Medicine For Mad Dow Disease?

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rge W. Bush has argued that his $1.6 trillion tax-cut plan would help America dodge a recession. But because its most generous provisions don't kick in until after 2003, the President's proposal can't provide much countercyclical punch before then. Democrats, who oppose the measure as too large and too favorable to the rich, several weeks ago called for $60 billion to $80 billion in tax cuts this year, many of them targeted at middle- and low-income groups. The idea: offer people some money now so they'll spend and give the economy a boost.

G.O.P. legislators began moving that way last week. As the stock market continued to swoon amid more negative economic news, Pete Domenici, chairman of the Senate Budget Committee, proposed handing taxpayers a $60 billion rebate in 2001. It's not clear what form that might take: the IRS could simply send out rebate checks, or, even quicker, the government might lower the amounts automatically withheld from workers' pay. Rebates would probably be treated as taxable income, which would reduce both their economic clout and public relations appeal. Evenly divided among the country's 200 million adult taxpayers, they could be worth $300 a head. Bush has said he supports the idea, and so does Tom Daschle, the Democratic leader of the Senate.

In the House of Representatives, which has approved a partial version of Bush's tax scheme, the Ways and Means committee last week voted for its own version of immediate relief. The plan would double the $500-per-child tax credit and make it available to as many as 3 million families that currently pay no income tax, earning from $20,000 to $30,000 a year. In a rare move, Democratic Senator Kent Conrad asked Congress to pass some version of these proposals by the first week of April. Senate majority leader Trent Lott offered a more leisurely schedule, calling for their consideration as part of a multi-year tax-cut package, perhaps as soon as Memorial Day.

The timing could make all the difference. If Congress approves $60 billion in cuts right away to bolster the economy, lawmakers will face less pressure to pass Bush's $1.6 trillion tax package later. Two moderate Republicans in the Senate have already called the President's plan excessive, and with the Senate split 50-50 between the parties, the legislation may not have enough votes to pass in current form. But if the G.O.P. can sweeten Bush's tax bill by adding $60 billion in cuts for 2001, Republicans could get more of what they want in a single piece of legislation.

Either way, the congressional rush toward immediate tax relief is likely to have more political than economic impact. For America's $10 trillion economy, a $60 billion tax reduction would offer mostly a psychological lift. But both Congress and the White House are betting that even if wallets don't get a whole lot fatter, the cut will make consumers think Washington is doing something for them.