CHICAGO — President Bush formally unveiled a plan Tuesday designed to spur America's sluggish economy through bigger, faster tax cuts--an approach he said will increase consumer spending and reinvigorate the stock market. But critics said it will mostly benefit the rich and help lower- and middle-income Americans little or not at all.
The plan will cost the federal government $674 billion over 10 years, more than half of it by eliminating the tax on cash dividends companies pay to shareholders, according to White House estimates.
For The Record
Los Angeles Times Wednesday January 15, 2003 Home Edition Main News Part A Page 2 National Desk 12 inches; 432 words Type of Material: Correction
Recession -- An article Jan. 8 in Section A about President Bush's new economic plan incorrectly reported that the economy was in recession when he took office. In fact, the recession began two months later, in March 2001.
The proposal would also accelerate all income tax rate cuts in Bush's 2001 tax plan -- including changes in tax brackets, the so-called marriage penalty and child credits -- so they become effective this year. Under existing law, the cuts would have come into force gradually until 2010.
The president also proposed a new tax incentive for small business and the creation of "reemployment accounts" to help the unemployed get training and other services needed to find jobs.
"The jobs and growth proposals I've outlined today are a focused plan to encourage consumer spending, to promote small-business growth, to boost confidence in our markets and to give critical help to unemployed citizens," Bush told a luncheon of 2,200 business executives hosted by the Economic Club of Chicago.
The stimulus plan follows months of White House worry about the economy, which was in recession when Bush took office in January 2001, and has since shown only anemic signs of recovery. Bush and his staff, mindful of the 2004 presidential election and how a faltering economy damaged his father's reelection bid in 1992, are eager to jump-start growth.
The stimulus plan's focus on tax cuts has been especially controversial, even within the administration, because the cuts are expected to increase the federal deficit -- by $102 billion this year alone, according to White House officials.
With an eye toward Democrats' efforts to dismiss its plan as a sop to the rich, the administration had originally considered excluding the wealthiest Americans from the tax-cut acceleration. But it ultimately decided to make the cuts across the board, administration officials said.
"The president does not believe in punishing people because they are successful," White House Press Secretary Ari Fleischer said.
