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Pro and Con: President Bush's Economic Stimulus Plan - 2003-01-09


VOA’s David Borgida hosts a pro and con segment on President Bush’s economic stimulus plan with James Dyke of the Republican National Committee and Peter Orszag, a Senior Fellow at the Brookings Institution

MR. BORGIDA
And now to our Pro and Con discussion, one of my favorite segments in NewsLine, we take an in-depth look at an important issue through the eyes of proponents and opponents. And today obviously the issue is the Bush economic plan.

And joining us to discuss this and support it, from the Republican National Committee, Jim Dyke. Thanks for joining us.

And opposing it, from the Brookings Institution here in Washington, Senior Fellow, Peter Orszag. Thank you both for joining us.

This is a no-holds-barred discussion, and no biting, kicking or scratching, but anything short of that is okay. I'm going to give Jim the first word here, Peter.

And Jim, as a representative of the Republican National Committee, give us the one-minute short version of why this is the best plan for America and beyond.

MR. DYKE
One of the important things is that it is for all Americans. We think it is important that Washington not pick winners and losers and decide who the right people and the wrong people are. This is a plan for all Americans, to promote consumer involvement in our economy, to promote investment, and to help unemployed workers who need help finding a job in the time while they're out there looking for a job.

And it is important to put the resources behind that, and let people keep more of their money. That is, I think, the fundamental difference between the way we view this process and this discussion as opposed to the way Democrats view this process. We fundamentally believe that it is the people's money and they ought to be able to keep more of their own money.

MR. BORGIDA
Peter Orszag, over at the Brookings Institution in downtown Washington, your take on the plan initially?

MR. ORSZAG
Basically, the problem here is that the plan wouldn't do much to get the economy moving in 2003, which is when we need help. By the administration's own estimates, from the Council of Economic Advisors, it would create only 190,000 jobs in 2003. That's nothing.

Furthermore, it is not really fair. For 50 percent of tax filers, the tax cut they would get is $100 or less. For two-thirds of tax filers, they would get less than $500.

Everyone may get a tax cut, but it ain't much, and therefore it doesn't really help the U.S. economy. And that has implications for the world economy, because other countries' economies depend on the health of the U.S. economy. If we don't have our ship in order, other countries won't either.

MR. DYKE
I would have to disagree with the numbers. I am not sure exactly where they came from.

MR. ORSZAG
They are coming from the Tax Policy Center, and I would welcome you to check them out.

MR. DYKE
I look forward to it. This is an important plan. An average family, a two-earner family of four, would get a $1,100 tax credit. Seniors would get about a $1,700 tax credit. The child income [tax credit] would be, in and of itself, a $400 instant rebate, plus the $600 on your tax return.

So, I would disagree. This does provide a strong short-term stimulus but, as well, outlines a plan for long-term growth. And you have to have both of those components. And really, there is no other plan out there under discussion right now.

MR. ORSZAG
Well, that is not true. The Democrats have a plan in the House. And again, by the administration's own estimates, 190,000 jobs in 2003, that's nothing. On who benefits and who doesn't from this plan, the administration is trotting out selective examples of hypothetical families that are benefited from it.

If you look at the population as a whole -- it is not even true for families with kids -- they are only counting married couples with two kids. If you look at, for example, heads of households that have children, 49 percent get less than $100 under this plan.

So, there are lots of different kinds of Americans that are trying to make their budgets add up in the current downturn, and picking out selective examples of families that happen to get a certain kind of tax cut isn't the right way to look at this.

MR. DYKE
I think the real problem here is Democrats want to pick selective Americans. And we think that is a bad idea. I think it is a bad policy. We think all Americans deserve to keep more of their own money. We think that that is good policy. We think it makes sense. We think it's fair.

