Collins offers stimulus plan for economy Aid to business, workers sought

WASHINGTON – Looking to help small business and assist laid-off workers in a sluggish economic climate that many analysts view as bordering on recession, U.S. Sen. Susan Collins introduced legislation Tuesday that calls for capital gains cuts and extended unemployment insurance.

The Maine Republican said she is anxious to have the measure attached to the economic stimulus package now being hammered out between congressional leaders and the White House.

“One of the targets of the terrorists is our economy,” Collins said. “We need to put in place an economic plan as well as a security plan.”

Any stimulus package crafted to fuel the nation’s economy is expected to run in the neighborhood of $45 billion. It would be in addition to a $40 billion emergency effort that Congress approved one week after the terrorist attacks of Sept. 11, as well as an additional $15 billion relief package for the airline industry that passed last week.

Collins’ legislation seeks to encourage small business growth by providing capital gains cuts to investors; doubling the current expense limit on new equipment purchases to $40,000; and reducing the 39-year depreciation schedule for restaurants to 15 years. Her measure also would boost job-training programs and extend the period that laid-off workers can receive unemployment compensation by an additional 13 weeks.

Rather than singling out the 100,000 airline workers for assistance who were recently laid off following the attacks on the World Trade Center and the Pentagon, as some have proposed, Collins said she wants benefits extended to all who have been affected by the economic slowdown. “All eligible workers should be able to reach for additional help because they are all being adversely affected,” she said.

The cost of her legislation has not yet been calculated, but Collins said she is confident it would be well below the $45 billion price tag of any new economic stimulus package now being discussed.

“I applaud Sen. Collins for recognizing the need for a stimulus package and for her proposals,” said Christopher St. John, director of the Maine Center for Economic Policy, an Augusta-based think tank. “But I don’t think it goes nearly as far as we need to go. Our economy is in serious, serious trouble and it needs a very significant stimulus.”

St. John said members of the State Economic Forecasting Commission are discussing growth rates of around 3 percent instead of 5 percent. He said that points to the need for a much larger stimulus package for Maine to benefit.

He said many economists believe that with consumer spending critical to the economy, any stimulus package needs to include provisions that directly put some cash in to individual taxpayers pockets.

“I have heard discussions at the national level of a package of between $100 billion and $200 billion,” he said. “We really need to see that size boost to get the economy going again.”

Federal Reserve Chairman Alan Greenspan suggested last week that Congress should consider a $100 billion package. He said that is about 1 percent of the national economy, and that it would be large enough to be credible but small enough that it would not harm the nation’s long-term fiscal health.

“I have great respect for Alan Greenspan,” Collins said. “And I am certainly willing to consider a larger stimulus package.”

Following a breakfast meeting with congressional leaders Tuesday, President Bush said he wanted a package “big enough to get the economy going, but small enough so it doesn’t affect the interest rates.”

That likely would include new tax cuts and possibly a speeding up of tax cuts already approved this year. “The best way is to give people some money so people can spend it,” Bush told reporters after the meeting.

Lawmakers also discussed new tax breaks for business and extended unemployment benefits and health insurance for laid-off workers. Legislation should be readied well before the congressional recess begins Oct. 15.

Later in the day, Sen. Olympia Snowe of Maine met behind closed doors with the Senate Finance Committee to begin hashing out a measure that will garner bipartisan support and meet the objectives of Senate Democrats.

Snowe’s spokesman, Dave Lackey, said the senator will be seeking a “balance” between business assistance and helping individual workers that would have “temporary, but immediate effect on stopping the loss of jobs.”

Several Democrats have already floated proposals for increasing government investment in public works projects. Sen. Harry Reid, D-Nevada, wants a $30 billion investment in mass transit, railroads, highways and water projects as a way to bolster job creation and improve the business climate.

Meanwhile, Sen. Edward M. Kennedy, D-Mass., is advancing a hike in the minimum wage and a $31 billion measure to assist laid-off workers with health insurance and lengthened unemployment benefits.

Such big-ticket programs would have received a much chillier reception just three weeks ago prior to the terrorist attacks, which delivered a heavy blow to an already faltering economy.

“The short-term outlook is not good,” Glenn Hubbard, chairman of the Council of Economic Advisers, told the Senate Budget Committee. “However, with prudent decisions by Congress and the administration, there’s every reason to believe a recovery would commence in 2002.”

Last week, Greenspan advised Congress to consider any economic stimulus plan carefully to ensure that the government can continue to pay off the $3.3 trillion national debt in the next 10 years. Still, he suggested that any effective emergency spending would be around $100 billion.

Robert Bixby, executive director of The Concord Coalition, a fiscal watchdog group that has made its reputation by opposing deficit spending, says that some sort of economic stimulus package is appropriate at this time because of the terrorist attacks and the slowing economy. “Still, its important to maintain fiscal discipline,” he said. “Because there will be other problems 10 years from now when the baby boomers start to retire and draw on Social Security.”

Mal Leary of Capitol News Service contributed to this report.