Bush unveils economic stimulus plan
Posted on 01/07/2003 9:38:38 AM PST by MeekOneGOP
Bush unveils economic stimulus plan
01/07/2003
WASHINGTON - President Bush put forward a "growth and jobs" economic stimulus plan on Tuesday that would provide tax relief to an estimated 92 million Americans by accelerating income tax rate cuts, wiping out all federal taxes on stock dividends paid to investors and boosting the child tax credit by $400 per child.
The administration estimated its latest economic stimulus package would carry a 10-year price tag of $674 billion, more than double what the president had been considering only a week ago.
Leaving the White House for a Chicago speech where he will begin selling the plan, Bush strode toward his helicopter with his new chief economic adviser, Steve Friedman, alongside, and a clutch of other top aides following behind.
The two major elements of the package would be a total elimination of the federal tax that investors pay on their stock dividend earnings and an immediate acceleration -- retroactive to Jan. 1 -- of the tax rate cuts that had been scheduled to take effect in 2004 and 2006.
Even before the administration released the details of its stimulus program, it was being attacked by Democrats who charged that it offered too little to lower-income Americans while providing costly tax breaks to wealthy Americans under the guise of providing a quick jump-start to the sluggish economy.
The administration said that $102 billion of the cost of the program would occur in 2003 and the rest of the $674 billion total cost would be spread out over the next decade.
The biggest element of the package would be the total elimination of taxes on corporate dividends which the administration estimated would cost $364 billion over 10 years.
The acceleration of the tax rate cuts in the 2001 tax law would cost $64 billion while the acceleration of the child tax credit, currently at $600, would cost $91 billion, according to administration's estimates of 10-year costs.
Bush's 10-year $1.35 trillion tax package that Congress passed in 2001 called for further rate cuts but not until 2004 and 2006. It also phased in increases in the per child tax credit but the $1,000 level would not have been reached until 2010.
The administration said that checks reflecting the higher child care credit would be issued this year and it estimated 34 million families would benefit from this element of the president's plan.
The administration also proposed accelerating planned relief from the so-called marriage penalty which hits two-earner couples. Accelerating relief for the marriage penalty, which would have been fully effective in 2009, was estimated to have a 10-year cost of $58 billion.
"This is a plan that provides tax relief to the working citizens," Bush said Monday. "It's a plan that is a very fair plan. It's a plan that recognizes when somebody has more of their own money, they're likely to spend it, which creates more jobs."
The administration estimated that the various elements to accelerate tax breaks in the 2001 legislation would provide tax relief to 92 million taxpayers with the average reduction totaling $1,083 in 2003.
Breaking that figure down further, the administration said in a fact sheet that 46 million married couples would receive an average tax cut of $1,716 this year while 23 million small business owners would receive tax cuts averaging $2,042.
The administration said its package would provide $1,100 in tax relief this year to a typical family of four with two wage earners making a combined income of $39,000.
In addition to the tax relief for individuals, Bush's package would boost tax relief for small businesses by expanding the amount of equipment purchases they can write off as deductions from the current $25,000 to $75,000 and index future increases to inflation.
The president's Council of Economic Advisers estimated that all the tax relief, by providing consumers and businesses with more spending power, would boost economic growth and create an additional 2.1 million jobs over the next three years.
The president also proposed as part of his plan reinstating the extended unemployment benefits which expired on Dec. 28, making the benefits retroactive for the nearly 800,000 laid off workers who lost their benefits last month.
Word of Bush's plans to eliminate taxes on stock dividends helped spur the stock market as the Dow increased by more than 170 points Monday.
Democrats offered a rival tax-cutting plan and said Bush's favors the rich.
"The president really is investing $600 billion on an old, old Republican theory of trickle-down economics," said Rep. George Miller, D-Calif. "We're saying no. Give it to the people who need it."
The Democratic plan would expand unemployment benefits by 26 weeks and give all workers a refundable income tax rebate of up to $300 per person or $600 per working couple. States would get $31 billion for homeland security, highway, Medicaid and unemployment insurance programs.
After tackling the unemployment benefits issue, Bush wants Congress to create "Personal Re-Employment Accounts" of up to $3,000 that could be used by states in a variety of ways -- including awarding bonuses to people who quickly leave unemployment rolls.
Under the two-year, the federal government would give the states $3.6 billion to fund the account, which could be used by people who have exhausted their unemployment insurance or are likely to do so. The money could be used to pay for child care, job training, transportation, moving costs and other expenses of finding a job, according to Bush's proposal. The administration estimated 1.2 million Americans could take advantage of these new accounts.
How does a U.S. tax cut help Mexico, India, China and at the same time hurt the U.S.? Trying to follow your logic.
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