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Bush sends tax-cut outline to Congress

Democrats start to dig trenches

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"We need tax relief now -- in fact, we needed tax relief yesterday," Bush tells supporters as his tax-cut plan goes to Congress  

February 8, 2001
Web posted at: 4:52 PM EST (2152 GMT)


In this story:

The legislative process

A mixed message

Democrats have another warning

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WASHINGTON (CNN) -- President George W. Bush transmitted the blueprint for his $1.6 trillion, 10-year tax relief package to Congress on Thursday, fulfilling a major presidential campaign promise three weeks into his term.

Bush, in the first Rose Garden ceremony of his nascent presidency, signed two bound documents containing the parameters for a tax-cut bill that will have to be written in the House of Representatives over the next few weeks.

Bush said signs of a slowing economy are becoming more obvious by the day, and he is betting his tax-cut package will boost sagging prospects for wage earners and business owners.

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"We need tax relief now -- in fact, we needed tax relief yesterday -- and I will work with Congress to provide it," Bush told a gathering of Hispanic business leaders who observed the signing ceremony.

The expected arrival of the documents at the Capitol, on their way up Pennsylvania Avenue from the White House at late morning, allowed the leaders of the Democratic minorities in the House and the Senate to begin their maneuvering against the soon-to-be-written tax bill.

The documents were handed over by Treasury Secretary Paul O'Neill to Senate Majority Leader Trent Lott, R-Mississippi, and House Speaker Dennis Hastert, R-Illinois, just before noon, and just after the Democrats stepped forward to launch their counteroffensive.

House Minority Leader Richard Gephardt of Missouri and Senate Minority Leader Tom Daschle of South Dakota told reporters the Bush plan is based on economic projections that could crumble, and they warned the nation should not be locked into a 10-year commitment that cannot be reversed.

"We cannot count on the economic forecasts that the Republicans rely on to hold up 10 years from now," Gephardt said. "No family, no business would act in this manner, and we shouldn't either."

The legislative process

The documents signed by the president Thursday consist only of guidelines for the House to use when it sets about actually drafting a tax-cut bill.

The House Ways and Means Committee, the panel that writes tax legislation, will compose the package of bills before it advances to the floor of the House of Representatives. The Senate will soon after follow suit. The process will begin Tuesday when O'Neill testifies before the Ways and Means panel about the administration's position.

Hastert said Thursday that the House may create several smaller bills based on Bush's wishes, while the Senate may move forward with one large measure.

Bush's plan closely mirrors the proposals he made the centerpiece of his presidential campaign, including reducing income tax rates, easing the so-called "marriage penalty" that causes married couples to pay more in taxes than if they were single, phasing out the estate tax and boosting tax breaks for charitable contributions.

The Bush framework would cut the lowest income tax rate to 10 percent and the highest to 33 percent. It also would change the five-rate income tax structure -- currently 15 percent, 28 percent, 31 percent, 36 percent and 39.6 percent -- to four rates, 10 percent, 15 percent, 25 percent and 33 percent.

Aides say the plan would save a family of four making $40,000 a year about $1,600.

"With this tax relief families can save or pay off debt or pay for higher energy bills," Bush said Thursday. "This is good for one family, and multiplied by millions of families, it will be good for nation's economy."

"I am committed to accelerating economic growth," he said.

A mixed message

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Democratic leaders Richard Gephardt and Tom Daschle say Bush's tax-cut proposal would leave the richest Americans enough money to buy a Lexus  

The president delivered a somewhat mixed message in his speech Thursday morning. He warned that the economic downturn he sees on the horizon could spark hardship across all earning brackets. At the same time he urged Congress to pass the tax plan as a show of good faith to those who have not benefited from a decade-long economic boom.

"A lot of folks feel that they've been looking at someone else's party," Bush said of those who struggled to make do through years of record-setting economic performances. "They feel they've been looking in from the outside. It's time to open the door and welcome everyone in."

But everyone could be hit hard if tax reductions don't induce new spending and savings habits, Bush insisted.

"Economic growth has been in doubt. Now, it may be in danger," he said. "Americans are hearing of, and some are feeling, the economic slowdown.

"Consumer confidence has slumped. Many business leaders are worried. A warning light is flashing on the dashboard of our economy, and we cannot just drive on and hope for the best."

Democrats have another warning

Daschle and Gephardt, speaking to reporters outside the Capitol, said the Bush plan is predicated on unreliable projections that show a roughly $5.6 trillion surplus in government funds over the next decade.

Both argued that those figures cannot be trusted. Economic forecasts change rapidly, and, Gephardt said, it would be the height of foolishness to lock the U.S. government into a tax law that would require 10 years of deep tax cuts when those surpluses could dry up much earlier.

"The Republicans say the government ought to be run like a business," Gephardt intoned. "How many businesses give dividends without knowing their profits?"

Daschle said the president's plan is unfair to lower income families because much of the break goes to the wealthiest 1 percent of Americans.

"If you make over $300,000 a year, this tax cut means you get to buy a new Lexus," Daschle said. "If you make $50,000 a year, you get to buy a muffler on your used car. That's the difference."

Daschle and Gephardt said the Democrats felt no pressure to introduce a rival bill immediately, saying they wanted to comb over Bush's proposal first. But Bush has been in discussions with congressional Democrats as well as Republicans, and the foundation of Bush's aspirations was discussed briefly over the weekend when the president appeared at two Democratic retreats.

Rather than a tax bill, Gephardt said, the Democrats will likely present an integrated financial plan that includes a full fiscal year 2002 budget as well as a series of tax cuts. Earlier Democratic projections have indicated that the minority party sees the possibility of some $900 billion in tax cuts but not more.



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