on Monday.

Bush's meetings with top lawmakers come as all sides brace for what promises to be a contentious fight over the 13 spending bills that the House, Senate and president must approve in order to keep the government running after Sept. 30.

Lott said he is likely to link his capital gains tax cut proposal to a Democratic-backed minimum wage increase.

Democrats oppose additional tax cuts, and spent much of the August congressional recess blaming those that Bush pushed into law earlier this year for evaporating the budget surplus and threatening to invade Social Security surpluses.

White House press secretary Ari Fleischer countered Tuesday that Democrats offer nothing but hollow complaints. ``If there are any growth proposals from the Democrats, the president would be very interested in hearing them,'' Fleischer said.

To his union audiences, Bush scorned ``second-guessers'' of his tax cut: ``The best thing we can do is ask the question, how do we make sure our economy grows? And I came up with this answer. Our economy can grow best when we give people their own money back.''

He said he refuses to consider tax increases as a means of easing the budget crunch because to do so would be ``the absolute worst thing'' that could happen to the economy.

Fleischer said capital-gains taxes will have to wait until the 2003 budget deliberations and it is too early for any decision. But, he added: ``It's fair to say that economists, depending on how a capital-gains tax cut is structured, do believe it can have a positive effect on the economy.''