- The Washington Times - Thursday, May 29, 2003

President Bush signed the second major tax cut of his administration into law yesterday, setting a goal of creating 1 million jobs by the end of 2004.

“By ensuring that Americans have more to spend, to save and to invest, this legislation is adding fuel to an economic recovery. We have taken aggressive action to strengthen the foundation of our economy so that every American who wants to work will be able to find a job,” Mr. Bush said at a 20-minute signing ceremony in the East Room of the White House.

The $350 billion package includes $20 billion in aid to states and $330 billion in tax cuts, divided among dividend and capital-gains tax cuts, income-tax rate cuts, an increase in the child tax credit and tax breaks meant to stimulate new investment by businesses.

New withholding tables have already been posted on the IRS Web site to reflect the tax-rate changes, and beginning in July some 25 million taxpayers will begin to get checks of $400 per child as the 2003 installment on the increased child tax credit.

“We know that tax relief is going to help this economy because it has done so in the past,” Mr. Bush said. “The tax relief we passed in 2001 helped make the recession one of the shallowest in American history.”

Mr. Bush’s endorsement of the $350 billion bill is a stark turn from a month ago, when he called that figure “little-bitty.”

But it became clear that a larger tax cut could not pass the Senate, and so last week, the administration decided to accept a bill immediately rather than fight for something bigger.

In order to fit into the $350 billion cap Republican leaders agreed to “sunset” most of the tax cuts, meaning that they will expire after a few years, although Republicans have pledged to make them permanent.

Facing an economy that is sputtering after having come out of the 2001 recession, Mr. Bush stumped heavily for the tax cut.

He made several campaign-style appearances around the nation, particularly in home states of wavering senators who will be up for re-election.

At the same time, he had members of his Cabinet stumping for the tax cut with House and Senate Republicans who supported the tax cut, as a kind of reward.

Vice President Dick Cheney also got involved, keeping the tax cuts on track three times in the past two months by breaking 50-50 ties in the Senate.

Even Democrats credited the president with a political victory, though they disagreed with the policy, saying it will just build the nation’s debt.

“It’s a tremendous political victory, it’s just tremendously bad policy,” said Gene Sperling, who was President Clinton’s national economic adviser.

Mr. Sperling told reporters in a conference call arranged by the Democratic National Committee yesterday that if Republicans extend the tax cuts, it will mean more than $1 trillion in lost revenue to the government over the next decade.

He said that means the government will have received only 20 cents’ return in 2003 and 2004 for every dollar spent on stimulus.

“This is extremely poor bang for the buck,” he said.

Senate Minority Leader Tom Daschle, South Dakota Democrat, said the president’s plan is more of a giveaway to the rich than a jobs-creator.

“The consensus of economists was that the plan needed to be responsible, immediate and tailored to create the most jobs for the money. Unfortunately, the plan the president signed today missed on all three,” he said in a statement.

Besides the state aid, the legislation includes a reduction in the marriage penalty, an acceleration of already planned income-tax rate cuts, and incentives to spur business investments.

But the bill’s centerpiece cut, accounting for about $190 billion, is the cut in dividend and capital gains taxes. Though it falls short of the president’s requested $726 billion tax cut, which called for full elimination of the tax that individuals pay on income from corporate dividends, it does substantially lower the dividend tax.

According to various Republican estimates, the bill is front-loaded to pump more than $200 billion into the economy in the next two years.

In addition to the 1 million jobs the White House says the legislation will create, House Majority Leader Tom DeLay said last week that the new law will also promote an immediate boost in the stock market. The Dow Jones Industrial Average rose 11.77 points yesterday, on top of gains of almost 180 points Tuesday. The bill passed Congress on Friday.

Unlike the signing ceremony for the $1.3 trillion 2001 tax cut, which was described as raucous, yesterday’s signing was more staid.

Mr. Bush was surrounded by Republicans — Treasury Secretary John W. Snow, Commerce Secretary Donald L. Evans, Senate Majority Leader Bill Frist of Tennessee, and House Ways and Means Committee Chairman Bill Thomas of California.

The president thanked them, as well as House Speaker J. Dennis Hastert, Illinois Republican, and Senate Finance Committee Chairman Charles E. Grassley, Iowa Republican, neither of whom was at the ceremony.

He also pointedly thanked Democratic Sens. Ben Nelson of Nebraska and Zell Miller of Georgia, whose votes were critical to offset the three Republican senators who opposed the measure.

Mr. Bush has now signed a tax cut in each of the first three years of his presidency. In addition to the 2001 package and this year’s package, he signed on March 9, 2002, a $42 billion stimulus bill that included cuts to encourage hiring by businesses.

Copyright © 2017 The Washington Times, LLC. Click here for reprint permission.

blog comments powered by Disqus

 

Click to Read More

Click to Hide