Congress and the Bush Administration are moving swiftly on a stimulus package to spark a slowing economy. I have been encouraged by the spirit of bipartisanship exhibited in working toward agreement on a plan to recharge the economy and avert a recession.
The package would provide cash rebates for individuals and working couples who pay income taxes. Additional funds would be provided to families with children. The plan would also include incentives to help businesses create jobs, purchase new equipment and make other capital improvements. The details about exact rebate amounts have not yet been worked out.
The chairman and ranking minority member of the Senate Finance Committee have already signaled a willingness to work together and mark up the stimulus package next week. The House of Representatives is also expected to act in short order.
NO NEED TO PANIC
The U.S. has experienced a record 52 consecutive months of impressive growth and job creation, but inevitably, the cyclical nature of our free market system tells us those conditions are subject to change. While the economy continues to expand, problems in the housing industry, tighter credit rules, and higher energy costs have been factors in slowing the rate of growth. There is no reason to hit the panic button. The fundamentals of our economy remain strong, and I am hopeful that our work in Washington will provide the stimulus to get things back on track.
The Federal Reserve Board lowered interest rates last week by three-quarters of a percentage point. That step could help ease investor and consumer concerns and complement the tax incentive package soon to be on its way to American families and businesses. The stimulus plan would be a shot in the arm designed to provide an immediate impact. It is important that these provisions contain rebates and incentives with enough punch to help families hit by higher energy costs and other expenses as well as provide businesses with an infusion of capital to continue expansion and job creation efforts.
TAX RELIEF KEY TO GROWTH
As Congress advances this growth package we should also be mindful of the importance of making permanent the tax relief provisions enacted in 2001 and 2003. These tax cuts are set to expire in less than three years. Reductions in the marriage penalty, expansion of the child tax credit, creation of the 10 percent tax bracket, repeal of the death tax, and reduced rates on capital gains and dividends have helped fuel strong economic gains. Those provisions are set to expire in 2010. Taking away those tax advantages would amount to a tax increase and could prompt a downturn in the economy.
In the meantime, President Bush and members of Congress in both parties recognize that this economic stimulus plan has the potential to re-accelerate the economy and that we must move quickly for it to be effective. The swift bipartisan agreement reflects that sense of urgency.