- The Washington Times - Monday, January 13, 2003

Soon after President Bush got his $1.3 trillion tax-cut plan passed in 2001, his advisers realized they had made a huge, politically strategic mistake.
The tax cuts' agonizingly slow, 10-year phase-in period would hardly make a dent in the nearly $11 trillion-a-year economy before the 2004 presidential election. Most of the cuts occurred after the election.
The economy was softening before Mr. Bush took office, but by the end of the first year the numbers were worse and 2002 was bumpier, with 2003 also looking uncertain.
"We should have done it much faster. Ten years was too long," White House economic adviser Larry Lindsey told me during an interview.
The tax-cut revisions Mr. Bush proposed last week are aimed at not only correcting that blunder, but enlarging his tax-cut revolution. The income-tax cuts, the family per child tax credit, the marriage penalty tax rate reductions all are being moved up to this year, effective Jan. 1.
Unfortunately, the national news media focused to the virtual exclusion of everything else on only one part of the president's plan: elimination of the tax on dividends. As important as they are, they are not the most critical part of Mr. Bush's stimulus plan.
The income-tax rate cuts are far more significant for the short term and the long term. The next rate reductions were not going to take effect until 2004 and 2006. Mr. Bush's plan will cut them now, putting money immediately into worker paychecks to raise consumer spending and investment.
Under the plan, if you work, you will have less taxes taken out of your paycheck. If you are married and have children, you will do even better.
But this part of Mr. Bush's ambitious tax-cut proposals concerning income were either buried, blurred or ignored in the news media's reporting, letting Democrats get away with murder with their class-warfare attacks.
A careful reading of his plan shows taxpayers at all income levels will be helped a lot, particularly middle- and lower-income earners. In fact, they will be helped much more under Mr. Bush's plan than by the Democrats' alternative.
Who says? None other than the liberal New York Times, which fiercely opposes Mr. Bush's tax-cut policies. Read this sentence that was buried in the next to the last graph of the Times' story last week on the president's plan: "What Democrats are less likely to emphasize is that Mr. Bush's plan would provide bigger tax cuts for many people at middle-income and lower-income levels than theirs would." But a close analysis of the administration's plan shows this is much more than just an economic blueprint to put the nation's economy back on its feet. It is a political blueprint to ensure Mr. Bush's re-election in 2004.
Take a look at a few of the key voter groups who will be helped by the president's stepped-up tax cuts:
Two-parent households with children. Not just upper-income families, but all families at every income level will benefit from the $400 boost in the $600 per child tax credit. Many families will be sent a rebate check this year.
The higher $1,000 child tax credit is a pro-family initiative that not only will resonate with parents, but with social conservative activists who have made this a major plank in their agenda.
Despite charges that Mr. Bush's plan helps the rich the most, it is worth noting that this child-care credit is the second-costliest part of Mr. Bush's plan, after the dividend tax elimination.
Married working couples who file jointly are penalized by a higher tax rate than if they filed separately. Their lower tax rate under the 2001 act would not have been fully adjusted until 2009. By implementing it this year, 35 million couples will see their tax bills decline.
Election polls showed last year that the president's job approval ratings were higher among married couples than single people, especially those with children.
The elderly: They have been at the core of the Democrats' political base for decades, but Mr. Bush and the Republicans made inroads in the past year and may do even better two years from now.
Thirty-five million Americans receive income from dividends, including 10 million elderly retirees. Eliminating dividends tax will significantly raise incomes for these older Americans, putting up to $20 billion back into the private economy.
One of the news media's worst distortions in last week's reporting on the dividend issue reasoned that it would have no impact on workers who are under 401(k) investment plans because the plans are not taxed.
This misunderstands Mr. Bush's proposal. Besides letting investors keep their dividends for a more secure retirement, its larger purpose is to boost stock values.
As investors return to the market, stock prices will rise, as will the value of 401(k) plans. Ordinary workers who receive no dividends will see their 401(k) wealth grow. Workers who invest in stock IRAs or other mutual funds will also get dividend payments.
Mr. Bush's plan is aimed at getting the economy running on all cylinders. It is not politically unreasonable to think that if his plan is successful (and both the Kennedy and Reagan tax rate cuts were), millions of stock-owning voters will want to express their thanks at re-election time.
Polls show that two-thirds of all voters own stock (and 50 percent of all U.S. households). That could add up to a lot of gratitude in 2004.

Donald Lambro, chief political correspondent for The Washington Times, is a nationally syndicated columnist.

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