Bush urges US$60b in further tax cuts

David Williams Agence France-Presse Washington

U.S. President George W. Bush issued a surprise call Friday for an emergency US$60 billion tax cut to limit a feared U.S. slide into recession after the Sept. 11 terrorist attacks.

Bush said further U.S. stimulus should be based on tax reductions rather than spending increases, noting that Congress had already passed crisis spending measures worth some $60 billion.

"In order to stimulate the economy, Congress does not need to spend any more money. What they need to do is to cut taxes," Bush told reporters in the White House's Rose Garden.

"I propose that the United States Congress as quickly as possible pass tax relief equal to or a little bit greater than the monies that we have already appropriated."

Bush spoke on the eve of a Group of Seven finance ministers and central bankers' meeting, dedicated to reviving the worldwide economy and choking off terrorists' financing networks.

The United States is pressing Europe and Japan to stimulate their economies to limit the economic impact of the assault, in which 19 terrorists commandeered four planes, destroyed the twin World Trade Center towers and wrecked part of the Pentagon.

The International Monetary Fund also called for global action.

"A number of developments indicate that a more pronounced than expected economic slowdown is underway across much of the IMF's membership," IMF managing director Horst Koehler said.

Following the events of Sept. 11, he told the IMF's executive board, "a coordinated international response is needed to deal with weaknesses in the world economy and the new risks in the outlook."

Bush, flanked by Treasury Secretary Paul O'Neill, noted that lawmakers had already passed a package of $40 billion to help rebuild New York and a $15 billion airline rescue.

The president also called this week for Congress to extend another $3 billion to help the more than 100,000 workers who lost their jobs as a result of the Sept. 11 onslaught.

Congress should accelerate the 11-year, $1.35 trillion tax- cutting program already passed, he said, while also passing measures to ensure that low- and moderate-income workers receive tax relief.

For business, Bush said the government should stimulate investment by easing taxes on capital expenditures.

And he called for an end to the alternative minimum tax on corporations, a system that limits tax deductions.

Such a package would dovetail with the marginal tax cuts and the increased child credit set to kick in next year, Bush said.

"The terrorists attacked us, but they did not diminish our spirit, nor did they undermine the fundamentals of our economy," he said.

"And we believe if we act expeditiously, that those fundamentals will kick back in and people will be able to find work again."

Signs of a feeble U.S. economy are mounting.

U.S. payrolls plunged and the jobless rate stagnated at a four-year high of 4.9 percent in September even before the full impact of the attacks was felt, latest government figures showed.

The unemployment rate was unchanged from the previous month, the Labor Department said.

But in a separate survey, non-farm payrolls fell by 199,000, double Wall Street expectations and the steepest fall since February 1991.

Experts warned worse lay ahead.

"The job picture looks very grim," said Naroff Economic Advisors president and chief economist Joel Naroff.

"The labor market was hurting before the Sept. 11 attacks and conditions should get even worse over the next few months."

Job losses could be high over the next few months and the unemployment rate would doubtless soar, Naroff said.