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STIMULATING BUFFALO NIAGARA

Analysts are confident that an economic stimulus package currently before Congress could provide a great boost to the Buffalo Niagara region, which is in an excellent position to benefit from it.

The economic stimulus plan before Congress won't reverse Buffalo's fortunes, but it might help the region more than it helps most places.

That's the consensus of economists and other experts, who see lawmakers coalescing around a bill aimed at boosting the working poor and struggling manufacturers -- which, of course, are in no short supply in Western New York.

For the working poor, the bill is likely to provide a tax rebate of upwards of $600 in cash sometime early next year.

For manufacturers, a probable provision gives them a faster tax write-off for investments in plant improvements. Economists say that will help companies pull out of the doldrums that have produced layoffs across the region.

The emerging stimulus package, however, isn't likely to include any of Sen. Hillary Rodham Clinton's much-touted proposals for boosting the upstate economy. And experts say no single bill can cure all of upstate's long-standing problems.

Yet many say the stimulus bill, if it proceeds as expected, will at least help stop the economic bleeding that began Sept. 11.

"I don't think this is going to give us a big jolt, but it will help us return to our earlier, normal lives," said Rep. Amo Houghton, a Corning Republican who serves on the tax-writing Ways and Means Committee. "It's not just the money flow that we're creating here; it's the psychological boost."

Work on that boost began in earnest this week, when the House narrowly agreed to a $100 billion stimulus bill consisting largely of tax cuts for businesses. Meanwhile, the Senate is working on a far different $70 billion proposal aimed more at helping people who have lost their jobs since Sept. 11 by increasing their unemployment and health benefits.

Nevertheless, lawmakers and economists see the makings of a compromise between the House and Senate bills that will likely be passed by Thanksgiving. And that compromise is likely to be built around two key provisions that could disproportionately help Buffalo.

The working poor are likely to benefit because Congress is likely to agree to a proposal to offer a tax rebate to low-wage workers. People would qualify if they don't earn enough to pay income taxes and thus didn't benefit from the $300 tax rebate sent out earlier this year.

The new tax break would be a boon to Buffalo because, according to the U.S. Department of Labor, the region's average annual pay stood at a mere $31,421 last year -- more than $5,500 lower than the national average. In other words, Buffalo has a larger than normal share of the working poor, and thus it will get a bigger share of any tax break aimed at them.

"The most important thing with this is to get consumer confidence back," said Rep. Thomas M. Reynolds, R-Clarence. "We need people buying things."

There's no guarantee, though, that people will actually spend that $600. Economists say people are more likely to hoard their money in tough times -- even if the government is giving them a little extra.

"I think it's silly as economic policy simply to encourage people to go out and spend when there is uncertainty and they don't want to spend," said William Gale, an economist with the Brookings Institution.

And if they don't spend their rebate checks, the actual boost to the economy will be minimal, Gale said.

Luckily for Buffalo, though, the emerging economic stimulus bill is likely to include another provision that would boost the economy no matter how nervous consumers are.

That provision would allow companies to take tax write-offs for their investments in plants and equipment far more quickly than they can under current law. Economists said that change would encourage manufacturing industries -- which have huge equipment costs and which have been struggling nationwide -- to start investing again.

"Anything that's done to help manufacturing will really help upstate New York, which has such a heavy share of manufacturers," said Celia Chen, an economist who follow the region for the Economy.com forecasting service.

Economists say such a boost makes particular sense just because the nation's manufacturers need more help than other sorts of companies.

"Before Sept. 11, manufacturing and investment were slowing down rather quickly for a long period of time," said Richard Deitz, an economist with the Federal Reserve in Buffalo.

That's especially true in upstate New York, which saw little job growth in the 1990s and then entered a downturn shortly after the new decade began.

Clinton aimed to fix all that with her upstate economic plan, but her package of economic bills have languished since spring, picking up no new cosponsors.

Congressional sources said those narrowly tailored bills are especially unlikely to gain any momentum now that Congress has a struggling national economy to cope with along with a multibillion-dollar disaster zone in lower Manhattan.

Clinton continues to push the proposals nevertheless, said Karen Dunn, her spokesman.

"We're continuing to work on every level to advance them," she said.

Meanwhile, though, Clinton and Schumer have other plans in the works. Most importantly, they will be working on a $5 billion plan to give tax credits to employers and residents who invest in the lower Manhattan neighborhoods devastated by the World Trade Center attack.

Houghton will be pushing a similar plan in the House, and congressional sources say it's likely to move separate from the stimulus package.

Other aid for the state is possible, too, though Capital Hill sources say it certainly won't equal the $54 billion Gov. George E. Pataki has been seeking. New York's troubles are likely to be dealt with separately from the stimulus package, which has more of a national focus.

While congressmen generally think a stimulus package will get passed, there's still considerable partisan debate about exactly what it will include.

The bill passed by the House is so laden with tax breaks for businesses that both Rep. Jack Quinn, R-Hamburg, and Rep. John J. LaFalce, D-Town of Tonawanda, felt compelled to vote against it.

Quinn said he hopes and expects the Senate to add some highway and other infrastructure projects to the bill to directly put people to work. He called the House bill "a stinker," but acknowledged it was essentially a negotiating stance set by the House Republican leadership to push the Democratic Senate more toward the middle.

It's unclear how many infrastructure projects the bill will include, just as it's uncertain how the rest of the stimulus bill will shape up beyond the tax rebate and the write-offs for business investments. Economists expect a proposed capital gains tax cut to die in House-Senate negotiations, along with some of the Senate's extensive benefits for workers who lost their jobs in connection with Sept. 11.

Unfortunately, whatever boost Congress provides won't arrive right away. While lawmakers said they could have a stimulus bill on President Bush's desk in a matter of weeks, Houghton noted that it would take months to process those tax rebate checks and implement other tax breaks. And by then, the economy could be growing again on its own.

e-mail: jzremski@buffnews.com

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