AFL-CIO President John Sweeney said working families have taken a beating for 22 months while "the president has been AWOL."
"So it is especially outrageous that he is trying to pass off another tax cut for the rich as a boost to the economy while warning that it may be greeted by 'class warfare.'"
The head of nation's largest labor group said depending on how the tax cut is structured, taxpayers with incomes of more than $1 million would get 25 percent of the total benefit with average tax breaks of up to $24,230.
"The top 1 percent, whose incomes exceed $333,023, would receive more than 42 percent of the benefit from the cut, with an average break of as much as $7,001," Sweeney said. "Three-quarters of the total benefit would go to tax filers with incomes exceeding $100,000."
According to the AFL-CIO, Americans with incomes under $50,000 would get less than 10 percent of the total benefit -- or an average tax cut of $76 or less.
"Tax cuts for the wealthy and big business will not help the average American family put food on the table or send their kids to college," said Sen. Edward M. Kennedy, D-Mass.
Sen. John F. Kerry, another Massachusetts Democrat, who hopes to challenge Bush for the presidency in 2004, said the president "has produced a stimulus mirage, not a plan for economic growth."
"I don't think we've ever witnessed an administration more out of touch with the economic needs of average Americans," said Kerry.
Despite Republican control of Congress, Bush needs support of a handful of moderate Democrats to pass his economic plan in the House and Senate.
House Democrats Monday criticized the Bush plan as too expensive and outlined a smaller alternative for working and middle class taxpayers offering extended unemployment insurance benefits and financial aid to states plagued by growing budget deficits.
"It was good speech. Let the games begin. Hopefully they'll come to conclusion really quick," former Clinton administration Commerce Secretary William Daley told United Press International.
Bush called for all tax cuts approved in 2001 to be effective now, including an end to the "death tax" and raising the federal child tax credit to $1,000 from $600. He proposed $3.6 billion to the states for $3,000 re-employment accounts for some 1 million jobless workers and an end of double taxation of corporate dividends.
He said his plan would provide $98 billion in tax savings this year, including $20 billion from stock dividends, and $670 billion over a decade.
"When it comes down to it there are risks to both of these plans," said Diane Swonk, Bank One Corp. chief economist and senior vice president. "It's an issue on Wall Street ... dividends are a signal of how well you a doing, but it really is a very small portion of the economy."
Critics likened the plan to the old Reagan Republican "trickle-down economics."
Sweeney said instead of eliminating all individual taxes on stock dividends the Bush administration should develop a recovery package targeted to help average families.
"Cutting taxes on dividends will provide no bang for the economy, either," he said. "America workers and the American economy need a recovery plan that kicks in quickly to create jobs that pay well and provide good benefits. The most effective job-creation program is one that stimulates demand by putting money into the hands and pockets of average families and laid-off workers who need it and will spend it."
Paul Irvine, professor of finance at the Emory University's Goizueta School of Business, said the White House package was a good effort at long-term restructuring by the Republicans, but neither the GOP proposal nor the Democratic alternative provide a quick fix.
"What the Democrats are saying -- and they have a point -- is that the people who get dividends have to be by definition owners of stock. That puts them automatically among the better off portion of society. They say that the better off portion generally has a lower propensity to consume."
He said middle and lower class consumers would spend more of any tax benefit, that could "provide a bigger short-term fiscal pop.
"But it's my understanding is that consumer spending has not been a problem. What's lagging is business spending -- both on labor and capital. I think that structurally Republicans are doing good things for the economy, but I don't see businesses responding immediately. It's more in the long term.
"The Democrats on the other hand are right to say it could get a better fix by giving tax cuts to consumers but they haven't been the problem."
Democratic New Mexico Gov. Bill Richardson told CNBC that he was disappointed there was not more for states that are fighting severe revenue shortfalls across the nation.
"I'm disappointed that more direct aid to states is not included," he said. "We could have used some assistance with our state revenues in Medicaid, homeland security and education. The states are really hurting."
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