By Bill Brubaker
Washington Post Staff Writer
Wednesday, May 17, 2006 4:21 PM
President Bush today signed a $70 billion, election-year tax-cut package, predicting it will bring a "strong lift" to the economy and "help millions of Americans who are saving for the future."
Republicans hope the legislation, which extends existing tax cuts on dividends and capital gains as well as changes to the alternative minimum tax, will give their party a boost heading into the midterm congressional elections in November.
Democrats quickly labeled the bill a boon to wealthy -- not average -- Americans.
"Today's really a good day to be a millionaire, but it's a bad day if you want to be a millionaire," Senate Democratic Leader Harry Reid (Nev.) said at a news conference minutes after Bush signed the bill. "That's because President Bush just signed with the stroke of a pen a bill that sealed the fate of those trying to get ahead."
The signing on the White House's South Lawn, at a table decorated with stars and stripes and the words "Tax Relief for All Americans," comes as public confidence in GOP governance has plunged to the lowest levels of the Bush presidency, according to a Washington Post-ABC News poll.
"The opponents of these tax cuts were wrong when they voted against them the first time," Bush said, referring to Democrats who opposed tax cuts passed by the Republican-controlled Congress in 2001 and 2003. "They've been wrong to oppose the extension of tax relief in the face of overwhelming evidence that the tax cuts have helped grow the economy and create millions of new jobs."
Bush said the tax cuts have benefited Americans at all income levels.
"If you have a mutual fund for your family, these tax cuts made you better off," he said. "If you have an IRA or 401(k), these tax cuts will help provide a better retirement. If you're a senior who depends on dividend income to make ends meet, these tax cuts have led to a better check each month. At all levels of income, the tax cuts on dividends and capital gains are letting Americans keep more of their own money and live a better life."
Democrats opposed the legislation, saying the tax cuts on dividends and capital gains are mostly benefiting wealthy Americans.
"If you want to look at why the Republican Party is down in the dumps and why the president's numbers are down in the dumps," Sen. Charles Schumer (D-N.Y.) said this afternoon, "it's that the American people are beginning to understand that when they talk about tax cuts, they're not talking about helping middle-class people. They're talking about helping the wealthiest corporations and individuals among us."
The bill extends for two years the 15 percent tax rate for dividends and capital gains, which was due to expire at the end of 2008. It extends through 2006 changes to the alternative minimum tax, which were designed to increase the tax burden of wealthy Americans but has also struck upper-middle income families. And it extends through 2009 a tax cut that gives small businesses a write off -- up to $100,000 -- for equipment and other depreciable assets.
Among other provisions, the bill also eliminates, for 2010, the $100,000 income limitations on converting traditional IRAs to Roth IRAs.
The signing ceremony was attended by many prominent Republicans including Vice President Cheney, Treasury Secretary John Snow, House Speaker J. Dennis Hastert (Ill.) and Senate Majority Leader Bill Frist (Tenn.).