o'neill is a clown...
just an observation.
:)
Bush Examining Wide Range of Tax Cuts to Spur Economy
Updated: Tuesday, November 12, 2002 07:38 PM ET
Associated Press
WASHINGTON -- The Bush administration, concerned that the Federal Reserve is running out of room to boost growth with interest-rate cuts, is examining a wide range of possible tax cuts for individuals and businesses to bolster the shaky recovery.
President Bush told U.S. Chamber of Commerce officials Tuesday that a number of options were under consideration, participants said.
The president "did not in any way articulate what way the wind may be blowing, " said Bruce Josten, the chamber's executive vice president, said after the meeting.
"All he did say is, 'We are examining what we have done and other steps the government has taken. We want to vet all of these, measure what result came of them and what will have the greatest impact,'" Mr. Josten said, quoting Mr. Bush.
Treasury Secretary Paul O'Neill told a separate group of business executives Tuesday that he didn't believe broad-based measures would be needed but targeted stimulus proposals should be considered to help particular industries suffering the most. Outside of a few sectors, consumer demand was holding up, he said.
"When you think about broad-based intervention, I think implicit in that is the assumption that all of the sectors of our economy need some additional support," Mr. O'Neill told a global business forum sponsored by Fortune magazine.
However, others in the administration said broader tax relief remained very much an option, and Mr. Bush may decide to unveil new proposals during his State of the Union address in January.
Making his case for the health of much of the economy, Mr. O'Neill said sales of new and existing homes are expected to hit a record this year and auto companies will have one of their best sales ever as demand for both homes and cars have been fueled by the Federal Reserve's decision to keep interest rates at a four-decade low for almost a year.
Yet some sectors are doing poorly, he said, citing the airline industry in particular. Passenger traffic is still 10% down from the level before last year's Sept. 11 terrorist attacks, he said.
Mr. O'Neill offered no specifics about new proposals the administration might put forward other than to say the search entailed looking for ways to "sharpen our intervention" to parts of the economy that needed help. He said such a move would also limit the impact of any short-term stimulus on the government's long- term budget outlook. After four years of surplus, the budget dipped back into deficit this year.
A senior administration official, speaking on condition of anonymity, said economic growth in the fourth quarter and the unemployment level would be two key determining factors on whether Mr. Bush proposes further economic stimulus. Many economists are worried that growth will slump dramatically in the current quarter, pushing unemployment higher.
To shield itself from criticism that Mr. Bush wants new tax cuts for the rich, the administration may focus further tax cuts on the middle class, such as proposing an increase in the per-child tax credit, the senior official said.
But the official said other ideas being considered included accelerating future reductions in income tax rates that were part of last year's $1.35 trillion, 10-year tax cut, and an increase in tax deductions businesses can take for new investments.
In his comments, Mr. O'Neill didn't specify what type of targeted assistance, if any, the administration might consider backing.
The House is considering legislation to provide up to $1.5 billion in relief to airlines through further loan guarantees and the easing of some of the added security costs they are facing.
Airlines have projected they will lose $7 billion this year because of the added security costs and the reduction in passengers.
For the overall economy, Mr. O'Neill said he believed upcoming revisions would show the gross domestic product grew at an even stronger pace than the 3.1% rate initially estimated for the July-September quarter. He discounted talk of a possible double-dip recession.
"I don't find the basis for pessimism that people are expecting somehow our economy is going to fall off the cliff and go back to a zero rate of real growth," he said.
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