Administration urges House to push forward with tax cuts

Wednesday, March 7th 2001, 12:00 am
By: News On 6

WASHINGTON - Treasury Secretary Paul O'Neill gave a pep talk Wednesday to Republican House members who are rushing to pass the centerpiece of President Bush's economic program, a $958 billion tax cut. House leaders predicted victory on the eve of Thursday's vote.

O'Neill and GOP leaders cited the weak economy as a reason for speed, saying Americans will start seeing less tax withheld from their paychecks six weeks after the measure clears Congress and is signed into law by the president.

``As we look at the economic statistics, we feel it is important to get money flowing back to the American people as fast as we can,'' O'Neill told reporters following a closed-door meeting with the House Republican caucus.

O'Neill said it would be ``hard to imagine'' any faster legislative action than the pace that GOP leaders have set for the rate cut bill, which was approved by the House Ways and Means Committee Thursday, only a day after Bush sent his budget outline to Congress.

Bush, citing a previously announced government surplus figure of $76.4 billion in January, told Treasury Department workers Wednesday that he is confident his tax cut will pass. ``I feel like I'm going to have a pretty good day in the House of Representatives,'' he said.

``We've got enough money coming into the treasury to meet important obligations,'' Bush said. ``But we've also got enough money to remember who paid the bills in the first place.''

House Republican leaders predicted the proposal will pass when it is voted on by the House on Thursday.

House Majority Leader Dick Armey, R-Texas, told reporters he expected the House Rules Committee will allow a vote on a less costly Democratic alternative, one providing more tax relief to middle- and low-income taxpayers.

Bush has been campaigning around the country to build support for his $1.6 trillion, 10-year tax cut, which Democrats are attacking as too expensive and too heavily weighted to the wealthy.

Bush said Tuesday that the measure needs to be passed because ``the great boom is beginning to sputter.'' But Democrats have said the small amount of tax relief that would be provided this year would have little impact on a $10 trillion economy.

Rep. Jennifer Dunn, R-Wash., said the tax cut this year in the House GOP version of the bill would amount to $400 for the average family. She said workers would begin seeing that relief in less money withheld from their paychecks within six weeks of enactment.

Rep. Rob Portman, R-Ohio, called Thursday's vote ``extremely important'' because of what he said was the precarious state of the economy. Some economists fear the record 10-year economic expansion could be in jeopardy of ending in a recession.

O'Neill said the main reason for his appearance before the Republican caucus was to ``celebrate their great progress and urge them on.''

While the House is quickly pushing the tax cut, Senate leaders have said they do not plan to begin moving their own version until May.

And Democrats have hardened their stance against the measure, objecting to what they see as heavy-handed lobbying tactics by Bush and his allies.

They argued that tax cuts should wait until passage of a budget that shows the disposition of all money, not just that earmarked for tax cuts.

``The strong-arm tactics being used by the administration are clearly backfiring,'' Senate Minority Leader Tom Daschle, D-S.D., said Tuesday.

Several Democrats said Bush should curtail his campaign-style trips to promote his tax cuts in states represented by Democrats and sit down instead to work out compromises in the bipartisan fashion he promised a few weeks ago in numerous cordial face-to-face meetings.

The House vote Thursday will be on the biggest piece of the Bush tax plan, a 10-year, $958 billion cut that would provide some benefit to everyone who pays federal income tax. O'Neill said that after it is passed, the administration plans to work with congressional leaders to pass the other parts of the tax package with the hope that later in the year debate can begin on overhauling Social Security.

The rate cut bill would gradually reduce and condense the current five income tax rates of 15 percent, 28 percent, 31 percent, 36 percent and 39.6 percent. By 2006, the rates would reach 10 percent, 15 percent, 25 percent and 33 percent. The House GOP bill would create an interim 12 percent bracket retroactive to Jan. 1, 2001, that would apply to every taxpayer's first several thousand dollars of income.