Many Lawmakers Feel Bush Growth Package Needs Overhaul

Times Staff Writer

WASHINGTON -- Now that President Bush has detailed his bold $674-billion plan to cut taxes and stimulate the economy, he may have to make significant changes to get it through Congress, lawmakers in both parties say.

Hardly any Democrats have stepped forward to support it. And enough Senate Republicans have expressed reservations -- especially about the price tag and the plan to eliminate taxes on dividends -- that the proposal’s approval is anything but a slam dunk.

“The package needs a lot of scrutiny,” said Sen. Susan Collins (R-Maine). “I’m pleased he has come up with an economic plan; the question is, what should be in it? I would have chosen different elements.”

Even one of Bush’s most reliable Democratic allies, Sen. John B. Breaux of Louisiana, is critical of the package and bearish on its prospects. Bush and his allies “cannot pass it like it is,” said Breaux. “They are going to have to move on a lot of things.”


The White House, meanwhile, geared up its lobbying effort Wednesday for the stimulus package. Bush’s new economic advisor, Stephen Friedman, went to Wall Street to talk to big business and investors. Treasury Department officials answered questions on the Internet. And the White House office of media affairs began a phone bank to sell the program to regional journalists.

“It’s a very detailed plan to try to garner as much support as possible for something the president thinks is important,” White House Press Secretary Ari Fleischer said.

He said that although the president had not set a deadline for Congress to act, “I think his preference is the sooner the better, the better for the economy.”

But the skeptical comments on Capitol Hill from crucial centrists in both parties portend a legislative journey far different than the course for the 2001 tax cut that the administration whisked into law. Back then, Bush put out a plan that was a clear blueprint for what became law. Now, many lawmakers are viewing his new proposal as an opening gambit in what will be a lively negotiating process.


“It’s going to be very tough to get it through the Senate,” said Sen. Kay Bailey Hutchison of Texas, a member of the Senate GOP leadership. Bush “put out what he believes is right, what his wish list is. There’s going to have to be compromise.”

The plan unveiled by Bush on Tuesday includes some proposals that have broad bipartisan support -- an increase in the per-child tax credit, a speedup of tax relief for married couples and expanded tax breaks for small businesses.

The plan’s most contentious elements are those central to it: elimination of taxes on dividends received by shareholders and an acceleration of scheduled cuts in income tax rates.

The package’s estimated $674-billion cost over 10 years is more than double the amount Bush had been expected to propose.

Despite Bush’s sense of urgency about the economy, congressional leaders say it will probably be months before a version of the plan can clear Capitol Hill. Both the House and Senate probably will not even begin action on the legislation until after they complete the annual budget, which typically does not pass before April.

Bush’s bill is expected to encounter few difficulties in the House, where Republicans tend to be more conservative than the Senate and party discipline is typically in lock step with the president. House Republican leader Tom DeLay of Texas said the House might pass an even bigger tax relief package than Bush has proposed. “‘I look at the Bush plan as a floor, not a ceiling,” said DeLay.

But other Republicans say there is less enthusiasm for this Bush plan in the GOP rank-and-file than there was for the 2001 bill, which cut taxes by $1.35 trillion over 10 years at a time when the federal government had a budget surplus. Since then, a combination of factors has led to a return of budget deficits.

When House Republicans met for their weekly caucus Wednesday morning, sources said the new Bush plan was not even discussed.


“In ’01, people were real pumped up,” said a senior House Republican aide. “Now, you just don’t see the enthusiasm.”

The Senate -- where there are 51 Republicans, 48 Democrats and one independent who usually votes with the Democrats -- presents an even bigger hurdle for the Bush proposal. It usually takes 60 votes in the Senate -- not a simple majority of 51 -- to prevent a filibuster and pass a bill.

But in dealing with the Bush plan, GOP Senate leaders are considering use of a special budget procedure under which filibusters are not allowed. Even under that rule, the plan’s fate in the Senate will be uncertain.

“The whole tax bill can be rewritten in the Senate,” said Mark Bloomfield, head of the American Council for Tax Formation, a pro-tax-cut business group.

One Senate Democrat who has indicated he is inclined to back the new economic initiative is Zell Miller of Georgia. But most other Democrats who supported the president’s 2001 tax cut are giving his new proposal the cold shoulder.

Most ominously for the president, some Republicans are already breaking ranks with him.

Sen. John McCain of Arizona says the Bush plan is too skewed to the wealthy. Sen. Lincoln Chafee of Rhode Island, a liberal Republican who opposed the 2001 tax cut, is expected to oppose the new plan.

Today, he and Sen. Dianne Feinstein (D-Calif.) will introduce legislation that would block income tax rate cuts for the top bracket that, under the 2001 bill, are phased in through 2006. The new plan, in contrast, would implement the phased-in cuts this year for all income tax brackets.


Collins says she is concerned about the overall price tag of the Bush plan, fearing it would add to the deficit at a time when there are other pressing domestic and international needs. She also questioned whether eliminating taxes on dividends would be the “right kind of stimulus for the economy.” Her GOP colleague from Maine, Sen. Olympia J. Snowe, has similar reservations.

Sen. Ted Stevens (R-Alaska), new chairman of the Senate Appropriations Committee, said some Republicans are discussing a cap on the amount of tax-free dividends that could be earned. That change would reduce the plan’s cost and could weaken the argument that the break benefits only the rich.

Some backers of the dividend tax cut acknowledge they have work to do to press their case for the virtues of something that is relatively arcane and easily associated with the wealthy.

“What we need to be able to communicate is that dividend income is going to the people next door on fixed income,” said Rep. Mark Foley (R-Fla.), a member of the House Ways and Means Committee. “This is about mom and pop, not [stock market investor] Warren Buffett.”

Grover Norquist, head of Americans for Tax Reform, predicted that moderate Republicans would eventually line up behind the president, and he said Democratic opponents run the risk of alienating the growing numbers of voters who identify themselves as investors.

“This is the moment at which the Democrats stand up and say, ‘We hate the investor class,’ ” said Norquist.

The White House expressed confidence that it would eventually sway some Democrats.

“I think there’s no question there are some Democrats who will never be for what President Bush is for,” said Fleischer. “But there are going to be others who are. And we will find them, we will work with them, and the process is now beginning.”


Times staff writer Maura Reynolds contributed to this report.