Faced with the possibility of an economic slowdown or outright recession, Congressional leaders are considering legislation to spur economic growth. There's no specific plan yet, but Representative Barney Frank is leading the effort to come up with a proposal:
"We're looking at a variety of things, but it's got to have some reach," Sen. Charles Schumer of New York said yesterday, in discussing the Senate's effort for the first time. He called for steps that will give lower- and middle-income consumers more confidence and more money to spend. He declined to discuss details.
House Democrats may be more constrained by budget rules that require tax cuts to be offset by tax increases or spending cuts, a barrier to crafting a package. But there, too, leading lawmakers are considering both tax cuts and new spending.
"If you are going to do something -- and you may very well have to -- some tax relief may be a useful part of this, but aimed at middle-income and working people," said Rep. Barney Frank (D., Mass.), chairman of the Financial Services Committee, who is helping to assemble the House package. He also is weighing new federal programs to help states and local governments reduce the large inventories of unsold real estate that are hurting prices.
As chair of the committee of jurisdiction, Frank has his expertise in this area. He's shown a strong interest in housing this term, with a number of bills introduced to address the slow housing market. It's interesting to hear Democrats talk about a solution that features tax cuts, given their demonstrated preference for raising taxes.
The Democratic budget calls for higher marginal rates on single middle-income Americans, higher taxes on capital gains and dividends, elimination of state and local sales tax deduction, reduction of the child tax credit, a return of the marriage penalty, reimposition of the death tax, and numerous other tax increases. Ways and Means Committee Chairman Rangel--who probably speaks for a majority of House Democrats--wants to raise taxes by another trillion or so.
Rather than propose some targeted tax that's more likely to help some Democratic donor or small interest group, perhaps Congress can simply refrain from increasing taxes. After all, the first rule is 'do no harm.'