Bush to Unveil Economic Package
Thu January 2, 2003 05:51 PM ET
By Adam Entous
CRAWFORD, Texas (Reuters) - President Bush will unveil his economic stimulus package on Tuesday, hoping to boost job growth, investor confidence -- and his own re-election chances -- with a new round of tax breaks for businesses and individuals, officials said.
Bush declined to detail what will be in the multi-year package, which is expected to total as much as $300 billion. He will announce the package during a visit to Chicago.
"I'm worried about those who are unemployed. I am concerned about those who are looking for work and can't find work. And so, next week, when I talk about an economic stimulus package, I will talk about how to create jobs ... as well as how to take care of those who don't have a job," Bush told reporters at his Crawford, Texas, ranch on Thursday.
Bush chafed at suggestions that the cuts would mainly benefit the wealthy, saying critics were trying to "turn this into class warfare."
"I'm concerned about all people," Bush said.
The package was expected to include a cut of up to 50 percent on taxes on corporate dividends paid to shareholders.
Despite the recent recession, the Sept. 11 attacks and a series of corporate scandals, Bush said: "I hope American investors realize that the economy is pretty darn strong."
Bush is also expected to ask Congress to accelerate cuts in income tax rates, though the nation's top earners may be left out. Some of the president's political advisers are worried about Democratic charges that he favors the rich.
Under Bush's 2001 tax-cut package, across-the-board cuts in income tax rates are set for 2004 and 2006. While there had been discussion among Republicans about bringing the 2004 rates forward to this year, now congressional aides say the 2006 rates could be implemented in 2003.
That would lower the current 27 percent bracket to 25 percent and the top 38.6 percent bracket to 35 percent.
The package also was expected to include incentives to spur business investment and may include aid to cash-strapped states, something Democrats have been urging.
Bush said he would also immediately ask Congress to extend federal unemployment benefits for more than 750,000 Americans, whose benefits expired on Dec. 28.
He said his goal was to "create confidence in our economy so that people can find work."
DOMESTIC PRIORITY
By unveiling the package on Tuesday, well before the State of the Union address tentatively set for Jan. 28, Bush increases pressure on the Republican-controlled Congress to act within the next month.
While the U.S. House of Representatives is likely to take up the tax cuts right away, debate could bog down in the Senate, where minority Democrats have enough votes to delay passage or to force Bush to make concessions.
Incoming Senate Finance Committee Chairman Chuck Grassley, an Iowa Republican, issued a statement saying he would work closely with the White House to move a package quickly.
"I'm interested in plans that will work quickly, that will do the most good for the most people, and that will pass in a bipartisan way, given the realities of working in a closely divided Senate," Grassley said.
The White House has made reviving the U.S. economy the top domestic priority besides homeland security. Bush's re-election chances in 2004 could depend on whether he can get the economy growing again.
The White House would not discuss details of the package but sources said many of Bush's aides favor a 50 percent cut in taxes on dividends that could cost the U.S. Treasury more than $100 billion over 10 years.
Business leaders say it would provide a near-term stimulus by providing an immediate increase in disposable income and encouraging investment in stocks. Currently, corporate income is taxed twice -- once when earned by a company and again when it distributed to shareholders as dividends.
In addition, Bush's package was expected to allow companies to quickly write off more of their investments.
Bush is expected to accelerate some tax rate cuts, particularly for married couples and families with children.
Wage earners would see less income tax withheld from their paychecks, giving them more to spend. Putting money in the hands of middle-class families could also help blunt claims that Bush's tax cuts benefit the rich and win Democratic support in the narrowly divided Senate.
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