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Politics as usual

National | The 9/11 attacks may become another excuse for liberals to delay tax cuts and spend money

Issue: "A patient nation," Oct. 13, 2001

After a hearty breakfast of bacon and eggs with congressional leaders just off the Oval Office, President Bush told reporters they had discussed creating an economic stimulus package that everyone could agree on, "to make sure that we affect the economy in the short run in a positive way, but don't affect it in the long run in a negative way."

But as congressional leaders left to prepare their party caucuses to unite behind such a package, some conservative legislators were suggesting the stimulus talks might bring a high-fat helping of government spending to the stalling economy instead of a high-vitamin boost of tax relief.

"The tone we're hearing around town is spooky," Rep. Paul Ryan (R-Wis.), a leading House advocate of pro-growth tax cuts, told WORLD. "It's almost like 1990 all over again. It seems like some in the White House and the Democrats are trying to one-up each other how we can make people more comfortable in their unemployment rather than discussing how we can get this economy moving and keeping people in their jobs." As TeamBush and congressional leaders tried to hard-wire a package to pass both houses quickly, reporters found the stimulus debate was almost as secretive as the preparations for military action.

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With a war president and a war Congress, leaders didn't seem to be abiding by supply-side economics or old-style New Deal pump-priming. They simply wanted to gird the nation for war without partisan rancor, while also having their constituents see them as taking action to address the weakening economy. "This is the 'I Care' bill," said Grover Norquist, head of Americans for Tax Reform and a leading advocate earlier this year for the Bush tax cut. "We're left with urging a minimal package because for every tax benefit, the Democrats will insist on something worse for the economy," like jobs programs or a minimum wage increase of as much as $1.50 an hour.

Underneath the bipartisan bonhomie, Republicans still want the corporate and capital-gains tax cuts they sought this fall before the attacks, and Democrats still face a liberal political base angry that they were rolled by the president on the first set of tax cuts. White House economic advisers like Larry Lindsey would like to accelerate the approved tax-rate cuts that don't really kick in until 2006, while some Democratic activists insist the tax cuts ought to be repealed in the new war economy. The only firm position President Bush established in this new budget debate is that his tax cuts will stand.

The president did announce that he had agreed with congressional negotiators on a new budget outline for Fiscal Year 2002, which, due to the terrorist attacks, began without Congress sending one of the traditional 13 appropriations bills to the White House for a signature. All sides agreed on a pre-stimulus budget that is $25 billion larger than Mr. Bush requested earlier this year, meaning that domestic nondiscretionary spending (excluding defense, debt service, or entitlements like Social Security and Medicare) would increase to $686 billion, or a growth rate of 7 percent, instead of the 4 percent target the White House attempted to set early in the year. Most of that initial increase will go to defense and counter-terrorism, although it also includes more dollars for schools and teachers. All the spending bills are targeted for a White House signature by the end of October.

The tone of the entire budget struggle changed after the attacks. Anything remotely related to relief for the victims and their families is politically untouchable. Already, the education department, for example, has awarded millions of dollars in grants to schools in the New York City area and northern Virginia, none of which were actually harmed in the terrorist attacks. As House and Senate budget committees estimate that the coming year's surplus may be only $50 billion before Congress passes a stimulus package, deficit projections may be the only brakes on the new pattern of budget politics.

TeamBush's green eyeshades are pushing to prevent wartime emotions from overwhelming the surplus. Even on the $40 billion in emergency spending approved for disaster relief, Office of Management and Budget spokesman Chris Ullman predicts, "It's going to take a great deal of vigilance on our part to ensure the desire to spend is guided by the demonstrated need."

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