Bush Offers Plan to Kick-Start the Economy
MADELEINE BRAND, host:
This is DAY TO DAY. I'm Madeleine Brand at NPR West.
ALEX CHADWICK, host:
And I'm Alex Chadwick exploring rural Nevada from the town of Eureka. This town of about 500 people has its own opera house. And coming up, we'll be there for a musical conversation.
BRAND: But first to Washington, where President Bush announced today how he'd like to avoid a full-blown recession. His prescription to stimulate the economy: tax rebates and more.
President GEORGE W. BUSH: This growth package must be built on broad-based tax relief that will directly affect economic growth, and not the kind of spending projects that would have little immediate impact on our economy.
BRAND: One plan being considered could put up to $800 into the hands of individual taxpayers and $1,600 for couples. But it all depends on what Congress and the president can agree on.
And joining us now from Capitol Hill is NPR's Brian Naylor.
Hi, Brian. And can you give us the details of the president's plan today?
BRIAN NAYLOR: Well, the president didn't get too deep into the weeds, as they say, here. There weren't a whole lot of specifics other than his guidelines, some of which we heard there. It should be quick and temporary. It should include broad-based tax relief. And it should, as he said, bolster both business investment and consumer spending. He also said it should be a big enough package to have an impact on the economy. And that meant that it should be about the size of one percent of the nation's gross domestic product, which, they're saying, adds up to about $145 billion. And that's at the upper end of what congressional leaders have been talking about.
Madeleine, he also said there were a number of things the package shouldn't contain, and specifically new spending programs or any new tax increases.
BRAND: Now, Senate Majority Leader Harry Reid seemed a little irritated yesterday that the president decided to go public with his plan before hammering out all the details of an agreement with congressional leaders. So what does that say to you in terms of the ability of the two sides to work together?
NAYLOR: Well, you know, Madeleine, I think maybe Reid got up on the wrong side of the bed yesterday, because there's been an awful lot of meetings back and forth between the Democratic and the Republican leaders, an awful lot of talk of bipartisanship, an unusual amount, having covered Congress these past many years.
Maybe it won't last, but Democrats, you know, by and large seem to be getting pretty much what they want out of this. They want it targeted to low and middle-income Americans, and they've said that some business tax relief is appropriate. There's been some criticism that, you know, the income tax rebates won't do much to help those at the very lowest end of the economic scale because they don't pay much in income taxes.
And I think there might be some grumbling about the president's insistence there'd be no new spending programs because - excuse me - some Democrats are pushing for money to be, you know, spent on infrastructure repairs, helping out states that have bridge and highway programs underway. The president seems to be ruling that out. So there could be a little bit of pushback from Democrats over that. But by and large I think they'll be pretty happy with what he said this morning.
BRAND: Now, what about this idea about making the 2001 tax cuts permanent?
NAYLOR: Well, that's, you know, that is one of the president's longstanding wishes, and it's something that the Republicans in Congress would like very much to do as well. Unfortunately, you know, the wind behind that - the wind that was taken out of that sale a little bit yesterday by the Fed Chairman Ben Bernanke's comments, saying that basically, you know, what we need to do is help the economy now in the short-term.
Extending tax cuts that don't expire until the end of 2010 isn't going to do anything for the short-term health of the economy. But there is a lot of support among Republicans for extending those tax cuts - among Democrats, that is, though - it's a nonstarter. And frankly, I think the president's going to have a tough time convincing Democrats to change their tune on that.
BRAND: Hmm. Well, you know, the Dow dropped some 300 or so points yesterday. Stocks dropped today again after the president announced his plan. So is the feeling on Wall Street that Washington is just acting too late now?
NAYLOR: Well, I think so. I think some people are saying that this should have come last year. But I don't think the, you know, full parameters of this economic downturn were apparent to everyone. Everyone saw the subprime mortgage crisis, certainly. But insofar as the decline in the Dow since the beginning of the year and some of the other problems that have become manifest, it's kind of snuck up, I think, on some lawmakers. Having said that, you know, I think there is a lot of momentum here. Congress wants to act and they say they're going to do something in the next - or they could act in 30 days. And I think that would certainly help.
BRAND: NPR's Brian Naylor joining us from the Capitol, thank you.
NAYLOR: You're welcome.
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