Bush: $550B tax cut would enliven economy

WASHINGTON, April 15 (UPI) -- President George W. Bush on Tuesday urged Congress to approve a tax cut of at least $550 billion to spur the sagging U.S. economy as he pushed his job growth proposal on the day millions of Americans faced the deadline for filing their tax returns.

"The nation needs quick action by our Congress on a pro-growth economic package," Bush said. "We need tax relief totaling at least $550 billion to make sure our economy grows."

The president spoke during an event in the White House Rose Garden surrounded by small business leaders as millions of ordinary Americans scrambled to meet the midnight deadline to file their 2002 tax returns. It is those people that Bush said his economic growth plan would help.

The president continues to be troubled by the economy. Unemployment remained at 5.8 percent in March. The Conference Board's Consumer Confidence Index declined to 62.5 points in March, down 2.3 points from 64.8 in February.

Bush was trying to salvage the size of his proposed tax cut, which is under fire from congressional lawmakers jittery over war costs and the rising federal budget deficit. Last week, Senate Republicans on Capitol Hill agreed to hold Bush's tax-cut package to no more than $350 billion in return for support of next year's federal budget request.

"In this debate, the goal is not to set arbitrary numbers for that package, Bush said Tuesday. "The goal is to determine what our economy needs, what small businesses need, what workers need, and then to take action necessary to meet those needs."

Sen. Charles E. Grassley, R-Iowa, chairman of the Senate Finance Committee, promised Republican moderates the tax-cut bill wouldn't include more than $350 billion, half of the $726 billion Bush had asked Congress to provide as a stimulus for the still-sagging U.S. economy. In return, moderates pledged to support the $2.2 trillion federal budget plan.

The U.S. House of Representatives voted 216-211 to approve the budget early Friday.

The Senate agreement might force House members to make that figure smaller. The White House signaled early last week that it might settle for $550 billion when it appeared that lawmakers would not give the president the full $726 billion package he had initially asked for.

Bush's plan calls for accelerating the 2001 tax rate reductions and making them retroactive to Jan. 1, 2003. It reduces the so-called marriage penalty in 2003 rather than 2008 and raises the child tax credit from $600 to $1,000 this year instead of 2010.

Under his proposal, Bush said, a family of four with an annual income of $40,000 would receive a 96 percent reduction in federal income taxes. Instead of paying $1,178 per year, their tax bill would be $45 a year.

"That means extra money in the family budget year after year. That money can cover a lot of bills. That money can help families with purchases they have been delaying. That money will be in circulation, which will be good for our economy," Bush said.

In his moves to strengthen the economy, the 2004 budget estimates that 92 million Americans will receive an average tax cut of $1,083 and the increased economic activity will create 2.1 million jobs.

Bush proposed spending $3.6 billion for "Re-employment Accounts" in 2003 and 2004 to give the unemployed a $3,000 fund to help them find work, and he is asking for $7.1 billion in 2003 to pay for a five-month extension in unemployment insurance.

Bush said his proposals were designed to address specific weaknesses slowing down the economy and keeping companies from hiring new workers. He said job growth comes when consumers buy more goods and services, and the "best and fairest' way to make certain Americans do that is to grant them immediate tax relief.

"In 2001, the Congress passed broad tax reductions in income taxes, and promised much of this tax relief for future years," Bush said. "The economy as it is, the American people need that relief right away. If the tax cuts are good enough for the American taxpayers three or five or seven years from now, they are even better today."

Some Republican moderates have been concerned over the rising deficit numbers. The non-partisan Congressional Budget Office released an analysis of the president's budget proposals for next year that determined that changes to the tax laws would significantly reduce revenues.

Hill Democrats were critical of the president's proposals.

Rep. John Spratt, D-S.C., said the deterioration of the economy and the budget was prompting concern about the president's domestic policies even among Republicans.

"Congressional Republicans are in disarray and disagreement about the size of a tax cut. But most have begun to recognize that cutting taxes by an additional $1.6 trillion when the budget already is in substantial deficit causes either still bigger deficits or harmful cuts to services," said Spratt, ranking member on the House Budget Committee.

The CBO estimates that Bush's proposals would reduce revenues by $35 billion and increase outlays by $4 billion. Between 2004 and 2013, analysts anticipate the proposals would reduce revenues by $1.5 trillion and increase outlays by $96 billion.

The president's proposals would add $621 billion to mandatory spending between 2004 and 2013, the CBO estimates, with Medicare and Medicaid, the federal-state healthcare plan for low-income individuals, accounting for 75 percent of that increase.

Bush answered his critics by saying that in two years the nation has experienced war, a recession and a national emergency that caused the government to run a deficit.

"The best way to reduce a deficit is with more growth in our economy, which means more revenues to our Treasury and less spending in Washington, D.C.," Bush said.

The effort to promote Bush's job growth plan rippled through the administration. Also, in an effort to draw support for his economic blueprint, the president dispatched his Cabinet secretaries to promote his proposal in 57 events around the country.

On Wednesday, Bush will sign the legislation authorizing the supplemental appropriations package that will pay six months worth of costs for the Iraq war. And on Thursday he will visit the Boeing plant in St. Louis, Mo. After that, for the first time since the war began, the president will head for his ranch in Crawford, Texas to spend the Easter holiday.