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EDITIONS
Tuesday, 15 October, 2002, 20:46 GMT 21:46 UK
Top Democrat blasts Bush on economy
Top Democrats House Minority Leader Richard Gephardt (left) and Senate Majority Leader Tom Daschle.
Gephardt and Daschle are unified against Bush policy
One of the US' leading Democratic lawmakers has proposed an $200bn (130bn) economic revitalisation programme in a challenge to Bush administration policies.


The idea of tax incentives to help stimulate growth is always an interesting idea

Ari Fleischer,
Bush spokesman
Hoping to draw on the growing unease among Americans with the economy, the House Minority Leader Richard Gephardt proposed new spending and tax cuts as a way to spur the fledgling US economy.

Members of Mr Gephardt's Democratic party have been harshly critical of Republican George W Bush's economic policies and advisors, saying they have done more harm than good.

"The fact is America faces a clear and present danger to the economic life of working families," Mr Gephardt said in a speech to the Economic Policy Institute, a liberal think tank.

"But all this president and the Republican House [of Representatives] have offered is an extremist ideology of trickle-down economics and ineffective gimmicks."

Better wages

Mr Gephardt, who stands to gain the leadership position in the House if Democrats win a majority in November's elections, outlined a five-point plan to provide short-term economic stimulus and long-term fiscal responsibility.

House of Representatives Minority Leader Richard Gephardt
Gephardt: Bush has only offered gimmicks

Part of his proposal calls for $75bn in tax cuts or rebates for working families and business investment.

In addition, the plan would allocate $125bn for school construction, healthcare aid and other programmes.

In order to rein-in government spending, the Gephardt scheme seeks a $100bn cut in so-called corporate welfare, a proposal first floated by Republican Senator - and Bush rival - John McCain of Arizona.

In addition, Mr Gephardt seeks to put a lid on corporate perks, such as the "golden parachute" contracts that give chief executives claims to millions in pay if a firm is sold or merged.

He also seeks to reform pension laws and boost the minimum wage to $6.65 an hour - from the current $5.15, last raised in 1997.

Incentives

Mr Gephardt's counterpart in the Senate, Tom Daschle, a frequent critic of Bush economic policy, backed the proposals.

"The economy will continue to become a more dominant part of our agenda and a very significant part of the legislative landscape," said Mr Daschle, a South Dakota Democrat.

Treasury Secretary Paul O'Neill
O'Neill: The economy is on sound footing

Bush administration spokesman Ari Fleischer said he found the idea of a $75bn rebate or tax cut "interesting" but chalked up the rest of Mr Gephardt's speech to political rhetoric.

"The idea of tax incentives to help stimulate growth is always an interesting idea," Mr Fleischer said.

But he added "there is always a need to take a look at the specifics".

Tech hangover

Separately, Treasury Secretary Paul O'Neill, on a speaking tour in the Midwest, blamed much of the current state of the economy on the technology boom of the late '90s.

He said generous incentives on the part of tech firms raised debts to unsustainable levels and led to the crash in technology goods prices.

When asked if a parallel existed between that scheme and the current generous loan terms being offering by domestic automakers, Mr O'Neill replied no.

He pointed to General Motors' latest trading statement, released on Tuesday.

In the third quarter, GM earned a profit - even with substantial customer incentives but without special one-time charges related to a write-down in GM's investment in Italian car maker Fiat.


Economic indicators

Fears and hopes

US Fed decisons

IN DEPTH
See also:

14 Oct 02 | Americas
10 Oct 02 | Business
04 Oct 02 | Business
23 Sep 02 | Business
02 Sep 02 | Business
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