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Bush Defends His $670B Tax-Cutting Plan

January 9, 2003

WASHINGTON (AP) _ President Bush on Thursday defended his $670 billion tax-cutting plan against Democratic-led charges that he is favoring the rich, decrying ``the class war of politics″ that he said is motivating critics.

``It’s a fair plan. It’s an important plan and it’s a plan that will help people find work,″ Bush said at a flag-making company in a Virginia suburb of Washington.

In a round-table discussion with area residents, Bush was challenged on the centerpiece of his proposal _ the elimination of dividend taxes. Don Lucas, a 74-year-old retired accountant, told the president he approved of his overall plan but did not think it was unfair for individuals to be taxed on their stock dividends.

``I saw no problem with corporations paying taxes on the income,″ Lucas said after the session. Bush did not respond to Lucas’ point.

The event was designed to promote the White House economic revival plan while surrounding the popular wartime president with American flags _ linking Bush’s strongest political strength, his fight against terrorism, to what White House officials believe is his biggest vulnerability, the ailing economy.

``We’re fighting a war and the war goes on,″ Bush told employees of the National Capital Flag Co. of Alexandria, Va., which provides flags for the presidential limousine.

``There’s no doubt in my mind we’ll prevail in the war on terrorism no matter how long it takes. And there’s no doubt in my mind that if Congress does the right thing, that more of our Americans will have a more hopeful future″ in a stronger economy, Bush said.

The smallest item in Bush’s 10-year package _ at a cost of $16 billion _ would allow small businesses like the flag company to write off up to $75,000 worth of new technology, machinery or other equipment, a cap that would be indexed to inflation in future years. Now, businesses can exempt just $25,000.

The White House has estimated that 23 million small business owners would receive an average tax cut in 2003 of $2,042 from that provision.

At a cost of $64 billion, Bush also wants to accelerate to this year all the individual income tax rate cuts enacted in last year’s tax package and scheduled for 2004 and 2006. White House deputy press secretary Claire Buchan said small businesses make up a large share of the individual income tax returns in the top brackets.

The administration’s hope is that giving such breaks to entrepreneurs and other smaller companies would lead them to expand, adding jobs in their own shops while boosting the broader economy with their demand for products.

Thursday’s event allowed Bush to focus on portions of the plan that, although making up only 12 percent of the total cost, have some of the potential for stimulating the economy.

Democratic critics are charging that the plan _ with its centerpiece elimination of taxes on stock dividends _ is a giveaway to the wealthiest Americans with little short-term growth-spurring value.

Bush himself has termed that provision in part a matter of principle, in which ``it’s unfair to tax money twice.″

He said Thursday that his overall tax plan would benefit middle-class Americans, citing administration estimates that a family of four making $42,000 a year will receive a 96 percent reduction in its federal tax bill.

``That may not mean a lot of money to some of the big shots,″ he said. ``It means a lot of money to the family of four making $42,000.″

He also said: ``You hear a lot of talk in Washington, of course, that this benefits so-and-so (and) this benefits this _ the kind of class war of politics,″ Bush said.

To sell the costly plan, unveiled Tuesday in Chicago, the administration is launching a full-court press inside and outside of Washington.

As Bush courted congressional leaders from both parties at the White House Wednesday, his new chief economic adviser, Stephen Friedman, was in New York briefing several groups of business leaders. On Friday, Vice President Dick Cheney talks up the proposals in a speech to the U.S. Chamber of Commerce.

The president plans additional trips, both before and after his Jan. 28 State of the Union address, to make his case before friendly crowds and generate local coverage of the plan, a senior administration official said.

The White House also was arranging audiences for Bush officials with newspaper editorial boards across the country.

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