Economic Stimulus in Works

House Republican leaders on Wednesday began sketching out an economic plan heavy on growth-stimulating ideas such as a reduction in capital gains taxes. The White House focused on a new round of tax rebates, an idea backed by many Democrats.

Under a two-pronged plan floated by the White House, taxpayers who did not qualify for rebates earlier in the year would receive checks for $300 or $600, according to officials who spoke on condition of anonymity. Those who received rebates already this year would receive new checks for half the amount of their previous ones.

In the House, Majority Leader Dick Armey (R-Texas), said the GOP package could cost well over the $75-billion upper limit suggested by President Bush and would probably be dominated by a blend of temporary and permanent tax cuts, rather than the spending programs many Democrats want.

Armey and Rep. Rob Portman (R-Ohio), a key Bush ally on Capitol Hill, said the emerging package could include a cut in the 20% long-term capital gains rate for investments made after the Sept. 11 terrorist attacks. That would discourage an immediate broad stock sell-off that would drive the market lower.

Other key House GOP items include a repeal of the corporate alternative minimum tax--also favored by the president--and a new expensing provision allowing businesses to write off as much as 30% of investments over a three-year period.

Another proposal would let businesses deduct current losses against past profits up to five years.

Rep. William M. Thomas (R-Bakersfield), chairman of the House Ways and Means Committee, said the panel could begin assembling the measure as early as Friday.