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Bush Asks Congress to Make Tax Cuts Permanent

April 16, 2002|EDWIN CHEN | TIMES STAFF WRITER

CEDAR RAPIDS, Iowa — President Bush on Monday urged Congress to make permanent the 10-year, $1.35-trillion tax cuts enacted last spring, warning that their scheduled expiration could hurt the economy and cost 104 million taxpayers an average of $1,040 a year.

If the broad tax relief package is allowed to lapse, taxes would increase by more than $200 billion in 2011, according to the White House.

Congress, however, is unlikely to comply with Bush's request.

The president traveled to Iowa to issue his plea, timed to coincide with the deadline for filing income tax returns. It was in Iowa, as a presidential candidate in December 1999, that Bush unveiled his sweeping tax cut proposal.

Also Monday, Bush attended a $500,000 fund-raising dinner for Rep. Greg Ganske (R-Iowa), who is favored to win the GOP nomination to challenge incumbent Democratic Sen. Tom Harkin in November.

Bush's dual-purpose appearance in Iowa is part of his escalating effort to draw distinctions with Democrats on domestic issues and help GOP candidates around the country as the November elections approach.

Vice President Dick Cheney was in neighboring Illinois on Monday, speaking at a fund-raiser for GOP Rep. John Shimkus.

Bush's call for a tax cut totaling $1.6 trillion was the centerpiece of his 2000 presidential campaign. Although the bill that passed in May fell short of his goal, the measure provided the largest tax reduction in 20 years.

Its main provisions included phased-in cuts of income tax rates, a gradual doubling of the $500-per-child tax credit for families, a new tax deduction for college tuition and repeal of the estate tax.

From the start--even at a time of huge projected budget surpluses--many Democrats opposed Bush's initiative. Since then, the disappearance of the budget surplus has virtually eliminated any chance that, at least for now, Congress would agree to make the tax cuts permanent. A few Democrats have urged repeal of some tax cuts yet to be phased in, but the party's congressional leadership has steered clear of that idea.

Speaking to a crowd of hundreds at General Mills Inc., one of this city's largest employers, Bush said his tax cut softened the nation's economic downturn. To date, he said, 974,000 Iowans have received refund checks totaling $426 million.

"Tax relief is absolutely right for America," the president said.

Referring to the law's sunset provision as "a quirk in the law," Bush said: "I think that doesn't make much sense. It's going to be hard to plan your future if you think all of a sudden [the tax cuts] get kicked in full time and then go away."

The tax cut measure included the sunset provision because, without it, congressional rules meant the bill would have needed 60 votes to pass the Senate. It ultimately passed 58 to 33.

The GOP-controlled House has scheduled a vote Thursday on a measure to make the tax cuts permanent. It is expected to pass on a virtual party-line vote, but die in the Democratic-controlled Senate.

Many Democrats have expressed concern about the fiscal impact of extending the tax cuts just as retirements by the baby boom generation are at their peak.

Analysts at the Center on Budget and Policy Priorities, a liberal-leaning research group, estimates that if the tax cuts are made permanent, it would drain $4 trillion from federal coffers from 2013 to 2022.

If, as expected, the bill to make the tax cuts permanent goes nowhere in the Senate, some Republicans hope to put Democrats on the spot by at least forcing a vote on extending one politically powerful element of the package.

Under the law, the estate tax is gradually reduced over 10 years and repealed in 2010, only to return the next year.

In his remarks at General Mills and at Ganske's fund-raiser, Bush provided his now-standard update on the counterterrorism campaign.

"The cause is noble and the cause is just," he said.

The president also repeated his intention to go after Iraq, a regime that he said is a menace to the world because of its ties to terrorists and its desire to develop weapons of mass destruction.

He also made a spirited pitch for his energy plan, most notably his proposal to open the Arctic National Wildlife Refuge to oil and natural gas exploration.

The Senate is expected to take up the issue this week.

*

Times staff writer Janet Hook in Washington contributed to this report.

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