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RESPONSE TO TERROR | ECONOMY

Fiscal Package Worth Billions Almost Certain

Recovery: Bush and key lawmakers agree on an amount from $60 billion to $75 billion. Negotiators are expected to opt for a mix of tax cuts and spending.

October 04, 2001|JANET HOOK and WARREN VIETH | TIMES STAFF WRITERS

The priorities outlined by O'Neill put Bush at odds with some Republicans who do not want Congress to include more spending in the stimulus package. They fear Bush's willingness to embrace expanded unemployment benefits and other Democratic proposals will sharply reduce the amount of money available for business tax cuts, which they consider more effective forms of stimulus.

"These are all the same old ideas that were rejected in the last tax package, primarily giving tax cuts to people who do not pay taxes," said Sen. Phil Gramm (R-Texas). "What I'm not sure of at this moment is whether we're going to get any stimulus in the stimulus package."

Although the White House has indicated it was willing to consider non-tax provisions such as expanded unemployment benefits or spending on infrastructure, they face resistance from Armey and other conservative Republicans.

"You're not going to be able to buy yourself out of a recession," Armey said. "Consumption is the gas in the tank; investment is the ignition." He said he intended to push for a tax cut as large as $150 billion.

Some Republicans are bridling at the political dynamic that has shaped the White House's approach to Congress since Sept. 11: Bush and GOP leaders have bent over backward to work with Democratic leaders toward a bipartisan response to the terrorist attacks and their economic fallout.

In the process, Bush and congressional leaders of both parties have had to contend with criticism from their rank and file that they have compromised too much. That tension may become especially acute in hammering out the details of the stimulus package.

According to sources familiar with the discussions, Greenspan recommended that the package include short-term tax relief measures, including expensing of new investments by business, relief for corporations that pay the alternative minimum tax, and individual tax rebates or payroll tax relief.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Stimulus: the Short List Leading contenders under consideration by the White House and Congress for an economic stimulus package:

* Speeding up the effective date of future reductions in the 10-year tax-cut package enacted in June.

* Giving tax rebates to workers who pay payroll taxes but do not pay enough income taxes to have qualified for the first round of rebates.

* Letting businesses write off the cost of new investments through accelerated depreciation or expensing.

* Extending unemployment benefits from 26 weeks now to perhaps 39 weeks for Americans who lose their jobs during the economic downturn.

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