Phyllis Stine,
Did you know this one too?
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Bush Pushes for Deficit Reduction
Sat Aug 17,10:09 AM ET
By SANDRA SOBIERAJ, Associated Press Writer
As he weighs the pieces of what could become a new White House economic plan, President Bush ( news - web sites) emphasizes a new priority — reining in budget deficits and their political liability.
Bush used his weekly radio address Saturday to promote the no-deficits theme that emerged from the economic summit he convened this week near his ranch. That forum also yielded ideas for new tax cuts for small investors that he admitted had caught his eye.
"We cannot go down the path of soaring budget deficits. We must meet our defense and homeland security needs, and hold the line on other spending," Bush said in his broadcast.
Drawing parallels between the Vietnam era and today, he recalled how war spending in the 1960s was not balanced by cuts in the rest of government spending and, as a result, the 1970s saw deep unemployment, growing deficits and spiraling inflation.
"We must remember the lessons of the past," he said.
The focus on fiscal restraint comes as the president and his economic team weigh proposals for a new long-term plan to aid the struggling economy. He told reporters Friday that he was intrigued by several ideas that emerged during the forum he convened Tuesday at Baylor University in Waco, Texas.
Bush singled out four particularly "interesting ideas" — cutting taxes on dividends and capital gains, increasing the amount of stock-market losses that individuals can deduct from one year's taxable income (currently $3,000), and speeding up increases in the amounts people can contribute to their 401(k) retirement accounts.
"I am going to analyze and think about some of the suggestions so that when I announce them they'll be well thought out, they'll be a part of a long-term plan," he said.
White House advisers later cautioned that proposals arising out of the economic forum have yet to be sorted or summarized, so any decisions on a new economic plan are likely to be weeks away.
But Bush's top economic adviser, Lawrence Lindsey, suggested on CNN's Saturday edition of "Novak, Hunt and Shields" some of what the White House has in mind: "We need tax simplification and we need lower taxation of capital on all fronts."
Democrats in recent weeks have focused their election-year criticism of the president on the return to federal budget deficits under his tenure and tax cuts. Bush had previously laughed off the resurrected deficit — projected to run $165 billion in the budget year ending Sept. 30, the first red ink in four years — by saying he had always maintained that deficit spending would be necessary only if there was a war, recession or national emergency.
His standard punchline then: "I didn't think we were going to get the trifecta."
Now, with Republicans headed into November balloting that will decide control of Congress and Democratic rivals positioning to challenge Bush in 2004, the message is entirely serious.
"For the good of our economy, for the good of the people who pay taxes, my administration will spend what is truly needed, and not a dollar more," Bush said in Saturday's broadcast.
On Tuesday, Bush scrapped $5.1 billion in emergency spending approved by Congress, saying much of it was unnecessary. That decision, too, carried a political price as veterans, firefighters, AIDS ( news - web sites) activists and Jewish groups accused him of abandoning their causes by depriving them of money.
"Every project sounds like it's needed, every proposal is one that's got to be funded, and my job is to set the priorities," the president replied Friday.
He also had fresh words of praise for Treasury Secretary Paul O'Neill, whose blunt off-the-cuff remarks have rattled markets and lawmakers. O'Neill is "doing a fine job," Bush said. "I find him to be refreshingly candid."
Bush also confronted, despite an accelerating debate outside his administration that includes some Republican lawmakers, the question of how to oust Iraq leader Saddam Hussein ( news - web sites).
"I am aware that, you know, some very intelligent people are expressing their opinions about Saddam Hussein and Iraq," Bush told reporters. "America needs to know, I'll be making up my mind based upon the latest intelligence, and how best to protect our own country plus our friends and allies."
Bush planned to meet this weekend with national security adviser Condoleezza Rice ( news - web sites) and on Wednesday with Defense Secretary Donald H. Rumsfeld. Aides said the Rumsfeld meeting would focus on plans for missile defense and the Pentagon ( news - web sites) budget.
On another foreign policy matter, the president said he had spoken with Mexican President Vicente Fox ( news - web sites), who canceled his scheduled Aug. 26 visit to Bush's ranch in protest after Texas executed Mexican Javier Suarez Medina for the murder of an undercover U.S. drug agent.
"I understand why (Fox) is not coming. He said that if the execution goes forward he's not going to come," Bush said. "And I said, 'Well, we have laws here in America. The state of Texas has got a law.'"
Bush said he had no doubt that relations between Mexico and the United States will remain strong.
story.news.yahoo.com
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or how about this one?
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President Moves to Spur Investors
Tax Cuts, Bigger Loss Writeoffs, Higher 401(k) Limits Considered
By Mike Allen and Jonathan Weisman
Washington Post Staff Writers
Saturday, August 17, 2002; Page A01
CRAWFORD, Tex., Aug. 16 -- President Bush said today he plans to propose initiatives to help small investors recoup some of their losses and entice them into a skittish stock market. White House officials said he wants to sign the measures into law this year.
Bush said the ideas he is considering include raising the limit on investment losses that can be written off on individual tax returns each year; speeding up measures to increase the contribution limits for individual retirement accounts (IRAs) and 401(k) plans; cutting tax rates on profits from the sale of stocks and other assets; and cutting tax rates on corporate dividends.
The package will be announced shortly after Congress returns from its break, White House officials said. The decision marks a shift in the White House's longtime position that Bush has proposed all the measures the economy needs -- including energy, insurance and tax laws -- if only Congress would enact them.
