NewsMax.com Wires
Friday, Feb. 9, 2001

"A warning light is flashing on the dashboard of our economy," he said during a ceremony in the White House Rose Garden. "And we can't just drive on and hope for the best; we must act without delay."

The program consolidates the tax code's five tax brackets to four, increases the tax credit for parents to $1,000 a child, eliminates the death tax, reduces the marriage penalty and expands deductions for charitable giving.

If it is passed, families with two children would get $1,600. Working families earning between $35,000 and $75,000 would be able to keep between $600 and $3,000 more of their income each year.

"Our treasury is full, and our people are overcharged," Bush said. "Returning some of their money is right, and it is urgent."

The White House said that though the president's proposal would not include a provision making the tax cut retroactive to Jan. 1, Bush would support those in Congress who had suggested it, signaling that he was willing to work with them on fine-tuning the bill.

The plan's critics said Bush's proposal was overzealous and would erode the nation's "surplus," which, over the next decade, is expected to reach $5.6 trillion.

Bush warned that a budget surplus could be dangerous to economic stability, stressing that his tax cut, coupled with lower interest rates, would boost consumer confidence and get the economy back on track.

"Our economy faces this challenge: Investors and consumers have too little money, and the U.S. Treasury is holding too much," Bush said. "The federal government is simply pulling too much money out of the private economy, and this is a drag on our growth.

"President John Kennedy faced a similar situation in the 1960s. He warned then against storing up dollars in Washington by taking more than the government needed to pay its necessary expenses."

Some lawmakers on the opposite end of Pennsylvania Avenue were not convinced.

The Usual Suspects

As Bush made his proposal to Capitol Hill, Sen. Tom Daschle, D-S.D., and Rep. Richard Gephardt, D-Mo., who both opposed the plan, held a news conference of their own in Upper Senate Park in front of a fully loaded 2001 Lexus car worth $43,000 to illustrate what they claim a millionaire would save under the president's tax plan. They held up a muffler to show what they claim a working family would save. However, a Fox News Channel report Wednesday said these claims were false.

Daschle and Gephardt called the $1.6 trillion the base price for tax relief. They said it did not include hidden "costs" such as $80 billion to extend expiring tax provisions, $200 billion to fix the Alternative Minimum Tax and $500 billion in interest for not paying down the national debt.

"It also doesn't include the extras the White House keeps adding on, like the cost of speeding up the tax cut. That's another $200 billion," Daschle said. "So the real price of the Bush tax cut is $2.6 trillion, a trillion dollars more than they acknowledge. That's enough to give anyone sticker shock."

The Bush plan, they claimed, would use 96 percent of the projected "surplus," leaving about 4 percent for debt reduction, prescription drug program for elders, education and defense. As a result, Bush would have to raid Medicare and Social Security, they claimed.

Budget surplus projections could be thrown off if the economic growth slowed to eight-tenths of 1 percent less than projected, resulting in a drop in the size of the surplus to $4 trillion, Daschle said.

"If that happens, it could drive our economy right off a cliff," Daschle said.

Asked why they did not have an alternative to Bush's proposal, Daschle said they had not anticipated that the bill would be submitted so early. He said, however, that Bush's bill lacked detail.

Copyright 2001 by United Press International. All rights reserved.

Read more on this subject in related Hot Topics:
Bush Administration

Related Products:
Get the best investment newsletters at a super price!
What`s the best investment in uncertain times? Click here to find out.