White House recants stimulus threat

WASHINGTON, Dec. 17 (UPI) -- The White House on Monday recanted its earlier comments that President George W. Bush could act unilaterally and bypass Congress to extend unemployment benefits to workers affected by the Sept. 11 terrorist attacks and a weakened economy.

"Extending unemployment benefits by 13 weeks, as the president has proposed, requires action by Congress," Press Secretary Ari Fleischer said in a statement released by the White House correcting his earlier comments.

Fleischer had told reporters it was in the administration's power to extend unemployment benefits to displaced workers in states with 30 percent or more unemployment rates.

He said Bush had not ruled out acting unilaterally to provide limited benefits to workers thrown out of work during the past three months if the U.S. Senate did not schedule a vote on the proposed economic stimulus package.

The Bush administration has criticized Senate Democrats for not allowing a vote on the president's economic stimulus package even though they believe enough support exists for passage.

Bush and Senate Democrats have been unable to reach agreement on a stimulus package designed to rejuvenate an economy that analysts say has been in recession for more than a year, a situation made worse by the Sept. 11 terrorist attacks on Washington and New York City.

On Monday, a White House negotiator who has been working on the stimulus package deal told reporters in the briefing room that Democrats want to extend benefits to people who quit their jobs or retired, rather than confining benefits to those laid off or fired as a result of the recession or the attacks.

At issue between the Bush and the Democrats are tax cuts versus expanded benefits for displaced workers.

The White House wants to extend a refundable tax credit to displaced workers that they could immediately use to purchase health insurance benefits. Fleischer said that if Democrats weren't willing to deal, the president's action would have been much more limiting, not covering part-time or temporary workers as the Democrats have wanted.

"If the Senate is able to take action, those issues can be discussed and addressed," Fleischer said.

The White House has maintained that it backs a bipartisan proposal presented last week by a coalition of moderate Republican and Democratic senators. Then negotiators met again to try to hammer out something they could take to the president. Bush has said he wants a bill to sign before Congress adjourns for the Christmas holidays.

At issue are the alternatives swirling around Capitol Hill to the $100 billion version of the economic stimulus bill approved in October by the U.S. House of Representatives and backed by the White House.

That version has four key provisions. It would repeal the corporate alternative minimum tax, cut the 27 percent income tax rate to 25 percent in 2002 rather than 2006, and allow greater business equipment purchase write-offs. It also would provide tax rebates for low-income workers.

The president embraced the idea to expand unemployment benefits for workers displaced since March 15, to allow tax credits that can be used to purchase health insurance on the open market, and to pare the 27 percent income tax rate to 25 percent. The proposal does not include a corporate alternative minimum tax. It also dropped the trigger providing displaced workers with expanded benefits in states with a 30 percent hike in unemployment.

Sen. Majority Leader Tom Daschle, D-S.D., on Saturday said Democrats believe that any plan to help the economy must start by helping laid-off workers. The Democrats' plan adds 13 weeks of extra benefits for all workers -- including the part-time workers and recent hires, who pay into the system but aren't eligible for benefits. And it includes a $25 dollar increase, in the weekly benefit. He also pointed out that the biggest monthly expense for many laid-off workers is health insurance.

Last week, Daschle detailed what features he wanted in the bill: an increase in unemployment compensation and eligibility for unemployment compensation for both part-time workers and late hires; help for states to pay for health care; and the ability to help unemployed workers to pay for their own health care.

To push its case, the White House on Saturday released a Council of Economic Advisors report on the impact of the failure to pass an economic stimulus bill. It said that while consumer confidence has stabilized the possibility of a more substantial and prolonged decline remains. Without the bill, about 300,000 jobs would be lost, the report said.