Bush Rejects Democrats’ Tax Credit Proposal

President Bush on Friday firmly turned aside the latest economic stimulus plan proposed by the Democrats--a tax credit for working Americans combined with higher taxes for the wealthy--and argued that the nation was no longer in a recession.

Speaking with reporters in the stately gardens of Villa Taverna, the U.S. ambassador’s residence in Rome, before flying to the Netherlands, Bush said he felt under no pressure--one year before Election Day--to produce an economic stimulus package. He suggested that with interest rates at “historic lows,” the economy could very well revive on its own.

The President said also that his Administration would most likely propose a health care plan sometime before the election, and he criticized the “prohibitive costs” of some of the plans already under debate.

The President expressed continued willingness to help the Soviet Union as it struggles through its economic problems this winter by providing credits for food purchases, although details of such a plan have not been completed.

Bush said also that he would, as expected, veto a bill intended to bypass the Administration’s so-called “gag rule” that blocks family planning clinics that accept federal funds from engaging in abortion counseling.

The President, whose official agenda was focused on a summit of the North Atlantic Treaty Organization in Rome, assumed a defensive stance in his encounter with reporters as he tried to bat away domestic issues that seem to have followed him to Europe.

The summit conference on the reorientation of NATO was the centerpiece of the four-day European trip, which ends today, after dinner Friday night with Queen Beatrix and a meeting this morning with leaders of the European Community. But in the 35-minute news conference, the summit was given short shrift, an indication of the increasing public focus on domestic economic problems and their political ramifications.

Speaking over the sounds of Roman traffic in the background, Bush responded testily to questions about his extensive foreign travels, which critics contend have prevented him from addressing domestic problems adequately.

Bush declared that he would not “neglect my (national security) responsibilities as President because of some carping” by critics of his foreign travel.

“You’re not going to see me stay put. I am not going to forsake my responsibilities,” he said. “People are hurting there (in America) and they need help. But they don’t need the President to forswear his obligations for national security and foreign affairs.”

On Tuesday evening, Bush canceled plans to visit Asia in late November, saying he wanted to remain in Washington while Congress was in session. The Asia trip would have been his third overseas tour in five weeks.

The decision to scuttle the trip appeared to be a direct response to increasing criticism of his foreign travel. That criticism was exemplified by Rep. Vic Fazio (D-West Sacramento), who unfurled in the House of Representatives a T-shirt bearing the words “George Bush went to Rome--and all I got was this lousy recession.”

At Friday’s news conference, Bush said that America’s relations with Japan--which was to have been the first scheduled stop on the canceled trip--were “terribly important domestically.” He cited jobs in Michigan, the high-tech industry and the agriculture belt as examples of American economic sectors affected by U.S. relations with Japan.

“To neglect that relationship and be driven away from it by people holding up silly T-shirts is ridiculous,” Bush said, referring to Fazio’s theatrics. He promised to visit Japan before next year’s elections.

The latest economic stimulus proposal was offered Thursday by Rep. Dan Rostenkowski (D-Ill.), chairman of the tax-writing House Ways and Means Committee. He called for a temporary $200 annual tax credit for all Americans subject to Social Security payroll taxes.

Rostenkowski proposed to pay for the tax credits by creating a 35% tax bracket--up from the current maximum of 28%--for individuals earning more than $85,000 a year, and by imposing a 10% surcharge on incomes greater than $1 million.

“I’m not interested in higher tax cuts on the American people,” Bush said. (The White House later said that the President had meant to say “higher tax increases.”)

“I don’t think that’s too swift an idea,” Bush added.

Interest rates, he said, “are in good shape,” and “soon they’re going to kick in and stimulate this economy and renew confidence.” The Federal Reserve Board, responding to signs of continued economic weakness, has moved repeatedly to force short-term interest rates lower.

The President said that his reluctance to support a tax increase was supported by voters, as suggested by the election results last Tuesday in New Jersey. Republicans there swept into the majority in the state Senate and Assembly in the wake of widespread opposition to tax increases pushed by Democratic Gov. James J. Florio.

“People sorted out the priorities that we’ve been talking about here: Hey, do you want me to go out and raise taxes on the American people? And over and over again, wham, the answer was no,” he said.

On the other hand, the results in the U.S. Senate race in Pennsylvania, where Sen. Harris Wofford trounced Bush ally and former U.S. Atty. Gen. Dick Thornburgh, were read as signs of deep concern about the state of the economy and Bush’s response to it.

The President denounced what he characterized as a mood of “gloom and doom out of the politicians” regarding the health of the economy. “I’m not prepared to say we’re in recession when you have a growth, a third-quarter growth, of 2.4%,” he said, referring to the latest report on economic performance during the July-September quarter.

Bush’s vow to veto the bill that would bypass the so-called abortion counseling “gag rule” at federally funded family planning clinics came a day after the Senate sent the legislation to his desk on a veto-proof 73-24 vote. House passage of the bill a day earlier fell 18 votes short of the two-thirds majority needed for an override.

Before he left Rome, Bush met for an hour with Pope John Paul II at the Vatican.

“We had a major tour d’horizon, touching on all the trouble spots,” Bush told a cheering group of American seminarians after his audience.