The fresh offensive reflects administration officials' eagerness to reinvigorate the economic recovery as they look toward November's congressional elections and Bush's reelection race in 2004. But it is far from certain that Congress will have the time or inclination to adopt his new plan, and some of the proposals could face resistance over their cost.
Taking his staff by surprise, Bush tipped his hand when he was chatting briefly with reporters and was asked what he had learned from his economic forum in Waco on Tuesday. The White House has said the five-hour event helped Bush tune in to the concerns of average Americans, although Democrats derided it as a clumsy public relations maneuver.
Bush said that besides validating his long-term optimism, the forum impressed on him that small-business owners feel "constrained by tax policy and regulatory policy."
"I am going to analyze and think about some of the suggestions so that when I announce them, it will be well thought out, it will be a part of a long-term plan. . . . We're thinking about all options," the president said.
Whatever the final details of Bush's new economic package, much or all of it will face tough congressional scrutiny, legislative sources said.
Bush referred to the measure in the shorthand of the market cognoscenti, saying he was looking at "expensing losses, increasing expenses of losses, accelerating the 401(k) contribution limits -- in other words, making it easier for people to put more money in their 401(k)s quicker."
"There's a lot of interesting talk about capital gains taxes, double taxation of dividends," he added. A profit on a stock investment is an example of a capital gain.
A senior administration official said the White House is "still in the sifting stage" but wants to act swiftly in order to provide the maximum benefit for the economy.
The White House said one of the biggest considerations will be what measures Congress will approve this fall. "We want to see what can get legs in Congress," one official said. "There's not a lot of time left in the session. Also, we want to be sure we don't do something for the short term that hurts the long term, or vice versa."
The official said the ideas Bush mentioned have long been under consideration, but the forum in Waco "gave us a chance to bring those issues to the forefront." Aides said they feel strongly that the corporate responsibility bill Bush signed last month will reassure investors, making this an ideal time for new incentives.
"You couldn't do anything about investment levels until you addressed confidence," the official said.
A Treasury official confirmed that tax analysts are working up proposals designed to lure investors back into the stock market, as well as to ease the pain of those burned by Wall Street's slide. All of the proposals were floated publicly by discount brokerage magnate Charles Schwab at the president's economic forum.
All the proposals face challenges involving time and money. Bush has made a big show of refusing to spend $5.1 billion in proposed supplemental funding -- some of it earmarked for homeland defense, New York firefighter safety and District of Columbia emergency preparedness -- because the money would "bust the budget." For Bush now to propose tax cuts that would cost the Treasury far more may be tough for some lawmakers to take, a senior Democratic leadership aide said.
Doubling the $3,000 limit on deductible stock losses would cost the U.S. Treasury about $1 billion a year, a Senate tax expert said. And Schwab suggested a new limit of $20,000, which would cost the government up to $45 billion over 10 years. Raising the contribution limits for IRAs would cost about $1.5 billion a year in tax revenue, experts said.
The other problem is time. Congress will be hard pressed to complete all 13 appropriations bills, plus the president's other priorities, a homeland security bill and pension protection legislation, and still leave Washington with time to campaign for the Nov. 5 elections.
Opening a new tax debate could invite a free-for-all. "You will have tax ideas coming out of the woodwork that people have been floating for 50 years," the leadership aide said. "It's very hard to control these things."
Then there is the question of whether any of the proposals will help or hurt the market. Raising the deductibility limit could entice people to sell stocks at a loss that reaches the deduction limit. A capital gains tax cut could also entice more selling of stocks, which might drive prices down further.
Still, the political temptation will be high, a Senate Democratic tax aide said. "Members are going home and hearing two things: 'Put the corporate crooks in jail,' and 'I've lost $20,000 on the stock market. What are you going to do about it?' "
The proposal with the most political appeal would take some of the sting out of the stock market losses suffered by millions of Americans this year and last. The limit on losses that can be written off has been fixed at $3,000 since 1977. However, losses above that level can be carried forward and taken off an individual's taxes any year within a 10-year window.
For much of the year, House Republican moderates have pushed a proposal to boost the annual limit to $6,000. Now it has some momentum. A source close to House Ways and Means Committee Chairman Bill Thomas (R-Calif.) said the committee could draft an expensing bill shortly after the House returns in September.
Bush's other ideas may be more problematic, even in the GOP-controlled House. The argument for a capital gains tax cut is to lure more venture capital into the stock market with the promise that profits eventually will be higher because taxes will be lower. Cutting taxes on dividends could entice companies to offer dividends, a practice that fell out of favor in the 1990s. And few things would improve investors' faith in corporate profits more than an actual cash return.
Likewise, speeding up a higher contribution limit in retirement savings plans could give more cash to institutional investors to pump into mutual funds. But the 10-year, $1.35 trillion tax cut passed last year already raised the annual IRA limit from $2,000 to $3,000, and the 401(k) limit to $11,000.
Bush laughed off criticism of Treasury Secretary Paul H. O'Neill, whose candid remarks often depart from the administration's script and have helped fuel a disjointed image of the president's economic team. "Paul O'Neill is doing a fine job," Bush said. "I find him to be refreshingly candid. I appreciate his judgment. He's a man of great experience."
Weisman reported from Washington.
washingtonpost.com
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Sometimes he makes me cornfused... |
