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Jewish World Review Feb. 13 , 2002 / 2 Adar, 5762

Donald Lambro

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Consumer Reports

Stimulus bill's death wounds Democrats -- NOTHING better illustrates the immense ideological gulf between Democrats and Republicans over economic policy than the death of the GOP's stimulus bill in the Senate.

With America's anemic economy starving for new capital investment, Senate Democratic Leader Tom Daschle and his allies bitterly fought the accelerated tax cuts that every business group in the country said was needed to get the economy growing again.

The White House-backed measure was pretty straightforward. At its core, the bill would give businesses a 30 percent tax write-off for new equipment and plant expansion. The bill also called for speeding up some of President Bush's tax cuts to pump additional liquidity into the economy.

Even as the economy was sinking into a recession in the aftermath of the Sept. 11 terrorist attacks and 2.5 million workers were losing their jobs, Daschle flatly opposed the bill. He ridiculed its relatively modest $90 billion in tax cut prescriptions as "a giveaway to big business."

Reality check: Businesses employ most American workers. When the business sector spends money to expand, its expenditures pour through the economy, creating new jobs, paychecks and, ultimately, increased tax revenues for things like Social Security benefits and the war on terrorism.

Daschle insisted that the president's approach would not work and would not pass. He wanted a bill that would expand jobless benefits (which the White House supported), new entitlements for employee health insurance and tax rebates for people who paid no income taxes (the White House agreed to this, too).

But there was precious little in the Democrats' bill that would create a single job. And there were many on the Republican side of the aisle who began to suspect that Daschle & Co. did not want to create any jobs. They believed that the Democrats want to keep the economic slowdown going as long as they can to help them win back the House and strengthen their hold on the Senate.

The Republican House, under pressure from the White House to work out a deal with the Democrats, passed a whittled-down bill in December, but again Daschle balked and stalled and the Senate adjourned at the end of the year without any action. While Daschle was back home vacationing in South Dakota, the jobless rate continued to climb, factories were idle and the financial markets remained volatile and bearish.

Notably, when the Senate returned in late January, Daschle seemed to be singing a little different tune. He had heard from his constituents and saw internal Democratic polls that showed his party was being blamed for inaction on the recession. Bush and the Republicans were trusted more than the Democrats to handle economic policy.

Suddenly, Daschle was willing to be a tiny bit more generous on business tax cuts, but not much. There was still very little stimulus in his bill.

Even House Democratic Leader Dick Gephardt was privately counseling his colleagues that Daschle's anti-business message wasn't playing well with voters, especially with swing Democrats and independents.

Bush's proposals to get the economy growing again have struck a chord among a majority of Americans. They understand that four previous budget surpluses came from an economy that was growing flat out and that only a recovery would restore them.

But Daschle came up with every procedural roadblock he could muster to prevent that from happening. The worst: he insisted that the stimulus bill must receive an unreachable 60 votes to end a Democratic filibuster instead of the traditional 50-plus-one majority rule.

So what's next?

Ironically, the stimulus bill's demise will have the effect of lowering the projected deficits, robbing the Democrats of one of their big issues. And there is growing evidence that the economy is recovering on its own.

Manufacturing orders rose by 1.2 percent in December. Layoffs also slowed, as the unemployment rate unexpectedly fell last month to 5.6 percent. Home sales remained strong. Energy prices have fallen. Inflation is tame. Productivity continues to rise. In other words, this is an economy that is clearly poised to take off.

"I've long said that we'll have a recovery starting early this year, and I still believe that. What I'm concerned about is its strength," White House economic adviser Larry Lindsey told me.

The big political question now is whether the recovery will come in time to shape voter perceptions before the post-Labor Day election season begins.

"That's the $64,000 question," said Bruce Josten, the U.S. Chamber of Commerce's chief lobbyist. "The stimulus bill would have put 300,000 unemployed people back to work and increased economic growth by half a point. And in a $10 trillion economy that's a lot of growth."

But Daschle and his friends killed that bill for political purposes and if the economy does not begin recovering soon, they are the ones to blame when the voters go to the polls in November.

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© 2001, NEA