GOP Seeks Social Security Tax Breaks
By: The Associated Press
The New York Times,
November 28, 2001
Congressional leaders left a White House meeting
Wednesday promising to do what they can to reach agreement on an economic
revival plan. Both sides said they were open to a proposal giving workers
and employers a one-month holiday from Social Security taxes.
``The economy needs some boost,'' said Senate
Minority Leader Trent Lott, R-Miss. ``We're going to find a way to do that
Lott was joined at the White House microphones by
House Speaker Dennis Hastert, R-Ill., Senate Majority Leader Tom Daschle,
D-S.D., and House Minority Leader Richard Gephardt, D-Mo. The leaders,
after meeting with President Bush, said they were still divided over how
to boost the economy but committed to breaking the deadlock as soon as
A senior administration official, speaking on
condition of anonymity, signaled that the president would agree to some
sort of Social Security tax holiday, calling the proposal first suggested
by Sen. Pete Domenici, R-N.M., a positive effort to find middle ground.
White House spokesman Ari Fleischer called it ``an interesting idea.''
Democrats have said they are open to negotiations and
would consider the Domenici proposal, but only if a $15 billion package of
homeland security spending items be made part of the talks. Republicans
have blocked a Democratic package including the items.
Daschle, showing a willingness to bend, said he would
consider adding the security spending to the Department of Defense budget
-- removing the issue from the economic stimulus debate. Daschle praised
Domenici for offering the Social Security tax holiday idea but said he was
concerned that the tax cuts would takes months to implement.
``If that is the case, I think it lessens our
enthusiasm,'' Daschle said.
Replied Lott: ``It can be done, we think, quickly.''
Daschle said there were still substantial differences
between Republicans and Democrats on the stimulus plan. ``We are committed
to finding a way'' to close the gaps, he said.
Afterward, Lott said Daschle would be blamed if an
agreement isn't reached. ``If we can't get a stimulus bill, it's going to
be at the feet of the Senator Daschle and the Senate,'' Lott told CNN.
Fleischer sought to put the onus on the Democratic-led Senate, not Bush,
to break the stalemate.
``This is more urgent. The nation is now in
recession,'' the presidential spokesman said. ``The Senate's message to
unemployed Americans needs to be, `We are here to help.' Not, `We are here
to go home.'''
A tax holiday would give workers and employers a
one-month break from the 6.2 percent payroll tax that each pays into the
Social Security Trust Fund. Self-employed people would get to keep the
entire 12.4 percent for a month.
To prevent the already-threatened Social Security
fund from losing money, the cost of the holiday -- about $43 billion if
done in January -- would be replenished with a transfer from general tax
Domenici said a worker earning $40,000 a year would
keep $207 more in earnings; a self-employed contractor would see a $413
increase in pay. Employers would also get infusions of cash.
``I have not seen a stimulus package that is
better,'' said Domenici, ranking Republican on the Budget Committee.
The holiday proposal, part of a revised $100 billion
stimulus package outlined Tuesday by GOP leaders, would essentially
replace rebate checks of up to $600 for lower-income workers that were
part of earlier versions.
Otherwise, the GOP plan contains many familiar items:
reduction of the 27 percent tax bracket to 25 percent in 2002, instead of
waiting until 2006; repeal of the corporate alternative minimum tax; an
immediate 20 percent business depreciation write-off for three years; a
13-week extension of unemployment benefits; and $5 billion in grants that
states could use to help the jobless pay health insurance premiums.
There were no signs that the latest GOP offer would
bring Democrats and Republicans closer to a deal. In fact, the two sides
spent much of Tuesday trading shots over which was being obstructionist.
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