2 Democratic Senators Call for More Tax Relief

Congressional Democrats, who have spent weeks battering President Bush over the stumbling economy, demonstrated their own case of nerves on the subject Sunday by suggesting the need for new tax cuts, including cuts of the until-now sacrosanct Social Security payroll tax.

In separate appearances on television talk shows, two key Democrats said that rising unemployment, falling production and a tanking stock market have become so troubling that the time may have come for another blast of growth-spurring cuts--the very economic medicine that Bush has been pushing.

“We may need additional tax cuts to give lift to this economy,” Senate Budget Committee Chairman Kent Conrad (D-N.D.) told “Fox News Sunday.” Asked what kinds he favored, Conrad suggested another income tax rebate like the one now being mailed to millions of U.S. taxpayers, or a reduction in the Social Security payroll tax.

In a similar vein, Sen. John F. Kerry (D-Mass.), a member of the Senate Finance Committee, told CBS’ “Face the Nation” that “I personally think you’ve got to be prepared to talk about additional tax cuts now.” Kerry said any new cut should go to the 29 million Americans who pay only Social Security payroll taxes and therefore are not benefiting from the recently passed 10-year, $1.3-trillion income tax cut.

Although Kerry appeared to back off his proposal almost as soon as he made it, analysts said the fact that Democrats would advance any new cuts illustrates how quickly fears about the economy are spreading. Party leaders have sharply criticized the president for his tax cut plan, saying it has favored the rich, has all but erased the overall budget surplus and has proved ineffective in reviving growth.

Analysts said Democrats’ focus on the payroll tax, even as they criticize Bush for threatening the Social Security surplus, indicates how much party leaders worry about the political fallout of an economic slowdown.

“Is there something inconsistent about calling for Social Security payroll tax cuts at the same time you’re screaming about your opponent spending the Social Security surplus? You betcha,” said Stan E. Collender, senior budget analyst with Fleischman-Hillard Inc., a Washington-based public affairs firm. “But inconsistency doesn’t trouble most politicians, especially when it comes to taxes and the budget.”

As if to demonstrate Collender’s point, key Republicans offered their own inconsistencies Sunday.

Less than 36 hours after the president’s budget chief conceded that Washington probably will have to spend $9 billion or more of the Social Security surplus on routine costs this fiscal year, which ends this month, Republican congressional leaders said the GOP has no intention of using the surplus for such costs.

“We will not” touch the Social Security surplus, House Majority Leader Dick Armey of Texas told NBC’s “Meet the Press.” “We made a commitment to that. This is a very heartfelt commitment.” Senate Minority Leader Trent Lott of Mississippi made similar remarks on ABC’s “This Week.”

GOP congressional leaders again touted a capital-gains tax cut to help rekindle growth, and there were reports Sunday that Bush, who initially was reluctant to embrace the idea, is warming to it.

Unless the economy begins showing signs of improvement, both parties are likely to be under mounting pressure to act.

Analysts said Democrats may press for a Social Security payroll tax cut, which would go to the lowest-income workers in the country, as a measure of fighting the GOP proposal for a capital gains tax cut, which would go largely to the wealthy. However, party leaders apparently have yet to embrace the idea.

Senate Majority Leader Tom Daschle (D-S.D.), appearing on ABC, steadfastly refused to offer any proposals for fixing the economy, saying it is up to the president to act first.