Bush Woeful on Economy, Lieberman Tells DMA Luncheon

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SAN FRANCISCO -- Though President Bush has handled the war on terrorism well, he has fallen far short on the economy and isn't taking needed steps that would, among other things, help the direct marketing industry, Sen. Joseph Lieberman, D-CT, said in a luncheon keynote speech at the fall DMA show yesterday.


"People elect our presidents to deal with more than one problem at a time," he said.


Noting that Advo, Pitney Bowes and Micro Warehouse are in his state, Lieberman said, "Connecticut has an interest in the health of this industry." Direct marketing drives $2 trillion in sales per year and is responsible for 16 million jobs, he said.


"Those are remarkable numbers" underscoring that it is the private sector that creates jobs, he said.


Though the government doesn't create jobs, the senator said, it "has the responsibility to create conditions for growth." He proposed that the federal government boost consumer confidence by such things as delivering a tax rebate to 34 million people who didn't get one last year as part of Bush's tax cut: mainly low-income households that do not pay taxes.


"These are precisely the people who will spend their checks immediately," he said.


Lieberman also proposed a 10-day sales tax holiday to boost consumer spending and plans to revitalize business investment, which he said "has dropped every quarter since Bush took office." He suggested a 20 percent tax credit for businesses to invest in information technology equipment and said measures should be taken to spur the growth of broadband.


Lieberman also called for an overhaul of 401(k) regulations. Employees, for example, should be able to sell stock as freely as executives, he said. The senator praised the recent stock market rally but said, "a rally does not a recovery make."


To spur venture capital investment, Lieberman called for zero capital gains taxes on investments in small to mid-sized companies. He also called for "intelligent government investment," for example, in tax breaks for companies to make new hires.


Lieberman said the federal government should invest more heavily in all levels of education. He called for more focus on the No Child Left Behind Act, "which Bush shortchanged by $6 billion." He also proposed a $10,000 tax deduction for families for education and an increase in Pell grants to $5,800.


When asked about the possibility of sweeping sales tax reform and whether merchants will be forced to collect out-of-state sales taxes, he said the issue "is worth stimulating discussion, but don't count on it [a major overhaul]." However, he said, "I wouldn't minimize your [industry's] influence to achieve the more limited goal" of avoiding being forced to collect sales taxes on goods sold in states where the merchant has no physical presence.


On postal reform, Lieberman, who chairs the Senate's Governmental Affairs Committee, which oversees the U.S. Postal Service, said he is seeing progress toward phasing in rate increases on a pre-announced schedule. This would let direct mailers plan better, he said. He also said Sen. Tom Carper, D-DE, is emerging as a key figure in postal reform.


In a question-and-answer session later, Lieberman said, "the postal service has a board that isn't making judgments entirely based on the bottom line." For example, when the postal service proposed closing a small-town office in Connecticut, "all hell broke loose."


Lieberman began the speech on a lighter note, saying he was going to publish a book about his experience in the hotly contested 2000 presidential election, probably under one of the following titles:


·"Our Life on the Campaign Trail: The Good, the Chad and the Ugly"


·"From Schmear to Eternity"


·"The Customer Is Always Right, but Sometimes the Voter in Palm Beach is Wrong"


·"A Connecticut Yankee in King Rehnquist's Court"


The speech followed the DMA's Hall of Fame Luncheon, which honored four new inductees: Jock Bickert, Ralph Lane Polk II, Jonah Gitlitz and Robert Kestnbaum.


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