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Democrat Assails Bush on Economy
ALISON MITCHELL . NY Times . 5 january 2002

Senate Majority Leader Tom Daschle today began an election-year drive by Democrats to portray President Bush and other Republicans as fiscally irresponsible.

WASHINGTON, Jan. 4 — Senator Tom Daschle, the capital's most prominent Democrat, accused President Bush and the Republicans today of causing the "most dramatic fiscal deterioration in our nation's history" when they pushed through a major tax cut last year.

Mr. Daschle praised Mr. Bush repeatedly for his leadership in the war effort. But using pointed language in his speech to set out the Democrats' election-year stance on the economy, he said that domestic policy was "being written by a wing of the Republican Party that isn't interested in fiscal discipline." He added, "They have one unchanging, unyielding solution they offer for every problem: tax cuts that go disproportionately to the most affluent."

He said the $1.35 trillion, 10-year tax reduction that was the centerpiece of Mr. Bush's domestic program had led to dwindling surpluses, high long-term interest rates and an erosion of investor confidence.

"So not only did the tax cut fail to prevent a recession, as its supporters said it would," Mr. Daschle said, "it probably made the recession worse."

The speech by Mr. Daschle, the Senate majority leader from South Dakota, was the opening shot in what is likely to be a fierce election-year struggle over the weak economy. It came just weeks after partisan strife stalled economic stimulus legislation. And with Mr. Daschle considered a potential presidential contender, the address might also be a first salvo in the 2004 campaign.

Mr. Bush plans to travel to California and Oregon this weekend and use his Saturday radio address to promote his own economic stimulus measure — a mix of large business tax cuts, benefits for the unemployed and an accelerated reduction in income taxes.

In a sign of the importance placed on the debate, the White House brought out one of Mr. Bush's most influential advisers, Karen P. Hughes, to respond. A chorus of high- ranking Republicans in Congress also shot back, with a barrage of accusations that Mr. Daschle wanted to raise taxes by repealing tax cuts.

Ms. Hughes said Mr. Daschle "seems to be implying that tax increases might be necessary." She said, "Nothing could be worse for workers who want to keep their jobs than to increase taxes at a time when our economy, we hope, is just beginning to recover."

The office of the minority leader, Senator Trent Lott of Mississippi, provided a "glossary" for understanding Mr. Daschle's speech, titled "Senator Daschle's Economic Speech for Dummies." It said that when Mr. Daschle spoke of restoring "fiscal discipline" he really meant he favored raising taxes.

And Speaker J. Dennis Hastert, Republican of Illinois, said, "Perhaps the most important thing the Congress did last year to promote economic security was to pass the president's tax relief proposal." He added, "Senator Daschle voted against that proposal and now he seems to indicate that he wants to repeal it."

With Democrats deeply divided over whether to push to repeal or delay part of the tax cut, Mr. Daschle was silent on the issue. He sought to put Democrats on record in favor of "tax cuts that work."

"We want to make sure that any tax cuts we pass don't threaten Social Security or Medicare reserves, crowd out other critical investments, or drive us deeper into debt," he said.

Mr. Daschle tried to dispel the idea that the Sept. 11 attacks and the war on terrorism were the main causes of returning federal deficits. "Sept. 11 and the war aren't the only reasons the surplus is nearly gone," he said. "They're not even the biggest reasons. The biggest reason is the tax cut."

At the heart of Mr. Daschle's speech was an effort to contrast Mr. Bush's economic policies with those of former President Bill Clinton and to tie Democrats to the prosperity of the last decade. He was flanked by a former Clinton treasury secretary, Robert E. Rubin, and a onetime Clinton budget director and chief of staff, Leon E. Panetta, who is board chairman of the Center for National Policy, the site of the speech.

"In 1993," Mr. Daschle said, speaking of Mr. Clinton's first year in office, "our economy was saddled with a record $290 billion deficit, and that deficit was projected to grow substantially for years. By 2000 not only was the deficit gone, we had a record $236 billion surplus, and that surplus was expected to increase dramatically for years."

Careful not to attack Mr. Bush by name, he said that when the recession started in March, "Republicans chose exactly the wrong solution" and pushed through the $1.35 trillion 10-year tax cut. Mr. Daschle said supporters of the tax cut had been "certain we could do everything" — reduce taxes, increase spending, protect the federal retirement programs and pay off debt.

"What we got instead," he said, "was the most dramatic fiscal deterioration in our nation's history."

Mr. Daschle proposed two ideas to spur economic stimulus talks — a one-year business payroll tax credit and a new business depreciation schedule to encourage companies to replace equipment and technology this year. The proposal would allow companies to write off 40 percent of new investments for six months and then 20 percent for the next six months. The administration favors write-offs of 30 percent a year for three years.

More broadly, Mr. Daschle endorsed a "balanced national energy plan" that relies more on conservation than does Mr. Bush's to increase production. And he pledged an early Senate vote this year on giving Mr. Bush expanded trade negotiating power. He said approval of the trade measure should be tied to a package of aid for displaced workers.

Ms. Hughes said that much of the Daschle plan sounded like Mr. Bush's own calls for an energy policy and for trade negotiating authority. She said she hoped Mr. Daschle's speech was an acknowledgment "that his posture at the end of the year in obstructing some of this important legislation was wrong."