Greenspan doubts effectiveness of stimulus package

By Curt Anderson

Associated Press

WASHINGTON – The Senate opened debate on a scaled-back economic stimulus package Thursday, 10 months after the nation’s recession began and with fresh evidence from Federal Reserve Chairman Alan Greenspan that the measure may not be necessary.

Senate Majority Leader Tom Daschle, D-S.D., said his proposal, combining common elements of previous Democratic and Republican bills into a $69 billion stimulus package for 2002, was an effort to break a months-long stalemate on how to boost the recession-battered economy.

While the debate was unfolding, Greenspan told the Senate Budget Committee that he is “conflicted” about whether the economy still needed a boost from the federal government. Greenspan said a stimulus package could have done much good if enacted last fall but was less crucial now.

“I don’t think it is critically important to do,” Greenspan said. “I think the economy will recover in any event.”

Daschle, who has endured fierce Republican criticism for the Senate’s failure to enact two House-passed stimulus bills, said it appeared the GOP was trying to “slow-walk” his attempt at compromise. President Bush, who gives his State of the Union address to Congress next week, is expected to ask for a roughly $90 billion package pattered after the second House bill.

“If they’re going to criticize me for not getting something done, they’ve got to cooperate on the time that we have to do something,” Daschle said of the Republicans. “I think that it is important for us to move on.”

Republicans denied they were trying to block the Democratic bill but objected to a Daschle request to limit amendments, which could have speeded progress. GOP leaders argued that Daschle’s measure was not comprehensive enough.

“You can’t call this a stimulus package,” said Sen. Don Nickles of Oklahoma, the assistant Republican leader. “This might be a little political cover, to say we tried to do something.”

The Daschle bill would extend unemployment benefits by 13 weeks, provide a new round of rebate checks of up to $600 aimed at lower-income workers, allow businesses a one-year, 30 percent depreciation writeoff for new investments and boost the federal match for what states pay for Medicaid.

Notwithstanding Greenspan’s comments, Bush will continue to put pressure on the Democratic-led Senate to act on broader legislation that would also accelerate income tax cuts set to take effect in 2004, give businesses more generous investment writeoffs and provide the jobless with a tax credit to afford health insurance.

“There are still clouds on the horizon … and the president prefers to err on the side of creating jobs,” said White House spokesman Ari Fleischer.

Many Democrats also said it was important to do something.

“Most businesses believe we are not out of the woods,” said Senate Finance Committee Chairman Max Baucus, D-Mont.

Economists generally peg March as the beginning of the recession, which was made worse by the Sept. 11 terror attacks. Bush proposed a stimulus package in October and the GOP-led House has acted on two different packages, but the partisan differences prevented the Senate from following suit before recessing at the end of 2001.