Associated Press Senate Majority Leader Tom Daschle, D-S.D., meets with reporters on Capitol Hill last Friday. An amendment to economic stimulus legislation was defeated by the Senate despite strong support from President Bush and much of corporate America. The Senate forged ahead on a scaled-back, $69 billion stimulus package introduced by Daschle as an attempt to blend common elements of previous Democratic and Republican plans.

WASHINGTON - The economic stimulus bill that President Bush says will hasten recovery from recession appears dead in the Senate and will probably be shelved, Senate Majority Leader Tom Daschle said yesterday.

Daschle, D-S.D., said neither Republicans nor Democrats will have the 60 votes necessary to win approval of their competing measures - and that the Senate will take up other business today.

"It's with great regret I will pull the bill tomorrow," Daschle told reporters yesterday.

Daschle's comments would seem to seal the doom of legislation President Bush has been pushing since October to boost an economy that began a downturn in March and was rocked again by the Sept. 11 terror attacks.

The House twice passed economic stimulus measures last year, but both foundered in the Senate. Daschle tried in January to resurrect the issue with a bare-bones package focused on a few popular items, but Republicans sought to attach bigger tax cuts they said would spur growth.

Daschle blamed the GOP for trying to "score political points" by offering these tax cuts instead of working to compromise. Republicans said it was the Democrats who would not bend.

"I'm wondering if they would really like to have a genuine compromise," said Sen. Charles Grassley of Iowa, ranking Republican on the Senate Finance Committee.

The Senate is scheduled to vote today on whether to end debate on the stimulus plan, which would require 60 votes. Neither side expects that threshold to be reached.

Earlier yesterday, Treasury Secretary Paul O'Neill told the House Ways and Means Committee the U.S. economy is showing signs that the recession is ending and could return to growth rates as high as 3.5 percent by the end of 2002 "if we are able to pass still-needed economic security legislation."

"We see more and more signs every day indicating that the seeds for a recovery are there, and only need nourishing to speed the process of putting Americans back to work," O'Neill said.

O'Neill also said the 10-year, $1.35 trillion tax cut enacted last year helped make the recession a shallow one and that the tax relief will continue to help the economy recover and government return to its budget surplus.

"The focus must be on restoring growth. Surpluses will then follow naturally," O'Neill said.

Democrats, however, said the president's wish to make that tax cut permanent - it will expire at the end of 2010 under current law - would primarily benefit wealthier taxpayers while siphoning away resources needed for other priorities.

"Why does the president give wealthy individuals priority?" asked Rep. Fortney "Pete" Stark, D-Calif.

Without the bill, the Bush administration predicted in releasing its budget for the 12 months starting Oct. 1 that "it will mean fewer jobs, smaller growth in incomes and smaller budget surpluses." Even so, many economists, including Federal Reserve Chairman Alan Greenspan, say a stimulus bill is less critical now that the recession is appears to be ending.

Some House Republican conservatives want to turn stalemate on stimulus into a balanced budget for the fiscal year that begins in 2003. The $77 billion earmarked in Bush's budget for the stimulus measure would bring the plan within $4 billion of balance, said Rep. John Shadegg, R-Ariz.

"If the powers that be block a stimulus bill, then a balanced budget is within reach," said Shadegg, leader of a group of 70 House GOP conservatives.

The Bush administration is supporting a House-passed bill that would provide $89 billion in stimulus in 2002 and $73 billion in 2003. It would accelerate income tax cuts now set to take effect in the future and provide a new round of rebate checks of up to $600 aimed at lower-income Americans.

The bill would extend unemployment benefits by 13 weeks, help laid-off workers pay for health insurance and give corporations and small businesses more generous tax breaks for new investment.

Daschle's bill, providing $69 billion in stimulus in 2002, includes the unemployment benefits extension, business tax breaks, tax rebate checks and an increase in Medicaid money to help states balance their budgets.

The biggest tax relief item in the new Bush budget proposal is $344 billion included for the first years of a permanent extension of the 10-year, $1.35 trillion tax cut enacted last year. That tax cut is now set to expire at the end of 2010 - meaning millions of people could face a huge tax increase without the extension.