Bush Signs $70 Billion Tax Cut Extensions

President Bush waves as he walks back to the Oval Office of the White House after attending a ceremony honoring the 2006 United States Winter Olympic and Paralympics Teams, Wednesday, May 17, 2006, in Washington. (AP Photo/Pablo Martinez Monsivais) (Pablo Martinez Monsivais - AP)

"The Republican tax cuts do little for middle-class American families, and widen the gulf between the rich and poor," said the second-ranking House Democrat, Rep. Steny Hoyer of Maryland.

For a family making between $40,000 and $50,000, the cuts will mean an additional $46, he said. In the long term, Hoyer said, they will "add to our record-setting deficits and undermine America's ability to invest in job training, education, health care and other priorities."

Bush also renewed his threat to veto legislation to pay for war in Iraq and hurricane relief at home because the spending bill has so many election-year add-ons. He has set a limit of $92.2 billion for the war and hurricane relief plus an additional $2.3 billion to prepare for a possible bird flu pandemic.

"If this bill goes over the limit or includes non-emergency or wasteful spending I'll veto it," Bush said.

Passage of the tax-cut extensions was the first step of a two-track strategy for advancing the GOP's election-year tax cut agenda. A separate bill containing about $22 billion to $23 billion in tax breaks backed by Republicans and Democrats is expected to advance soon as a follow-up.

It would preserve tax deductions for state and local sales taxes, a tuition tax deduction, a tax break for teachers who buy their own school supplies, and the research and development tax credit for businesses.

Even though Democrats generally opposed the tax cut extensions, they back the alternative minimum tax relief. At about $34 billion, it is the single costliest part of the bill.

The tax was established in 1969 to ensure that all taxpayers pay at least some tax, but it was not indexed for inflation. Now, it often hits better-off taxpayers in Democratic-leaning high-tax states such as New York and California, where it threatens benefits such as the child tax credit or state tax deductions.