Bush Opens Campaign for a Slimmer Tax Cut Plan

On the day that most Americans are painfully reminded of the inevitability of taxes, President Bush began a new push to get Congress to pass at least a pared-down version of the tax cut proposal he says is necessary to spark economic growth.

“Congress must focus on a robust and effective growth package,” the president said in a speech Tuesday from the White House Rose Garden -- his first to focus on domestic matters since the war with Iraq began last month.

“We need at least $550 billion in that package because the more tax relief that goes to the American people, the more jobs we will create in this economy.”

His remarks signaled the launch of a new effort to avoid his father’s fate -- winning a war, but losing reelection over public perceptions that he failed to properly tend the economy.

In that sense, the speech was a potential preview of the 2004 campaign, as Bush laid the groundwork for what could be his predominant message on the economy and domestic policy.

“In two years’ time, this nation has experienced war, a recession and a national emergency, which has caused our government to run a deficit,” Bush told a group of small-business owners and others in the Rose Garden. “The best way to reduce the deficit is with more growth in our economy, which means more revenues to our Treasury and less spending in Washington, D.C.”

While Bush has been preoccupied with the war in Iraq, Congress has moved to reduce the $725-billion tax cut plan he unveiled early this year.

In a budget resolution approved last week, the Republican-led House trimmed Bush’s proposed cut to $550 billion over 11 years, while the GOP-led Senate went even further, limiting the cut to $350 billion. The Senate’s rebuff of Bush’s plan was spearheaded by moderate Republicans concerned about the growing budget deficit.

The nonbinding resolution sets the parameters for legislation both chambers will take up this year -- the measure that would actually put a tax cut into effect. The resolution also allows a tax-cut bill to move through the narrowly divided Senate with a simple majority, bypassing the hard-to-get requirement for 60 votes to cut off debate.

Bush’s remarks Tuesday were the first time he has publicly admitted he may have to accept a smaller tax cut than he has sought.

“[It] was an acknowledgment that the House and Senate have acted and spoken,” said a House Republican aide. She referred to $550 billion as the new target for any tax cut.

But there is no sign that key GOP senators are willing to budge from their $350-billion ceiling. Congressional analysts say Bush will have to get personally involved and twist arms to get anything above $350 billion.

Nonetheless, Bush and White House aides kept up the positive spin, pushing for a tax cut of “at least $550 billion.”

“I think it’s fair to say that there is a good fight ahead when it comes to how to provide growth for the economy, and the president’s going to engage in it,” said White House spokesman Ari Fleischer.

Bush’s allies are hoping he can parlay some of his wartime popularity into support for a tax cut of at least $550 billion.

According to a recent Los Angeles Times poll, Bush’s approval rating has bounced to 68% as a result of the war, up from 58% in early February. But the poll showed thatAmericans also believe, by a 2-to-1 majority, that the country cannot afford even $350 billion in tax cuts.

The lack of a public surge in favor of the cuts may reflect Democratic criticism that they would disproportionately benefit wealthy Americans.

Although the White House says the “average” cut would be $1,080, an analysis by the Brookings Institution and the Urban Institute, two Washington-based think tanks, suggests half of all taxpayers would get less than $100. By contrast, households with incomes of more than $200,000 annually would get to keep an average of $12,496, and those who take in more than $1 million would get an average $90,222 cut.

Even as Bush stakes some of his postwar prestige on the coming tax battle, some senators are skeptical that his fight to eliminate the tax on dividends will succeed.

“Political popularity can only carry a bad idea so far,” said Sen. John B. Breaux (D-La.).

A centrist who supported Bush’s $1.35-trillion tax cut in 2001, Breaux has been instrumental in denying the president crossover Democratic support for this year’s proposal. So far, among 48 Senate Democrats, only Zell Miller of Georgia has endorsed the Bush plan.

Breaux said Bush should jettison the dividend tax cut and press instead for accelerated income tax rate reductions, cuts for married couples and an expanded child tax credit.

“There’s a lot of agreement” on those proposals, which would fit within the $350-billion limit approved by the Senate, Breaux said.