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Taxes dominate Iowa race

Bush aides say tax cuts spur growth

Do you want that with tax cuts? Dean campaigning in Waterloo, Iowa.
Do you want that with tax cuts? Dean campaigning in Waterloo, Iowa.

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(CNN) -- Both sides of the political divide are focusing on taxes as Democrats gear up for the first vote in the 2004 presidential campaign -- the Iowa caucus on January 19.

John Kerry of Massachusetts and John Edwards on Sunday both accused the two leading candidates in Iowa, Howard Dean and Rep. Dick Gephardt, of planning to reverse President Bush's tax cuts without having a plan to ease middle class tax burden. (Full story)

Republicans also went on the offensive Sunday, saying the tax cuts pushed through Congress by the Bush administration last year will boost job growth, despite the fact only 1,000 new jobs were created in December, according to Labor Department figures. (Full story)

Dean, who leads in several polls of Iowa voters, said Sunday he would annul the Bush tax cuts.

"We're going to get rid of all the Bush tax cuts, but we're going to replace it with middle class tax fairness, which is going to be aimed at the payroll tax," he told ABC's "This Week."

Kerry, also on ABC, insisted that his frequent talk about his competitors' tax plans is not negative campaigning.

"If Howard Dean and Dick Gephardt want to raise taxes on middle class Americans and I don't, that's a different policy," the Massachusetts senator said.

Retired Army Gen. Wesley Clark, who is not campaigning in Iowa, said last week he was "going to provide tax cuts to ease the burden for 34 million Americans" and promised to "raise the taxes on one-tenth of 1 percent of families in America, those who make more than a million dollars a year.

"You don't have to read my lips; I'm saying it," he said in Nashua, New Hampshire.

Clark and Sen. Joseph Lieberman of Connecticut are staying away from Iowa and concentrating their efforts on New Hampshire, which will hold the nation's first primary on January 27.

Rep. Dennis Kucinich of Ohio, former Illinois Sen. Carol Moseley Braun, and New York civil rights activist the Rev. Al Sharpton -- who place last in polls nationwide -- are not campaigning heavily in either state.

The debate among Democratic candidates has shifted away from the Iraq war and toward the economy and taxes in a week in which a Labor Department report showed that only 1,000 new jobs were created in December

That was in sharp contrast with the 130,000-plus predicted by economists and well below the 200,000 new jobs a month that Treasury Secretary John Snow said would be created after the tax cuts Bush pushed through Congress in 2003.

"Everything we know about economics indicates that, as you get an economy into high gear, as you get a strong recovery under way, it does translate into jobs," Snow told "This Week."

The Bush administration argues the tax cuts it pushed through Congress kickstarted the economy's recent growth spurt, including an 8.2-percent boost in gross domestic product for the third quarter of 2003.

"The tax relief the president has given to this economy is working," Commerce Secretary Don Evans told CNN's "Late Edition."

"On three separate occasions over the last three years, he's provided additional tax relief for American workers, American families, businesses across America, and guess what? It's working. The results are showing that it's working."

Edwards' campaign gets boost

Edwards' campaign got a boost from the state's largest newspaper, the Des Moines Register, which endorsed him Sunday.

The paper said Edwards' blue-collar, public school background and experience as a plaintiff's lawyer would offer voters "a clear and attractive choice" in November. (Full story)

On ABC's "This Week," Edwards complained Dean and Gephardt are "taking away the tax cuts that Democrats helped fight for to help the middle class families.

"Not only are they raising taxes on the middle class, they're not doing anything about the next step," Edwards said. "We should be going the next step and actually having very targeted tax cuts that strengthen the financial condition of the middle class."

Both Gephardt and Dean deny middle-income Americans would face more of a burden under their leadership.

"At every meeting now in Iowa, I ask people, 'Would you rather have the Bush tax cut, or would you rather have health care that can never be taken away from you?' It's unanimous. People care about health care," Gephardt said.

For his part, Dean told ABC, "We're going to get rid of all the Bush tax cuts, but we're going to replace it with middle class tax fairness, which is going to be aimed at the payroll tax."

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