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Minnesota delegation split over Bush economic plan
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Rep. James Oberstar helped craft the House Democratic alternative to the GOP plan. It's a one year, $136 billion deal which includes a $300 per-person tax rebate, small-business tax incentives and the immediate funding of $15 billion in road, bridge, airport and other infrastructure improvements. (MPR Photo/Mark Zdechlik)
As the 108th Congress begins work, Republicans and Democrats are sharply divided over how to revive the economy. Democrats say President Bush is trying to cut taxes for the wealthy under the guise of an economic stimulus plan. Some Republicans are accusing Democrats of class warfare as they look ahead toward the next round of elections. The heated debate over the U.S. economy comes against the backdrop of escalating international tensions and a growing threat of war with Iraq.

Washington, D.C. — The Republican White House set the agenda for the Republican-controlled Congress with a tax-cutting economic stimulus proposal that's shaping up to be a major battle between the GOP and Democrats.

Minnesota's senior senator, Mark Dayton, says the Republican plan amounts to a tax cut for the wealthy, which would do little to bolster the economy and, instead, would add to the mounting national debt.

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Image Rep. Jim Ramstad

"It's not economic stimulus, it's economic senselessness," says Dayton.

The Bush approach, a nearly $700 billion, 10-year plan, would eliminate shareholder taxes on stock dividends and accelerate income tax cuts set to take effect in 2004 and 2006. Additionally the plan would increase the per-child tax credit and provide small businesses with new tax incentives.

Dayton is offering a counter proposal; he calls it his "Fair Tax Cut Plan." It would expand the lowest income tax bracket while freezing the top three brackets. It would not cut taxes on dividends.

Dayton says his proposal would cost half that of the president's and he says it would help average Americans, not the rich.

"I think we ought to focus the tax cut and there should be one, but one for people who are working, who are most middle-income families who are trying to make ends meet, and not give these bonanzas away to the very wealthy and then drive up the cost that we're going to have to pay for in future years," he said.

Dayton says he likes the administration's call for increasing the per-child tax credit and extending unemployment benefits.

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Image Sen. Mark Dayton

Dayton says he looks forward to working with his new Republican colleague, Sen. Norm Coleman. That desire to cooperate will immediately be put to the test on the issue of economic stimulus. Coleman supports the president's plan. However Coleman says he sees room for compromise and he notes that even with majorities in Congress, Republicans have little choice but to work with Democrats -- at least in the Senate, where the GOP does not have enough votes to stop a filibuster.

"It's not enough to have 50 votes; you need more than that. So if folks really want to get something done, they've got to be involved. And I would suspect that if the administration wants to get something, through they'll look at payroll tax issues. They'll look at a whole range of things that some of the Democrats have talked about and I'd say that's a good idea," Coleman says.

On international policy Coleman has supported the White House's approach to the war on terrorism all along. Although Dayton voted against the administration's use-of-force resolution, the Democrat calls the Republican president a "good commander-in-chief."

That sentiment is not shared among some Minnesota DFLers in the House of Representatives. Rep. James Oberstar of the 8th District, says the Bush administration is to blame, in part, for the situation with Iraq.

"He has an opportunity now to resolve the crisis in the Middle East that he has largely generated, by coming to a peaceful resolution with Saddam Hussein; moving him out peacefully without going to war, and to do the same in North Korea. But the choice is his," Oberstar says.

Oberstar agrees with Dayton that the Bush economic stimulus package amounts to little more than long-term tax restructuring tilted toward well-off Americans.

"In fact what the president is proposing is a tax cut for the rich in the guise of a stimulus for the average working American. He is not providing any stimulus to the economy this year, but in fact is setting the stage for long-term economic deficit and decline for America," he said.

Oberstar, the ranking Democrat on the House Transportation Committee, helped craft the House Democratic alternative to the GOP plan. It's a one year, $136 billion deal which includes a $300 per-person tax rebate, small-business tax incentives and the immediate funding of $15 billion in road, bridge, airport and other infrastructure improvements.

Oberstar says with Republicans in control of the House, the Senate and the White House, he holds out little hope that the type of stimulus package he supports will actually become law. Still, he says, Democrats will be talking a lot about what path they think the nation should take.

"We're going to define who we are as Democrats and we're going to stand up for the principles that we espouse; we are going to advocate for the average working American. We're going to put our plans forward in the full realization that they have the votes on the Republican side. They'll vote us down and vote their plan up, but we're going to stand for something," according to Oberstar.

Fellow Democrat 4th District Rep. Betty McCollum says she too doubts anything other than the White House plan will ultimately prevail. And like Rep. Oberstar, McCollum says Democrats may have to take their case outside of Washington to the American public in anticipation of the next election.

"We need to take it to the streets and my constituents back home, they re-elected me and they told me what's important to them. Yes, national security is important to them, but economic security for their families is equally important to them and I'm going to be a voice for them for their children for the future; that America not only be strong internationally but that we're also a strong country here at home," she said.

McCollum says the administration could go a long way toward rebuilding the nation's economy by finding a diplomatic, not a military solution to the situation with Iraq.

McCollum says she won't support the president's economic stimulus plan. She favors an immediate cut in payroll taxes.

Rep. Jim Ramstad, R-Minn., who represents the 3rd District, strongly supports the administration's stimulus plan. Ramstad calls the approach "balanced, bold, and fair." He says for high-income people, is relief for working Americans. And Ramstad says tax cuts aimed at increasing investment ultimately reach all Americans.

"I'm certainly familiar with the class warfare arguments, but I think if you look at the plan objectively, all citizens benefit from more confidence in the financial markets. This package benefits working people; everyone gets a tax cut, so I think we need to stimulate Wall Street. We need to stimulate Main Street. We also need to help the unemployed," Ramstad says.

Unlike, McCollum and Oberstar, Ramstad says he expects there will be a compromise between the Democratic and Republican plans. Maybe, for example, a 50-percent instead of a 100-percent cut in taxes on dividends, maybe the inclusion of the payroll tax cut that many Democrats are calling for.

Rep. John Kline, Minnesota's newest House member who represents the 2nd District, describes himself as a gigantic fan of cutting taxes. He says tax cuts should be made as broadly as possible. Kline says Democratic arguments that claim the Republican plan is targeted toward helping wealthy Americans, amount to a partisan distraction from, what he says is, an entirely legitimate approach to economic rejuvenation.

"They're just groping out there. The class warfare rhetoric is, 'well, the tax cuts benefit only the rich.' I don't believe that's true because the premise it seems to me is that we're going to create jobs and so Americans across the spectrum are going to benefit from the tax cut; it's not just who's paying less taxes, but what happens to the economy," says Kline.

Partisan rhetoric or not, newcomer Kline says the Republican trifecta in Washington presents the GOP with as much responsibility to pass legislation as it does opportunity to move forward Republican ideals.

Sen. Norm Coleman echoes that notion. But even Coleman, who says he wants to change the tone in Washington, acknowledges bringing together Republicans and Democrats on the national level will be an enormous challenge, given the unrelenting influence of partisan politics.

"There's a presidential election coming up and so much of what gets played out right now is going to be played out in the background," he said.

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