- The Washington Times - Wednesday, May 17, 2006

President Bush signed $70 billion in renewed tax cuts yesterday, calling the legislation the centerpiece of an economic expansion that Republicans hope to ride to re-election in November.

The president said emergency war appropriations pending in Congress is a test of whether the Republican majority can limit spending, raising the stakes as the House and Senate hammer out differences in their versions of the legislation.

The bill Mr. Bush signed yesterday extends the dividend and capital gains tax cuts that Congress first enacted in 2003, which set the maximum rate for both at 15 percent.

In a bill-signing ceremony at the White House, Mr. Bush said those cuts helped revive U.S. business investment, which is now growing at a rate of more than 9 percent a year. With 57 million households investing in the stock market, he said, those tax cuts reach half of American homes.

“The bill I sign today is a victory for the American taxpayers, and it’s a strong lift for our economy,” he said.

The tax cuts had been scheduled to end in 2008, but the new law extends them until 2010. It was what Democrats and Republicans predicted back in 2003, though with differing levels of enthusiasm.

The bill passed the House last week by a 244-185 vote, with 15 Democrats joining all but two Republicans in voting for it. In the Senate, the bill passed by a 54-44 vote, with three Democrats voting for it and three Republicans voting against it. The bill was named the Tax Relief Extension Reconciliation Act of 2005, which reflects that it was unfinished business from last year.

Both parties think they can campaign on the issue.

The National Republican Senatorial Committee issued press releases accusing Democratic candidates in swing states of having voted for a tax increase.

But Sen. Charles E. Schumer, New York Democrat and chairman of the Democratic Senatorial Campaign Committee, said the vote will “stay with the president and stay with every Republican member who voted for this bill from now until November 6.”

“This is a seminal issue,” Mr. Schumer said. “We’re no longer talking about tax cuts versus spending, which is ground the Republicans like to play on. We’re talking about tax cuts for the middle class versus tax cuts for the very rich, in this case Big Oil.”

Democrats said the middle class was damaged when Republicans removed college tuition tax credits from the bill during final House-Senate negotiations.

“They were OK with — it’s hard to say this — a half a million dollars a year for multimillionaires, but $4,000 for a student, they couldn’t handle,” said Senate Minority Leader Harry Reid, Nevada Democrat.

Republicans said they still plan to push for those breaks.

“I’ve said many times, on the Senate floor, in the Congressional Record, to anyone who will listen — and apparently certain Democratic leaders won’t — that no one is abandoning the extension of the college tuition tax deduction. It’s going in the second tax bill, under development right now,” said Sen. Charles E. Grassley, Iowa Republican and chairman of the Senate Finance Committee.

Mr. Grassley said many Democrats who are criticizing the new tax law voted against the 2001 bill that created the college tuition tax credit.

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