Proposal would aid troubled investors
WASHINGTON (AP) – A key committee in the Republican-led House approved campaign-season legislation Tuesday that would allow investors to deduct more stock market losses from their taxes and enable them to rebuild depleted retirement accounts. Democrats called the legislation pure politics. The two bills, costing a combined $65 billion over 10 years, were approved on straight party-line votes by the House Ways and Means Committee.
Although they have a slim chance of becoming law, the bills will provide Republicans with a fresh economic message for midterm election campaigns.
The measures will “help build the confidence and restore the losses of America’s investors,” said committee chairman Bill Thomas, R-Calif.
But Democrats, who contend President Bush and the Republicans are ignoring economic hard times, said the bills are driven by politics. Control of both houses of Congress is at stake in the Nov. 5 election.
“This isn’t real relief for pension holders or investors; it’s Politics 101,” said Rep. Charles Rangel of New York, the top Democrat on the Ways and Means Committee.
“They are running for political cover as fast as they can.”
One bill would boost the tax deduction for investment capital losses from $3,000 to $8,250 for net losses from the beginning of 2002, providing a modest way for investors to recoup this year’s stock market losses.
A second bill would raise the age at which retirees must begin mandatory withdrawals from 401(k)s and individual retirement accounts from 701/2 to 75 by 2007, adding a few years to rebuild lost value. It would also increase in 2003 the contribution limits for these plans to $5,000 for IRAs and $15,000 for 401(k)s; current law raises the limits to those levels over several years.
Republican leaders hope to bring the bills, which have been endorsed by the Bush administration, to the House floor next week.
There is little chance the bills will become law this year. The congressional session is in its final weeks, and a Democratic-run Senate probably will not take them up. But they serve a purpose for GOP candidates.
Democrats charge that Bush and the Republicans have focused too little attention on economic problems, preferring to talk almost exclusively about the war on terror and possible military action against Iraq. Democratic leaders in recent weeks repeatedly have alleged economic inaction by the Republican Bush administration, hoping that voters will blame the GOP.
Recent polls suggest that voters are seriously worried about the nation’s economic future, as unemployment rises, stocks and 401(k) plans plummet in value – coming quarterly statements will remind voters of that – and the government faces a fresh round of budget deficits.
“This is an absolute disaster in terms of the economy, and no one on the Republican side seems to care or want to do anything about it,” said House Minority Leader Dick Gephardt, D-Mo.
Republicans, however, say Democrats have no compelling plan to fix the economy.
GOP leaders say their new package would provide relief now and could improve investors’ willingness to invest, and they point to accomplishments such as the 2001 tax cut, a stimulus bill passed this year and new presidential trade negotiating authority as long-term economic tonics.
“Republicans have a good story to tell of trying to make the economy better,” said a recent memo from John Feehery, spokesman for House Speaker Dennis Hastert, R-Ill.
“They offer ideas, they can point to votes and they have a track record.”
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