Bush signs his 2nd big tax cut

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.

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