Bush Launches Tax Cut Offensive

President Bush delivered a spirited defense of his stewardship of the economy Thursday and issued a rare challenge to dissident members of his own party to rally behind the big tax cut that is the centerpiece of his domestic agenda.

Bush argued that Congress needs to quickly approve a tax cut of not less than $550 billion, which he said would create 1 million new jobs by the end of 2004. And the president demanded an explanation from lawmakers opposing his proposal. Among them is one of Ohio’s Republican senators, George Voinovich.

“Some in Congress say the plan is too big. Well, it seems like to me they might have some explaining to do,” Bush told several hundred employees of the Timken Co., a steel and ball-bearing factory here. “If they agree that tax relief creates jobs, then why are they for a little-bitty tax relief package?”

The speech represented Bush’s most concerted effort to reassert himself in domestic policy debates following the U.S.-led military success in Iraq. In the view of some Republicans, his economic policy has suffered setbacks on Capitol Hill in part because the administration has been understandably distracted by managing the war.

But even with Bush more engaged in the tax cut debate, it remains a tough sell. The issue underscores a festering division within GOP ranks between those who believe tax cuts will spur economic growth and those -- such as Voinovich -- who are worried about the burgeoning federal budget deficit.

Although Bush did not mention Voinovich by name, his comments Thursday were clearly part of an unusual presidential effort to publicly put the heat on a fellow Republican.

Voinovich, along with another moderate Republican senator, Olympia J. Snowe of Maine, has opposed Bush’s initial proposal for a $726-billion tax cut over 11 years and a House measure that would pare the reduction to $550 billion.

Bush has stressed that he considers $550 billion a bottom-line figure; he said Thursday that a new tax cut must be “at least” that much.

But Voinovich and Snowe, citing their concerns about the deficit, insist that any tax cut exceeding $350 billion must be offset by spending cuts.

In the narrowly divided Senate, their position could make it impossible for GOP leaders to pass the larger measure Bush seeks.

In recent weeks, Voinovich and Snowe have been the target of advertisements run in their home states by political groups favoring the bigger tax cuts. Still, associates of the two said that such efforts are unlikely to sway their views. Bush himself failed to persuade them in a more personal lobbying effort -- a 90-minute White House meeting before a crucial Senate vote on the tax cut this month.

Indeed, some Republicans viewed Bush’s trip Thursday as having more to do with demonstrating in politically crucial Ohio his commitment to improving the economy.

“This has more to do with the politics of 2004 than the tax bill of 2003,” said a senior Senate Republican aide. “He’s not going to change Voinovich’s mind, but he sure is going to need that state in his column.”

Ohio Gov. Robert A. Taft and Sen. Mike DeWine of Ohio, both Republicans, joined Bush in Canton and on his second stop in Lima. Voinovich greeted Bush when the president landed at Wright-Patterson Air Force Base in Dayton, en route to Lima. Voinovich had been invited, but he did not join Bush at either of his two public appearances.

In a brief interview after their fleeting encounter, Voinovich said he and Bush exchanged pleasantries on the tarmac.

According to the senator, their exchange went like this:

“How’re ya doin’, Jorge?” Bush asked.

“Glad you’re here,” Voinovich replied.

“Glad to be in town,” Bush said.

Voinovich said the president did not try to change his mind.

“I think he knows where I’m at.... We’re very, very good friends,” Voinovich said.

On his second stop, at a tank factory in Lima, Bush spoke more about the war with Iraq than the economy -- a tactic that foreshadows his campaign strategy of touting his commitment to revitalize the economy and the ongoing war on terrorism.

In his Canton speech, Bush blamed the weak economy on an array of factors, including a global recession, corporate scandals that shook investor confidence and the 2001 terrorist attacks.

The president also reminded voters that signs of a recession had begun under President Clinton’s watch. “When I was campaigning and first got into office, our country’s economy was slowing down, and then, as I say, the minute I got sworn in, we were in a recession,” Bush said.

Economists officially pinpoint the recession as having started in March 2001, less than two months after Bush was sworn in.

Congressional Democrats, in their rebuttal to Bush’s remarks, focused largely on what they characterized as the administration’s dismal economic record.

“Since President Bush took office, the economy has lost 2.6 million private-sector jobs -- the worst performance for any president since World War II,” said Rep. John M. Spratt Jr. of South Carolina, the top Democrat on the House Budget Committee.

He said Ohio alone has lost 218,000 jobs.

“The American people and the Congress are right to be skeptical of the administration’s economic policies, which have hurt, and not helped, the economy.”

Bush said he was “optimistic about the future of our country,” but acknowledged that “one of the problems we face is not enough of our fellow Americans can find work, [and that] there’s too much economic uncertainty today.”

He vowed to work tirelessly to revive the economy so that “every American who wants to work can find a job.”

Among the factors behind his optimism, Bush said, are low interest rates, a low rate of inflation and declining oil and gas prices.

In addition, he said, U.S. productivity growth last year was 4.8% -- “the best annual increase since 1980.”

Bush sought to rally support for the core element of his tax cut plan, the elimination of the individual tax on stock dividends. He said that move alone would create more than 400,000 jobs by the end of next year.

Bush also said that Congress in 2001 readily approved his 10-year, $1.35-trillion tax cut proposal, and that part of his new plan calls for speeding up cuts in income-tax rates that will be phased in by that legislation.

“I’m asking Congress ... to take the tax relief package they’ve already passed, accelerate it to this year so that we can get this economy started and people can find work,” Bush said. “If the economy needs help now, why wait?”

Bush also emphasized the role of small businesses as engines for economic prosperity and growth, predicting that a new round of tax cuts would go a long way in helping small businesses expand the nation’s job base.

The president made no mention of health-care reform -- specifically the rising cost of insurance premiums, which many small businesses blame as a major drain on profits.

He said he shared concerns about the growing federal budget deficit.

“But this nation has got a deficit because we have been through a war,” Bush said. “It affected the revenues coming into the U.S. Treasury. Recession, negative growth, means less revenues. And so of course we’ve got a deficit.”

But Bush said the tax cuts he wants would spur economic growth and increase revenues to the Treasury. “We can grow out of the deficit with wise policy.”