President Bush offered his opening bid to find a salve for the nation's economy, proposing giving stock investors $364 billion in tax breaks and boosting the size of the 2001 tax cuts by nearly $300 billion.
Bush, in his formal unveiling of the 10-year, $674 billion plan, invoked the supply-side theories of the 1980s. He opted to spend relatively little -- about 15 percent of the total -- to stimulate the economy in the short term. Bush proposed no financial aid to the states and little incentive for capital investment.
Instead, Bush, in a speech to the Economic Club of Chicago, opted for a range of long-term tax cuts. In addition to the complete elimination of the tax on dividends, Bush proposed the immediate implementation of many of the tax breaks slated for the next seven years, covering income tax rates, child tax credits, cuts for married couples and an expansion of the lowest tax bracket.
Democrats said the Bush proposal was a giveaway to the wealthy that would expand federal deficits while providing relatively little in the short term to boost the economy. House Democrats have proposed a plan that would spend more than Bush would in the current year and spread it more evenly across income levels but would cost a fifth as much over 10 years because its measures are temporary.
Bush's plan is likely to be the basis of whatever economic legislation emerges from Congress but unlikely to be the last word in the debate over economic stimulus. Democrats and moderate Republicans will push for a more egalitarian plan, and businesses, particularly high-tech companies that don't pay dividends, will push for a restructuring of Bush's tax proposals.
Bush signaled that he is not going to limit his policies because of the threat of long-term deficits.
-- Dana Milbank