US Senate Fails To Pass Stimulus Bill

by Mike Godfrey, Tax-News.com, New York

06 February 2002

President Bush's plea for economic stimulus legislation in last week's State of the Union address has fallen on deaf ears as far as the US Congress is concerned. The measure was included in the 2003 budget released on Monday, but leaders in the Senate yesterday admitted they could not agree on a bi-partisan approach to it, and plan to shelve it today.

One possible positive result of the failure to agree is that it will improve the administration's 2003 budget forecast, turning a projected $80 billion deficit into a $15 billion deficit, and producing a surplus in 2004. Some Republican strategists also noted that if the economy improves in time for November elections then the administration would not have to share credit with Democrats but instead could say last year's tax cut was responsible. "If the powers that be block a stimulus bill, then a balanced budget is within reach," said John Shadegg, an Arizona Republican leading a group of House conservatives.

Arriving back in Washington after after a visit to Pittsburgh, Bush told reporters he was "very disappointed" by the apparent demise of the stimulus bill. "I was just informed the Senate will not vote out a stimulus package," he said. "There's a lot of workers who hurt, and they need help. Our economy, while there's some good news, needs more stimulus."

The House of Representatives passed economic stimulus packages twice last year, but both foundered in the Senate. Majority Leader Thomas A. Daschle (D - S.D.) had made an effort to construct a stimulus bill which stood a chance of gaining Republican support, including just a few uncontroversial elements such as a $300 payment to low-income workers, extended unemployment benefits and a tax break designed to encourage business investment, but unruly senators from both sides have pelted the bill with amendments. Most failed, but when it seemed that a Republican amendment to repeal the estate tax permanently had enough votes to overcome procedural hurdles, Daschle announced he would move to shut off debate, which would require 60 votes, and if that failed, he would pull the bill off the floor.

"I don't think there's any question they don't want a stimulus package unless it's their stimulus package," Daschle said yesterday. "There is very little interest in working with us or negotiating some compromise." He added that "it is fair to say that there is a growing number of economists that question the stimulus."

Senate Minority Leader Trent Lott (R - Miss.) accused Daschle of starting the session on a partisan note. "The Daschle Democrats, in a cynical effort to score political points against this president, have chosen to fire a direct shot into a limping economy by killing the economic stimulus package," Lott said in a statement.

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