Snow Favors Tax Cut For 'Soggy' Economy
Treasury Chief Discounts Deficits
By Eric Pianin
Washington Post Staff Writer
Monday, May 12, 2003; Page A04
As the Senate prepares to debate a tax cut proposal considerably less than is being sought by President Bush, Treasury Secretary John W. Snow yesterday dismissed Democratic concerns about mounting deficits and said the administration's plan is just what is needed to fix a "soggy" economy.
Snow, making the rounds of the Sunday TV talk shows, told Fox News, "The president wants to create jobs now, and the best way to do that is to reduce taxes now, taxes for households and taxes for small businesses that are the engines of creating jobs."
Asked whether the administration would settle for less than the $550 billion package passed by the House, Snow replied, "We're not going to be satisfied unless we have the biggest number we can get that creates the most jobs. That's what we're going for."
The Republican-controlled House on Friday pushed through an 11-year, $550 billion tax cut that includes big reductions for corporate dividends and capital gains, setting the stage for a difficult and uncertain fight in the Senate over the president's top domestic priority.
The Senate is scheduled to begin debate today on a GOP-backed $421 billion tax cut proposal with offsets to bring it down to the Senate's self-imposed $350 billion ceiling for the package. Several Senate Republicans have described the bill as essentially a bargaining chip, although many Democrats say they support no more than $150 billion in tax relief.
Sen. Mary Landrieu (D-La.) said that proposals for reviving a stagnant economy need to go another way and that the Republicans' continued reliance on "trickle-down" economics, providing the wealthiest Americans with the biggest tax break, is "hogwash."
"We tried that and it didn't work," Landrieu said on ABC's "This Week" program. "Americans want a president that will focus on tax relief as well as focusing on keeping America strong in the long run by keeping Social Security and education investments."
"Our mayors and governors, regardless of whether they're Democrats or Republicans, are hurting," she added. "They're going to have to raise taxes at a local level unless the president changes his direction."
Snow argued that the best tonic for a weak economy, high unemployment and a slumping stock market is a massive tax cut. Bush originally proposed a $726 billion 10-year tax reduction. During an appearance on NBC's "Meet the Press," Snow described current conditions this way: "The economy is in a recovery, but it's not a robust recovery. It is a sort of weak -- soggy is a word I sometimes use -- recovery. Growth rates last quarter, 1.6 percent. You know, we should be growing at 3.5 to 4 percent."
Pressed to justify administration proposals for the third tax reduction in as many years while the budget has gone from a $281 billion surplus to a $246 billion deficit, Snow replied: "Deficits are not all equal. We need to distinguish here. . . . Today we have underemployment" and a greater need for deficit spending.