Boosting the Economy
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KWAME HOLMAN: The President used his second visit to New York City since September 11 to lay out his view of the need for economic stimulus. He did so after meeting with executives from major business sectors.
PRESIDENT GEORGE W. BUSH: We all believe that the underpinnings are there for economic recovery, and we all must do our part. The Administration believes that we ought to have 60 to 75 billion more dollars of stimulus to encourage consumer confidence, to enhance business investment, as well as to take care of displaced workers. I have shared that with the business leaders here. They understand that there is a role for the federal government- – a strong and active role– and I assured them it’s a role we intend to play. I know there are people hurting in America, there are people who have lost their jobs. But as I assured these leaders, that our government will do everything we can to get our economy growing, to make it as strong as possible.
KWAME HOLMAN: The President said he’d leave the details of a stimulus package to Congress. In the Senate Finance Committee today, Chairman Max Baucus ticked off his hopes stimulus legislation to Treasury Secretary Paul O’Neill.
MAX BAUCUS: If we do need a stimulus package, we need to focus on measures that can be implemented immediately. That is, true stimulus — up-front actions that do have a direct, positive effect on the economy. And we need to keep the long- term health of our economy in mind — that is, not delve into budget increases and… That would result in increases in deficits or increases in long-term rates — very important to us. And we need to provide a stimulus that actually will jump start weak sectors of the economy. It’s important to keep that in mind. The third basic principle is we must act together.
KWAME HOLMAN: Secretary O’Neill noted that Congress already has passed a rescue package for those affected by the September 11 attacks, including the recently enacted aid to the airline industry.
SECRETARY O’NEILL: With the actions already taken, about $50 billion of spending has already been put into motion. The President believes, and there seems to be broad bipartisan agreement in the Congress, that we should take care not to put upward pressure on long-term interest rates. It is clear that the components of the stimulus package are just important as its size. I look forward to working with you to ensure that the package addresses three priorities: Restoring consumer demand, supporting business investment, and helping those affected by the September 11 attacks.
KWAME HOLMAN: Finance Committee Member Kent Conrad, who also chairs the Budget Committee, said he was worried about evaporating budget surpluses.
SEN. KENT CONRAD: The Budget Committees of the House and the Senate will be announcing later today that we see now that we will have a unified surplus next year of $52 billion, down from what was estimated earlier in the year of $300 billion, and that’s before any stimulus package, and that’s before any additional spending on defense, and that’s before budget resolution policies that have not yet been enacted this year. So we can see that we are headed for some fiscal challenge. And that means we’ll be taking some $160 billion of payroll taxes, of Medicare and Social Security, and using them to pay for other government programs, something I would strongly prefer not to do. But we recognize our country has been the victims of a sneak attack, and on top of that, a serious weakening in the economy. And we simply must respond.
KWAME HOLMAN: But two Finance Committee Republicans, Gramm of Texas and Thompson of Tennessee, said short-term aid to individuals and various sectors does not constitute true stimulus for the overall economy.
SEN. PHIL GRAMM: It’s all tribute and no stimulus. These are all the same old ideas that were rejected in the last tax package, primarily giving tax cuts to people who do not pay taxes. It looks to me as if we’re moving toward a package, which I’m not going to vote for. Now, if we want to talk about how to stimulate the economy and do it without exacerbating all of our other problems, to me the obvious starting point is to make the tax cut permanent
SPOKESMAN: I think everybody realizes that in terms of these infrastructure projects and a lot of the other spending that we’re doing that that usually kicks in eighteen months or two years after the fact. It has very little immediate benefit. And then I look at your priorities and you talk about the consumer, which obviously we’re all concerned about and they’re the ones who vote. I mean, you talk about consumer demand as being your leader, and business investment, and then individuals who suffered from the attack. We obviously need some kind of compassion package. But it has little or absolutely nothing to do with stimulus.
KWAME HOLMAN: Meanwhile today, Federal Reserve Board Chairman Alan Greenspan continued his series of talks with Congressional leaders about ways to boost the economy. And Senate Majority Leader Tom Daschle said, while there is urgent need for a multi-billion- dollar stimulus package, it likely will be several weeks before such legislation is finalized.