Friday, September 5, 2003

KANSAS CITY, Mo. — President Bush yesterday called for making his tax cuts permanent for the first time since signing a major tax-cut package in May that was touted as temporary in order to keep the price tag low.

Critics saw the move as an attempt at yet another tax cut “costing more than $1 trillion over the next decade” at a time when Democratic presidential candidates are demanding that Mr. Bush repeal even his earlier, temporary cuts.

But the White House insisted the president was not “double-dipping” by resuming his demand for tax-relief measures that would have shattered the $350 billion ceiling Congress imposed on the May cut.

“When we threw out the old taxes, Americans didn’t expect to see them sneaking in through the back door,” Mr. Bush told an adoring crowd of business owners here. “For the sake of economic growth, for the sake of job creation, the United States Congress must make these tax cuts permanent.”

The measure was part of what Mr. Bush called a six-point plan for accelerating economic growth. It amounted to the most aggressive and detailed defense of his economic stewardship, which has come under fierce attack by Democratic presidential candidates.

One of them, Rep. Richard A. Gephardt, yesterday said the president’s first two major tax-cut packages, passed in 2001 and this year, have failed to create desperately needed jobs.

“Making it all permanent is just increasing the problem,” he told The Washington Times. “It’s not getting the economy to grow because the tax cuts go to the wrong people for the wrong reasons.”

The Missouri Democrat added: “When I’m president, I will ask the Congress to lay aside the Bush tax cuts.”

But as part of a concerted effort to take the political fight over the economy directly to Democratic presidential hopefuls like Mr. Gephardt and front-runner Howard Dean, the president said their calls to roll back his cuts amount to massive tax increases.

“Some critics, who opposed tax relief to start with, are still opposing it,” he said. “They argue we should return to the way things were in 2001. What they’re really saying is they want to raise taxes.

“Higher taxes will not create one job in America,” he added. “Raising taxes would hurt economic growth. Tax relief is putting this nation on the path to prosperity and I intend to keep it on the path to prosperity.”

The president’s first major cut, passed in 2001, was supposed to provide $1.35 trillion in tax relief over 10 years. But many of the cuts were temporary and others were not scheduled to take effect until the latter years, precluding an immediate stimulative effect on the economy.

Early this year, the president proposed a second, $726 billion tax cut that included making his earlier cuts permanent. When Congress balked at the price tag, Mr. Bush agreed to abandon the permanence provisions.

That lowered the package to $350 billion and allowed Mr. Bush to “front-load” plenty of economic stimuli that began taking effect immediately after passage in May. Democrats feared they had been outmaneuvered when it dawned on them it would be political suicide to ever reinstate temporarily suspended taxes like one that penalizes married couples.

“In the long run, the bill will really cost a trillion dollars or more,” predicted Rep. Charles B. Rangel, New York Democrat, after it passed earlier this year. He is his party’s ranking member of the House Ways and Means Committee.

Gene Sperling, chief financial adviser under President Bill Clinton, agreed.

“I think this is an enormous political victory for President Bush,” Mr. Sperling told CNN in May. “He’s gotten virtually everything he wants.”

Last week, the Congressional Budget Office estimated that making the Bush tax cuts permanent would cost more than $1 trillion over the next decade. But the president said failure to make the cuts permanent would devastate the rebounding economy.

“People are more likely to find work if businesses and their workers can be certain that the lower tax rates of the last years will stay in place,” Mr. Bush said. “Today, you don’t have that confidence.

“That’s because at the end of next year, the $1,000 child tax credit will shrink to $700. In 2008, capital-gains taxes are scheduled to rise by a third. In 2011, the ‘death tax’ on estates will reappear just one year after being phased out.

“That doesn’t make any sense,” Mr. Bush told the business owners, who interrupted him with numerous standing ovations during the 42-minute speech. “We’re going to phase out the death tax — which is a bad tax to begin with — and then let it pop back to life. But that’s reality.”

Aside from the renewed call to make his tax cuts permanent, the remainder of the six-point economic plan is largely a repackaging of earlier Bush initiatives. These include free trade, tort reform, reduced regulations, Medicare reform and a comprehensive energy bill.

“Our economy is starting to grow again; Americans are feeling more confident,” Mr. Bush said. “I am determined to work with the United States Congress to turn these hopeful signs into lasting growth and greater prosperity and more jobs.”

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