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US Congress Will Probably Fail To Pass Tax Stimulus Bill

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

18 December 2001



In Washington, as negotiations between House and Senate to reach a compromise economic stimulus plan totter towards failure, Democrats and Republicans are getting ready to say that an agreement could have been reached if only the other side hadn't been so inflexible.

The economic stimulus debate in Washington has boiled down to two positions: The White House wants a reduction in the 27% tax rate to 25%, while Senate Majority Leader Tom Daschle is insisting that it should be cut to 26%. Neither plan would provide any kind of stimulus.

House Republicans and the White House yesterday sought support from moderate Democrats, sweetening some key provisions in an effort to pass a new version of a stimulus bill today or tomorrow. Even if that ploy is successful, the bill will probably die yet again in the Senate.

What we are seeing is a return to dogma-driven politics after a brief interlude of bi-partisan harmony brought about by the horrors of September 11th. Republicans have pushed tax cuts for businesses and individuals, but Democrats have stressed aid for the unemployed, including assistance with health insurance premiums, that Republicans regard as permanent expansions of government spending programs.

Personality conflicts such as the Democrats' dislike for Rep. Bill Thomas (R-Calif.), chairman of the Ways and Means Committee are another difficulty. "It is very, very, very difficult," complained Sen. John D. "Jay" Rockefeller IV (D-W. Va.), one of the three Senate negotiators. "Thomas talks between 80 to 90 percent of the time at our meetings."

If no stimulus package is approved before the holidays, both sides will be able to point to missed opportunities, misunderstandings and cold political calculations as the reason for failure.


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