Bush pitches economic stimulus plan

Democrats say states need help

By Sean Loughlin
CNN Washington Bureau

President Bush denounced the "class warfare of politics" as he pitched his economic stimulus plan Thursday.

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BUSH ECONOMIC PLAN • Cost: $674 billion over 10 years • Eliminates tax on stock dividends • Tax breaks for businesses,   individuals • Increases child tax credit • Extends unemployment benefits • Decreases so-called marriage penalty tax SPECIAL REPORT • Text: Bush announces plan • Interactive: Details of the Bush plan • Impact of Bush plan open to interpretation • CNN/Money: How much will you save? • CNN/Money: Special Report -- The Bush plan • Graphic: Dividend Tax Cut: Who Will It Help? • Explainer: Comparison of Bush, Democratic plans

WASHINGTON (CNN) -- Pressing Congress to approve his economic stimulus plan, President Bush said Thursday his package of proposed tax cuts will spur small business growth and put more money in the hands of ordinary Americans.

"If Congress thought it was good enough in '01 to let people keep more money, they ought to think it's good enough in '03 to let people keep more of their own money," Bush said in a speech before employees of the National Capital Flag Co., a flag-making company in the Washington suburb of Alexandria, Virginia. The president was referring to the 2001 tax cut.

Bush outlined the highlights of his $674 billion, 10-year plan, including his call for the elimination of taxes on stock dividends and tax write-offs for business investments in new equipment. The speech is the first of what's expected to be many by Bush administration figures who will hit the road over the next several days making pitches for the economic package.

As he did Tuesday when he unveiled his plan, Bush sought to refute Democratic criticism that his proposals are weighted toward the wealthy.

"You hear a lot of talk in Washington, of course, about, you know, 'This benefits so and so,' or 'This benefits this,' " Bush said. "They call it the class warfare of politics."

Bush said if his plan was enacted, a family of four with an income of $40,000 would receive a 96 percent reduction in federal incomes taxes, dropping from $1,178 a year to $45 a year.

Democrats, however, say such numbers are misleading because they are averages and most of the tax breaks would be enjoyed by individuals and families with higher incomes.

Most economists and budget analysts agree that individuals who make more money would see more of a tax benefit from the Bush plan, but they also note that such people pay more taxes in the first place.

House Democrats are pushing a $136 billion plan, which they said would have more of an immediate impact on the economy, help the needy and pose less of a risk to adding to the federal deficit.

The president stressed his belief that providing a kick to the overall economy would benefit everyone, regardless of income level. He said, for example, that providing a tax break to a small business owner would allow that individual to hire more workers.

"That's important for people to know," Bush said.

On Capitol Hill, however, Democrats stepped up their criticism that the Bush plan would do little to stimulate the economy, pointing out that the administration backed away from one idea to provide money for needy states.

"The states have a total of $80 billion in deficit spending," Sen. Charles Schumer, D- New York, said at a news conference. "What are they going to have to do? Well, they are either going to have to cut programs, which will drag the economy down, or they are going to have to raise taxes, which will drag the economy down."

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