Senate leader says measures to stimulate economy dead

WASHINGTON -- The economic stimulus bill that President Bush says will hasten recovery from recession appears dead in the Senate and will probably be shelved, Senate Majority Leader Tom Daschle said Tuesday.

Daschle, D-S.D., said neither Republicans nor Democrats will have the 60 votes necessary to win approval of their competing measures -- and that the Senate will take up other business today.

"It's with great regret I will pull the bill tomorrow," Daschle told reporters Tuesday.

Daschle's comments would seem to seal the doom of legislation President Bush has been pushing since October to boost an economy that began a downturn in March and was rocked again by the Sept. 11 terror attacks.

The House twice passed economic stimulus measures last year, but both foundered in the Senate. Daschle tried in January to resurrect the issue with a bare-bones package focused on a few popular items, but Republicans sought to attach bigger tax cuts they said would spur growth.

Daschle blamed the GOP for trying to "score political points" by offering these tax cuts instead of working to compromise. Republicans said it was the Democrats who would not bend.

"I'm wondering if they would really like to have a genuine compromise," said Sen. Charles Grassley of Iowa, ranking Republican on the Senate Finance Committee.

The Senate is scheduled to vote today on whether to end debate on the stimulus plan, which would require 60 votes. Neither side expects that threshold to be reached.

Signs recession ending

Earlier Tuesday, Treasury Secretary Paul O'Neill told the House Ways and Means Committee the U.S. economy is showing signs that the recession is ending and could return to growth rates as high as 3.5 percent by the end of 2002 "if we are able to pass still-needed economic security legislation."

"We see more and more signs every day indicating that the seeds for a recovery are there, and only need nourishing to speed the process of putting Americans back to work," O'Neill said.

O'Neill also said the 10-year, $1.35 trillion tax cut enacted last year helped make the recession a shallow one and that the tax relief will continue to help the economy recover and government return to its budget surplus.

"The focus must be on restoring growth. Surpluses will then follow naturally," O'Neill said.

Democrats, however, said the president's wish to make that tax cut permanent -- it will expire at the end of 2010 under current law -- would primarily benefit wealthier taxpayers while siphoning away resources needed for other priorities.

"Why does the president give wealthy individuals priority?" asked Rep. Fortney "Pete" Stark, D-Calif.

Without the bill, the Bush administration predicted in releasing its budget for the 12 months starting Oct. 1 that "it will mean fewer jobs, smaller growth in incomes and smaller budget surpluses." Even so, many economists, including Federal Reserve Chairman Alan Greenspan, say a stimulus bill is less critical now that the recession is appears to be ending.

Some House Republican conservatives want to turn stalemate on stimulus into a balanced budget for the fiscal year that begins in 2003. The $77 billion earmarked in Bush's budget for the stimulus measure would bring the plan within $4 billion of balance, said Rep. John Shadegg, R-Ariz.