Jewish World Review Oct. 15, 2001 / 28 Tishrei 5762
If consumers don't have more money in their pockets by the end of next month, it's likely they won't spend and help lift the economy out of what indicators and analysts suggest will be a certain recession.
Consumers are key to U.S. economic growth, and surveys by the Conference Board and others show that consumer confidence, which was in a decline before Sept. 11, collapsed afterward because of shock and layoffs.
Putting money in the hands of consumers quickly - in the form of immediate tax cuts rather than rebates - would also be a short-term, temporary stimulus and wouldn't make a permanent dent in the federal budget surplus, as would runaway spending or permanent tax cuts.
White House officials say they haven't begun talking to Congressional leaders yet about how big the stimulus ought to be and what form it should take.
They are waiting for Greenspan to sound a gong - possibly this week - but if he continues to delay making a judgment, Democrats and Republicans ought to at least start talking without him.
The two sides have very different ideas about what it takes to give the economy a boost; therefore they should start putting proposals on paper - with numbers - and begin negotiating.
The White House and Congressional Republicans lean toward corporate tax breaks, while Democrats favor measures that put money into the hands of working people and those who have lost their jobs.
Acting like the war president he now is, President Bush has promised that whatever package is put in place will have bipartisan backing.
That's a good attitude with which to start discussions, but Bush's advisers and Greenspan are still emphasizing measures to encourage corporate investment, including cuts in the corporate and alternative minimum tax rates and faster write-offs for new equipment purchases.
For individuals, Republicans want to speed up the phasing-in of Bush's $1.6 trillion tax cut and - in their fondest imaginings - cut the capital-gains tax. Democrats oppose this.
Democrats want to slash payroll taxes so as to help the 34 million workers who don't pay income taxes and didn't benefit from Bush's cuts, as well as boost unemployment benefits, raise the minimum wage and, possibly, increase tax credits for the working poor.
Rep. Bob Matsui (D-Calif.), a member of the House Ways and Means Committee, said that during the economic boom of the 1990s, states cut funding for their unemployment programs in half, leaving too little in the till to handle the surge in new claims.
New filings last week rose from 390,000 to 450,000, the highest level in nine years. The number is expected to climb to 500,000, with 100,000 layoffs in the airline industry alone.
After bailing out airline companies to the tune of $15 billion, Democrats want to help jobless workers too, probably as part of airline security legislation.
Some Democrats also would like to find a way to force banks to pass on lower interest rates to consumers in the form of cheaper rates on credit cards, auto loans and mortgages. The White House is against this idea.
The size of the stimulus is still to be determined, but the number $100 billion has been widely bandied about. It isn't clear whether that figure would include the $40 billion in emergency funds passed in the wake of the Sept. 11 terror bombings or be added to it.
Democratic leadership aides report that the Bush administration is readying a new supplemental appropriation to pay for war preparations that may be as much as $40 billion.
On one thing, both sides agree: The Social Security surplus can be spent. "The President mentioned three prerequisites for that," said one of his aides. "War, an emergency, recession - arguably we've got all three."
On the other hand, there's still wrangling going on over spending between Congressional appropriators and White House Budget Director Mitch Daniels.
Daniels is valiantly - but possibly vainly -trying to persuade Congress not to use the terrorist crisis and the recession as an excuse to abandon fiscal discipline, which would endanger the long-term budget surplus.
Even some Democrats say they are worried that excessive spending now might sap money needed later for a Medicare prescription drug benefit and aid for individuals without health insurance.
Still, they want $3 billion to $4 billion more than Bush requested for education this fiscal year. And even one Republican House leadership aide admitted that "Discipline is going to be hard to maintain" as Bush himself proposes new spending plans and tax cuts.
So since both Greenspan and former Democratic Treasury Secretary Robert Rubin are emphasizing that stimulus packages should be temporary, when Bush finishes boosting airline travel, he should start on Christmas shopping.