We think that eliminating the double taxation on dividends, disproportionately paid by seniors, is unfair and ought to be eliminated -- on principle alone. So, we think this is a very balanced plan that will, again, create short-term stimulus and long-term stimulus, and doesn't allow people in Washington -- the House Democrats have put out some sort of plan; I'm not sure that all Democrats support it. We haven't heard from a lot of Democrats yet except for that they don't like the Bush plan, and they were saying that before the Bush plan actually came out.

MR. BORGIDA
Jim, that's precisely a point. And, Peter, I will throw this to you. It is clear you don't like the Bush economic plan. What plan do you like? And what are the key features of it?

MR. ORSZAG
I think the key thing that we need to do is to jumpstart the economy in 2003, and then get our fiscal house in order over the long term. This plan does neither of those. It doesn't get the economy moving in 2003, and it will cost at least $674 billion over the next 10 years, when we are already facing a large fiscal hole.

What we should be doing is getting the economy moving now, and then cleaning up our fiscal mess. And if we don't do that, if we don't clean up that fiscal mess which is looming out there over the next 10 years, other countries will pay the price. Because when we run huge budget deficits, it forces us to borrow a lot more from abroad.

MR. DYKE
That sounds pretty good, but it was real short on specifics. And, like I said, the Bush plan provides a strong short-term stimulus. And I couldn't agree more that you have to have some fiscal discipline. And one thing that the President has made abundantly clear that Congress can do is control Washington's spending.

If you want to have fiscal discipline, if you want to keep deficits down, Congress has to be responsible. They have to control their spending. And you combine that with tax relief, allowing Americans, all Americans, to keep more of their own money -- it's not Washington's money; it's families' money, it's seniors' money -- to keep more of their money, it is good economic policy.

MR. BORGIDA
Jim, how does this plan benefit our viewers out there, people who don't live in the United States, who wonder how this will affect the global economy?

MR. DYKE
Peter made a good point -- the U.S. economy does lead the world. And one of the things that was done over the past year was the passage of trade promotion authority, increasing our ability to create trade agreements with other nations. Trade is good for other countries.

It is good for the United States. And that is something that we are going to be working on. But creating a stronger domestic economy is good for the world economy.

MR. ORSZAG
Again, this is an administration whose rhetoric doesn't match its reality. This is an unaffordable permanent tax cut that won't do much to stimulate the economy in the short run. On trade, while trade promotion authority is great, this is the administration that has thrown up barriers to steel and other goods and hurt other countries through protectionist measures.

MR. DYKE
Peter was in the Clinton administration, and they had trouble passing trade promotion authority. I think passing trade promotion authority was an important first step. We're proud we got it done. We're going to work some more trade agreements.

And again, I just disagree with the fact that letting every American keep more of their own money isn't good policy. It made the recession that we had, the challenges that we faced in the recession, shorter and shallower. Economists have been clear on that. And we think it's good policy going forward.

MR. BORGIDA
Quickly, for the two of you, in about 20 seconds, what is going to happen in the next weeks and months ahead? There will be a lot of compromising on Capitol Hill. And quickly, please.

MR. DYKE
I think the first thing that has to happen is, again, Democrats have to put forward what they're for. There was a lot of talk about tax increases before the election. You haven't seen as much of that after the election, but it is not totally clear.

Peter is right -- there were some House Democrats that came out with a plan that they support, but you haven't heard anything from the Democratic presidential candidates; you hadn't heard anything from the Senate Democrats. So, I think the Democrats need to come forward and make clear what they're for.

MR. BORGIDA
Mr. Orszag, the same question to you, briefly, sir.

MR. ORSZAG
Democrats have put forward a plan. It's a much better plan than the administration has put forward. And I think that what we will see is that as the price tag for the administration's unaffordable package becomes clearer, it is not going to be passed.

MR. BORGIDA
Peter Orszag, over at the Brookings Institution here in Washington, D.C., a Senior Fellow there, and here in our Washington studio, Jim Dyke of the Republican National Committee, both of you, thanks for joining us.

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