By Sue Kirchhoff

WASHINGTON - Federal Reserve chairman Alan Greenspan told senators yesterday that any economic stimulus package passed by Congress should be short-term, dashing Republican hopes of enacting a permanent capital gains tax cut.

But in a closed-door session with the Senate Finance Committee, Greenspan told lawmakers if they go ahead with a stimulus package, it would be better to be bold, saying it would take $100 billion in stimulus to produce a 1 percent increase in the economy. Some lawmakers initially interpreted those comments to mean that Greenspan was advocating a $100 billion stimulus bill, forcing a Fed spokesman yesterday afternoon to issue a rare clarification. The spokesman said Greenspan was referring to the cumulative effect of any new stimulus bill and already approved measures. Since the Sept. 11 terrorist attacks, Congress has passed a $40 billion emergency bill and $15 billion airline bailout.

Illustrating the strains on the federal Treasury, the Congressional Budget Office told lawmakers in a private briefing yesterday that the fiscal 2002 budget surplus could plummet from $176 billion to as little as $50 billion, due to higher spending associated with the attacks and expected loss of government revenues.

The CBO will not issue formal projections until next year, and the numbers are certain to change dramatically between now and then. The Social Security trust funds account for nearly all the 2002 surplus.

Meanwhile, in the House of Representatives, Minority Leader Dick Gephardt of Missouri and other Democrats called for quick action on a $3.75 billion aid package for laid-off workers. The airline industry alone has shed about 100,000 jobs since the attacks.

And, Commerce Secretary Don Evans yesterday met with executives from car rental companies, hotels and other businesses hard hit by a decline in tourism. The group recommended the government expand tax deductions for travel expenses.

"Did they talk about some suggested ideas or ways the federal government might be able to be supportive of? Yes, they did. We've asked them to come back in a more formal way," Evans said.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said the panel had reached no agreement on when or how to proceed and wanted to wait for better data on consumer purchasing and other economic indicators, as Greenspan has suggested. Lawmakers are expected to meet with Treasury Secretary Paul O'Neill today for more talks.

"There's going to be even more uncertainty in the next years . . . that creates a kind of risk premium. This country is now facing a newer era of greater volatility," Baucus said. "We in Congress can help deal with this . . . by not acting too rashly, too quickly."

During the session, which also included former Treasury Secretary Robert Rubin, lawmakers tossed out a number of ideas to help business and spur consumer demand, among them accelerating spending on school construction and road, sewer and water projects. Leading short-term tax proposals include more liberal rules for expensing, faster depreciation of equipment, an acceleration of pending tax cuts that are part of an already approved 10-year $1.35 trillion tax cut law, or rebates to low-income earners.

Greenspan told the committee that while he personally favored a cut in the capital gains tax rate and other long-term reductions in business taxes, now was not the time to consider such proposals. Republicans have gradually been moving away from an earlier plan to cut the capital gains tax to 15 percent from 20 percent, though they have not abandoned it. Some have suggested a short-term cut as a beginning effort.

Lawmakers also said Greenspan reiterated his position that Congress should approve some sort of a "trigger" mechanism so that additional tax cuts or spending would not take place if the budget situation deteriorated too quickly. Greenspan and Rubin warned that using too much of the federal budget surplus could unnerve the markets, raising long-term interest rates and possibly hurting the real estate sector.

Senator John F. Kerry, a member of the Finance Committee, said he was interested in additional money for Amtrak, which has seen increased business since the attacks. Congress is talking about anywhere from several billion dollars for short-term security improvements to a long-term capital program for the railroad. Kerry said he also favored some small business incentives, adding there were limits to how much Congress should spend given the nation's long-term financing needs.

"There are still some reservations on the part of some people who want to let it shake out, and there are some of us who want to move faster," Kerry said. "We ought to accelerate projects in the pipeline."

The insurance industry, meanwhile, has begun lobbying Congress for relief, possibly in the form of new tax breaks. Baucus said the outlook for direct aid to other industries was "considerably less clear" now that Congress had acted to shore up the airlines. He and Evans suggested the best thing the federal government could do for the tourism industry was to assure the public that it was safe to fly, and urge them to go ahead with business travel and vacation plans.