WASHINGTON — President Bush on Thursday sent Congress a $1.6-trillion tax cut proposal, crafted during the election campaign when the economy was booming but serving now as his remedy for the sudden economic slowdown.
"A warning light is flashing on the dashboard of our economy, and we just can't drive on and hope for the best," Bush said at a Rose Garden ceremony.
"We need tax relief now. In fact, we need tax relief yesterday."
But some analysts challenged whether any tax cut could be put in place fast enough to turn the economy around. And the economic effect also hinges on whether taxpayers actually spend the tax cut. Taxpayers are already giving mixed signals, with some saying in interviews they would spend their tax cut even before they got it and others saying they would save it.
During the campaign, Bush defended his tax package as necessary relief for those struggling to enter the middle class. Now, with the economy growing much more slowly, he is promoting essentially the same package but wrapping it in different language.
Bush's key provision would reduce individual tax rates from the current range of 15% to 39.6% to new rates ranging from 10% to 33%. When the new rates would take full effect in 2006, married couples would pay 10% on their first $12,000 of taxable income and 33% on all income over $166,500.
This year, the White House estimates, the average family of four would enjoy a tax cut of $640, or about $12 a week. That would grow to $1,600, or about $30 a week, in 2006, when the phased-in tax cut would take full effect.
Some tax experts said that, regardless of its size, no tax cut can be implemented fast enough to help an economy on the way down. More than that, critics said, the tax cuts are not targeted to the lower and middle-income people who would be most likely to spend their tax savings and thus boost economic activity immediately.
"To fight a recession, you want a plan that is immediate, moderately sized and geared to low- and middle-income people," said Bill Gale, a senior fellow at the centrist Brookings Institution think tank in Washington. "Bush's plan is exactly the opposite."
Supporters pointed to the plan's psychological effect: its potential to boost consumer and investor confidence immediately, even before anyone has an extra dime in hand.
"It will have a big short-term impact and an even bigger long-term impact," said Dan Mitchell, a tax specialist at the conservative Heritage Foundation.
