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November 29, 2001
Mr. Thomas Goes To War, or, How We Got Where We Are On The Economic Stimulus Package
It's the end of November and Congress wants to leave town before the Christmas holidays. They've been talking about an economic stimulus package for months. Now they have less than a month to write it and get it to the President's desk. They will succeed. That, according to Tax Notes economic correspondent Martin Sullivan. But what will be in the final stimulus package and why? And how did we get where we are on this legislation?

In his report on the political strategies behind the economic stimulus package, Sullivan explains what he sees as obstructionist and foolish behaviors by two of the principal congressional powers behind the evolving tax bill. America is at war and expects its political leaders to pull together, says Sullivan. Instead, he finds there's also a war over this legislation within Congress. And this at a time when political leaders should "make a modest effort toward seeking good [tax] policy."

Sullivan credits House Ways and Means Committee Chairman Bill Thomas (R-California) with having an impact on this legislation that is disproportionate to his position as the man who has been Chairman of the House tax committee for less than one year. "The entire Congress must share responsibility for the sorry state of affairs regarding the economic stimulus package," writes Sullivan. "The starting point, the source of all the turmoil, however, is Thomas." Sullivan's article says Thomas fails to understand the economic basics for stimulating the economy: "the chairman does not seem to understand that if any cut is going to stimulate the U.S. economy it must be quick and temporary and tilted toward getting folks spending money." Sullivan also faults Thomas for not putting "much weight on the notion that during times of war, fearful citizens need and want their politicians to work together."

And the Senate Democratic leadership has "unwittingly put [Thomas's proposals] on center stage" when they instead could have ignored them. "Another byproduct of the Thomas intransigence," says Sullivan, "has been to force a reluctant President Bush -- who has bigger fish to fry -- into a battle about the petty details of tax politics."

Despite this political morass, Sullivan predicts that congressional leaders will settle down and negotiate a stimulus package -- and that it will be a compromise between the two very partisan plans produced by the House GOP and the Senate Democrats.

For more details of the politics behind this legislation, please contact Tax Analysts for Martin Sullivan's report.

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Media Release 2001-8