Bush Urges Congress to Back Tax Cut, Help Pay Down Debt

President Bush asked Congress on Tuesday to pass a large tax cut and make it effective this year, saying that the federal budget surplus means the nation can cut the national debt, spend more on education, fix Social Security and Medicare and still have money left over.

In his first speech before the Senate and House of Representatives, Bush appealed to voters to support his yet-to-be-proposed budget, which he said will follow a “reasonable and . . . responsible” middle path.

“Year after year in Washington, budget debates seem to come down to an old, tired argument: on one side, those who want more government regardless of the cost; on the other, those who want less government, regardless of the need,” Bush said.

“We should leave those arguments to the last century and chart a different course,” he said. “Government has a role, and an important one. Yet too much government crowds out initiative and hard work, private charity and the private economy. Our new governing vision says government should be active but limited, engaged but not overbearing.”

Adopting themes long sounded by the Democrats, the new Republican president said that his budget would increase spending on education, Social Security and Medicare.

Then, returning to the standard of his own party, tax cuts, he said: “The people of America have been overcharged--and on their behalf, I am here to ask for a refund.”

The speech, interrupted 85 times by applause that was often, but not always, bipartisan, was largely a review of proposals from Bush’s presidential campaign last year. The only new item was an announcement that the president has asked Atty. Gen. John Ashcroft to draw up “specific recommendations to end racial profiling,” the practice some police departments follow of targeting minority groups.

But for members of Congress--and, perhaps, the nation as a whole--the question was not whether Bush would surprise his audience with new ideas but how persuasive he would be in promoting already-familiar proposals.

The new president, who arrived in the White House with less than 50% of the popular vote in an election settled by the U.S. Supreme Court, is receiving only moderate approval from the public--and his tax cut, the centerpiece of his budget, has failed to win majority support. A Washington Post-ABC News poll conducted last week found that 55% of the public approved of the job Bush was doing, but only 43% supported his tax cut.

Despite appeals from Bush for a new spirit of civility, most members of Congress reacted along predictably partisan lines. Republicans howled and stamped their feet at every mention of a tax cut. Most Democrats sat on their hands and dismissed Bush’s program as partisan.

“Tonight, President Bush continued to set the right tone for Washington and the American people,” said Rep. David Dreier (R-San Dimas). “It truly is a new era.”

“The president is going to suggest that this is a blueprint for a new beginning,” said Sen. Joseph I. Lieberman (D-Conn.), last year’s Democratic vice presidential nominee. “I think it’s a copy of some old failed ideas that didn’t work.”

If the new president was nervous in his maiden appearance before Congress, he did not betray it. As applause swelled across the packed House chamber, he grinned and winked at members of Congress. And he began his speech with a well-calculated joke, saying he was grateful to have been invited to appear, knowing that it “could have been a close vote.”

The evenly divided Senate, including Sen. Hillary Rodham Clinton (D-N.Y.), the former first lady, laughed appreciatively. So did Vice President Dick Cheney, sitting in the chair as presiding officer of the Senate, a role in which he would break any 50-50 tie.

The president, well-known for garbling words when he speaks off the cuff, delivered his speech with fluency and ease. There was only one “Bushism,” when the president slipped and said that education was “not my top priority,” then corrected himself. His 49-minute elapsed time was shorter than any of the budget speeches of his predecessor, Bill Clinton, who set a modern record of 89 minutes only last year.

Among his major points, Bush called for:

* A significant increase in federal spending on education--”the highest percentage increase in our budget.”

He also repeated proposals to increase federal spending on reading programs by $5 billion and to make federal aid to schools depend on annual tests from grades three through eight. He signaled a willingness to compromise with Democrats on the issue of granting parents vouchers for private school tuition, saying that all he wants is “different options--a better public school, a private school, tutoring or a charter school.”

* Increased spending on Medicare, including a prescription drug benefit for senior citizens.

* $5.7 billion in increased military pay, benefits, health care and housing.

* A presidential commission to propose reforms in Social Security, to report back by next fall. “Reform should be based on these principles: It must preserve the benefits of all current retirees and those nearing retirement. It must return Social Security to sound financial footing. And it must offer personal savings accounts to younger workers who want them,” Bush said.

* A $1-trillion “contingency fund for emergencies or additional spending needs.” Bush suggested that the money might be needed later for defense spending, farm aid or Medicare reform.

Budget experts say that such a fund is more a device for postponing budget choices than it is a national savings account. Some have suggested that Bush might also use it to pay for the “personal savings accounts” he has proposed for Social Security. A Bush aide acknowledged that such a plan had been discussed but the president did not make that connection in his speech.

“It’s a way of making everyone believe it’s a pot of money they’ll all get,” said Bradford De Long, an economist at UC Berkeley and a former Clinton administration official. “Usually, people would prefer birds in the hand to stuff in the bush.”

Democratic candidate Al Gore proposed a similar--but smaller--”rainy day” fund during his presidential campaign last year.

* Finally, Bush said, “We have increased our budget at a responsible 4%, we have funded our priorities, we have paid down all the available debt, we have prepared for contingencies--and we still have money left over.” In effect, he said, with the budget surplus now estimated at $5.6 trillion over the next 10 years, his $1.6-trillion tax cut proposal now appears moderate.

“Some say my tax plan is too big, others say it is too small. I respectfully disagree. This plan is just right,” he said to laughter.

He formally endorsed an idea that Republican lawmakers first made, but that he has visibly warmed to during his 39 days in office: a “retroactive” tax cut that would apply to income earned this year.

“We must act quickly. The chairman of the Federal Reserve has testified before Congress that tax cuts often come too late to stimulate economic recovery. So I want to work with you to give our economy an important jump start by making tax relief retroactive,” he said.

Bush has been working for weeks to win more public attention and support for his tax cut plan. But he has had to compete for public attention with the furor over pardons granted by his predecessor on his last day in office.

The tax cut plan has barely edged out the Clinton pardons in holding the public’s attention, with 31% saying they were following news about the tax plan very closely, and 28% saying that they were following the Clinton pardon controversy very closely, according to a recent poll by the Pew Research Center for the People & the Press.

House Republican leaders said they plan to move almost immediately to begin enacting Bush’s tax cuts. House Ways and Means Chairman William M. Thomas (R-Bakersfield) said that his panel will meet on Thursday to begin drafting a bill.

The first bill, which could be approved by the full House as early as next week, is expected to focus on a tax rate cut because that is the cornerstone of the Bush plan--and also because GOP leaders argue that a rate cut could give the economy a quick boost.

Democratic leaders said they will not accept Bush’s plan, or his numbers, without argument.

“If what we heard tonight sounds too good to be true, it probably is,” said House Minority Leader Richard A. Gephardt (D-Mo.), who joined Senate Minority Leader Tom Daschle (D-S.D.) in giving the Democratic response. “President Bush’s budget numbers simply don’t add up. Ours do. His plan leaves no money for anything except tax cuts. Ours does.”

“The whole ‘80s and most of the ‘90s was the politics of deficits,” Gephardt said. Bush, he charged, “is now trying to drive the wagon into the same ditch.”

But some Democrats were more generous.

“Stylistically, it was out of the park,” said freshman Rep. Adam B. Schiff (D-Burbank). “He proved himself a much more capable speaker than many had anticipated.”

“It was a speech that could have been given by a moderate Democrat or a moderate Republican,” said Sen. John B. Breaux of Louisiana, a key centrist Democrat.

*

Times staff writers Nick Anderson and Janet Hook contributed to this story.