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House conservatives propose $2.2 trillion tax cut

Armey
House Majority Leader Dick Armey.  

WASHINGTON (CNN) -- With President Bush making a fresh pitch for his tax plan, conservative House Republicans said Wednesday they are "upping the ante" on the proposal, introducing a package that raises Bush's $1.6 trillion tax package to $2.2 trillion over 10 years.

The bill, which won endorsement by House Majority Leader Dick Armey and House Whip Tom DeLay, both Texas Republicans -- and an influential group of 65 of the most conservative members of the House -- is based on Bush's tax package, but accelerates the relief in some areas and adds other categories not in the president's plan.

"American taxpayers deserve a bigger, faster, pro-growth tax cut," said the bill's author, Rep. Pat. Toomey, R-Pennsylvania. "This legislation accelerates and expands the president's proposal in repealing such onerous taxes as the marriage penalty tax and the death tax, which hurts small businesses and farmers.

"In addition, my legislation would repeal the phone tax and the 1993 Clinton tax hike on Social Security benefits," Toomey said.

The bill also would increase tax-free contributions to retirement funds, increase the child tax credit, and increase the deduction for business meals to 80 percent, among other proposals, according to Toomey.

Many House Republicans, led by Armey, have pushed for a larger tax cut than Bush's, arguing it is both affordable under the growing budget surplus projections, and needed because of a slowing economy.

Casting blame

Meanwhile, the House Democratic Leader, Richard Gephardt, D-Missouri, blamed the Bush administration for talking so much about an economic downturn that it caused one to happen.

Richard Gephardt
Gephardt: This tax cut...is backloaded...it's really having a bad psychological effect to what's happening in the economy already."  

"Part of this, I guess, was started when Dick Cheney a few months back said we were in a recession," Gephardt said. "We've been talking ourselves into this, now it is happening,"

Gephardt called the stock market plunge of recent days proof that the American people are not comfortable with the Bush tax plan.

"Now there are real facts out there and the economic plan to me is not meeting the needs that are out there," Gephardt said. "This tax cut is not doing that because it is backloaded. Most of it happens in the last five years, not now, so it's really having a bad psychological effect to what's happening in the economy already."

House Speaker Dennis Hastert, R-Illinois, has said he wants the overall tax package to remain at $1.6 trillion, as proposed by the president. However, he has not discouraged the conservatives because he recognizes their push for more could persuade Democrats to negotiate a final figure closer to the $1.6 trillion goal, his press secretary, John Feehrey, told CNN.

In the Senate, where a tax bill is not expected to come for a vote until May at the earliest, Republicans still say they will not pass a tax cut higher than Bush's $1.6 trillion, 10-year plan, but they do say momentum is building for adding a capital gains rate reduction.

Democrats say the president's tax cut plan is already too high, geared to the rich, and based on questionable surplus projections.

Senate Democratic leader Tom Daschle, D-South Dakota, said this week's stock market dive is a harbinger for diminishing surpluses.

"I think the surplus projections are going to be dramatically different as a result of what you've seen from the stock market over the last couple of weeks," Daschle said.

"There is no doubt that if we have lost that much money in retirement accounts, we lost that much money in the stock market itself, we could lose similar amounts of money in projected surpluses."

Bush worried about stocks

Speaking in East Brunswick, New Jersey, on Wednesday, Bush acknowledged that investors were suffering at the hands of the stock market's poor performance, but said his tax and economic plan was still the best tonic for their ailments.

"Our economy is beginning to sputter," he said. "I'm sorry people are losing value in their portfolios. That worries me."

"But with the right policies, I'm confident our economy will recover," he said. "And that means giving people money back, in plain language."

"I like to remind people that the surplus is the people's money, and we better be wise about how we spend it," the president said.

"It makes good sense to reinforce the American dream through good tax policy," Bush told a meeting of the New Jersey Chamber of Commerce.

Wednesday's trip to New Jersey marked the first time Bush has taken his mobile tax-cut promotion to a state won by Al Gore, his Democratic rival for the presidency, last November.

New Jersey's two senators are Democrats -- Robert Torricelli and John Corzine. Bush is trying to exert pressure on Democratic members of the chamber to support his package, because at least two members of his own party have said they would not be inclined to vote for a tax cut bill once it reaches the Senate floor.

CNN producers Ted Barrett and Dana Bash contributed to this report.



RELATED STORIES:
Conservatives point to markets, call for more tax cuts (March 13, 2001)
Republicans suggest 'midcourse adjustment' on taxes (March 11, 2001)

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