Stimulating Choice: Cut Corporate Taxes Or Boost Federal Spending

Compiled By John S. McClenahen Proposals from the economically conservative National Assn. of Manufacturers (NAM) and the liberal Economic Policy Institute (EPI) dramatically illustrate the conflicting counsel Congress and the Bush Administration are getting this week as they continue to work on a multi-item package designed to stimulate a flagging U.S. economy. NAM, which like EPI is Washington based, is urging, in addition to repealing the corporate alternative minimum tax and accelerating individual income-tax rate cuts, a five percentage point cut in the corporate tax rate. The business group argues that unlike other proposed tax law changes a tax-rate cut would give companies a choice of saving, investing, or using the extra money to reduce their debt. In contrast, EPI argues that a quick boost in government spending would have greater economic impact than a tax cut of an equal amount. EPI's proposal, with a first-year price of $137.8 billion, includes additional unemployment insurance, more money for school construction and renovation, and additional funds to ease the transition from welfare to work. Although they differ on the details, both NAM President Jerry J. Jasinowski and EPI President Jeff Faux want quick economic action. "I understand the concern of those who urge caution, but I don't believe we can afford to take a wait-and-see attitude about the economy," says Jasinowski. "This economic storm has been gathering for many months, and the events of Sept. 11 have brought matters to a crisis," states Faux.

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