Kerry may get his capital gains tax cut yet...
Cheney Says Administration Is Mulling
Capital-Gains Tax Cut Pushed by GOP
But Vice President Says White House Is Skeptical
About Possible Across-the-Board Spending Cuts
By JEANNE CUMMINGS, JOHN D. MCKINNON and GREG HITT
Staff Reporters of THE WALL STREET JOURNAL
WASHINGTON -- Vice President Dick Cheney said the Bush administration is taking "a good hard look" at a capital-gains tax cut to try to boost the economy, suggesting the cut could be linked to a minimum-wage increase to make it palatable to more Democrats.
"I can easily see the Congress originating a measure that would include a reduction in the capital-gains tax and maybe pairing it with some other provision -- a minimum-wage increase, for example," he said in an interview. As to whether the administration would support such a bill, he said, "The president will have to make that decision and I don't think he's made it yet."
At the same time, the vice president expressed skepticism about the idea of across-the-board spending reductions proposed by some lawmakers. "I always prefer, I guess, arrangements where you make a conscious decision about what you're going to spend [federal money] on," he said.
Worried by the steep political price they might pay for dipping into the Social Security surplus to fund general government services, the White House and GOP congressional leaders have been exploring ways to boost economic growth through tax cuts, as well as stretch the federal budget through spending reductions.
Office of Management and Budget Director Mitchell Daniels Jr. wrote to federal agency heads Monday urging them to trim 5% from their spending plans for the fiscal 2003 budget President Bush will submit in January.
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Mr. Daniels said that because of "changes in the economic and budget outlook since the president submitted his budget, we now need to develop options to hold spending below" previously projected levels.
In a separate memorandum, the OMB last week urged federal agencies to hold down spending for the remainder of the current fiscal year, which ends Sept. 30, in hopes of avoiding an expected dip into the Social Security surplus.
The House Budget Committee also planned a vote as early as Tuesday on a proposal that would commit Congress and the White House to paying back any Social Security surplus funds spent in the 2001 fiscal year. Analysts expect that amount to total $9 billion and possibly as much as $15 billion.
Meanwhile, the White House has been negotiating with two budget hawks in the Senate, George Voinovich (R., Ohio) and Zell Miller (D., Ga.), on legislation that would use across-the-board spending cuts to fence off the annual Social Security surplus in the 2002 fiscal year and beyond. Under the evolving plan, expected to be unveiled this week with President Bush's support, the cuts would be triggered if the White House budget office determines that those surplus funds are threatened.
Even after the big tax cut enacted this year, the government still expected to have ample funds outside of Social Security. But the slowing economy's drain on revenue has punched big holes in those plans.
For now, the prospects for passage of any measures aimed at limiting the political damage are uncertain. Democrats control the Senate, and for now they appear content to watch Republicans struggle to solve the problem.
Sen. Kent Conrad, the Budget Committee chairman, criticized the idea of a capital-gains tax cut, calling it "particularly ill-suited" to the current economic problems.
The North Dakota Democrat called for more short-term spurs to demand, possibly through further tax cuts aimed at lower-income people. He also called for more long-term fiscal discipline to lower interest rates, although he declined to give details.
Mr. Conrad belittled the White House's embrace of a spending trigger, saying it duplicates existing statutory spending limits and also could undercut the economy.
Senate Minority Leader Trent Lott proposed linking a reduction in Social Security taxes to a cut in the capital-gains tax, but the Mississippi Republican's plan appeared to hold little appeal for Democrats.
Some analysts also derided the House's belt-tightening effort, saying it could readily be circumvented and wouldn't mean much even if Congress did summon the discipline to cut spending.
Write to Jeanne Cummings at jeanne.cummings@wsj.com, John D. McKinnon at john.mckinnon@wsj.com and Greg Hitt at greg.hitt@wsj.com |
