Ensign says Greenspan big boost for Bush tax cut; Reid disagrees

Scott Sonner

Thursday, Jan. 25, 2001 | 6:50 a.m.

RENO, Nev. - Nevada Republicans rallied around Alan Greenspan's endorsement of a tax cut Thursday, saying the Federal Reserve chairman's backing will provide momentum for President Bush's sweeping proposal.

"It's huge," Sen. John Ensign, R-Nev., said in a telephone interview.

"It certainly gives us more momentum for tax cuts and it certainly gives a lot more cover to moderate Democrats who were thinking about supporting tax cuts in the first place," he said.

Rep. Shelley Berkley, D-Nev., might be among them. Her spokesman said Thursday she is willing to consider any plan to cut taxes, including Bush's call for a broad reduction in income taxes as part of a $1.6 trillion package over 10 years.

Sen. Harry Reid, D-Nev., said he agrees "there is room for tax cuts" but not of the magnitude Bush is proposing.

"I'm in favor of tax cuts, but only ones we can afford," the assistant Democratic leader said from Washington.

Greenspan told the Senate Budget Committee that rising estimates of budget surpluses make room for a tax cut. He also said the U.S. economy has slowed dramatically, a signal more interest rate reductions are on the way.

Berkley was not available for immediate comment. But her press secretary Michael O'Donovan said Greenspan's testimony "is further evidence there is room for a significant tax cut.

"The congresswoman has not embraced any specific approach to a tax cut nor any specific numbers until we have a better sense of the size of the budget. At this point, she will consider any approach that would relieve a tax burden on American families," O'Donovan said.

Reid said members of both parties want to cut taxes.

"The question is what kind of tax cut? That is where the debate will be," Reid said. He said he's willing to look at Bush's proposals.

"But if it's the one he's been talking about in the campaign, it would bankrupt the country," Reid said.

"There's not enough money to do it. We've been into deficit spending before and I don't want to do deficit spending," he said.

Democrats prefer a series of targeted cuts aimed at ending the marriage penalty, reforming estate and inheritance taxes and providing breaks for parents who pay for their children's college education, he said.

Rep. Jim Gibbons, R-Nev., said broad reductions in income taxes would provide Nevadans with added money to save for their retirement or their children's education.

"I am pleased to hear that Mr. Greenspan agrees that we can pay down our public debt, fund our national priority programs and still provide hardworking Nevadans with much-deserved tax relief, such as the tax cut proposed by President Bush," Gibbons said.

"Too many families are struggling right now just to pay their mortgages and utility bills," he said.

Greenspan would not be drawn into a discussion of whether the tax cut package advocated by Bush is an appropriate size. He previously had expressed a preference for using the projected surpluses to pay down the national debt.

Greenspan said Thursday he still thinks debt reduction is the best use for the added revenue. But he said government estimates project more than enough surplus funds to pay off the debt and cut taxes.

"The sequence of upward revisions to the budget surplus projections for several years now has reshaped the choices and opportunities before us," Greenspan said.

Ensign, who served two terms in the House before his election to the Senate in November, said his own preference has been to pay off the national debt first.

"I'm like Greenspan in that regard. But now the surplus numbers are so big, you can't really pay off the debt any faster. You can only pay off the debt in about 10 years and if you try to do it faster, it costs you money," Ensign said.

"Because of that, tax cuts are now in order and I think significant tax cuts are in order along the lines of what President Bush is talking about."