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Bush $$ Plan Becoming Tougher Sell

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Key Republican senators are raising objections to President Bush's $670 billion tax cut proposal, an early sign that the White House will face a tougher fight than it did on two previous rounds of tax deductions, The Washington Post reports in its Saturday editions.

Although the president and his aides have signaled they intend to fight fiercely, the Post says, at least five GOP senators have now voiced serious doubts about the Bush plan, especially its centerpiece – eliminating the dividend tax. Senate Finance Committee Chairman Charles Grassley, R-Iowa, said yesterday, "we may not be able to sell it."

Grassley, whose committee handles tax legislation, raised the prospect that Mr. Bush's proposal to repeal the dividend tax could be dropped altogether. "We should sell the whole thing or not at all," he said, suggesting that other forms of tax cuts might be more achievable. "It would be easier to do something on capital gains than on double taxation of dividends," he said.

Soon after the president detailed his plan Tuesday, Sen. John McCain, R-Ariz., a longtime Bush antagonist, signaled his objections, and Sen. Lincoln Chafee, R-R.I., said he could not support it.

Though much of the protest has come from GOP moderates, Sen. George Voinovich, R-Ohio, also raised concerns. "It's heavy; it's big," he said. "I don't think it will give us the shot in the arm or rev us up like I think we need to be revved up."

Voinovich said lawmakers need to focus more on eliminating the federal deficit, which some economists predict will exceed $350 billion in 2004, the highest ever in dollar terms. "As far as the eye can see, I see red," the senator said.

Two moderate Republicans, Sens. Olympia Snowe and Susan Collins of Maine, will seek major changes to the president's proposal, the Post says. "The elimination of tax dividends is very controversial," Collins said. "I would guess that will be the piece changed the most." Collins is considering calling for the dividend portion to be dropped from the economic package.

Bush aides, who the Post says plan to send the president on a road show to sell the tax cut as he did his $1.35 trillion, 10-year tax cut in 2001, brushed aside concerns about wavering Republicans and broad opposition from Senate Democrats.

"Just as happened in 2001, the process will begin in the House and move to the Senate, and the president is confident that support will pick up as the process goes along," White House press secretary Ari Fleischer said yesterday.

Mr. Bush defended the plan in his weekly radio address Saturday, and Democrats criticized it in theirs. Vice President Cheney talked it up in a speech on Friday, and the Post says top Bush advisers will tout it on Sunday's television talk shows.

The president's aides have told allies that, as one Republican who consults with the White House put it to the Post, "they're going to ram it through." Mr. Bush is aiming for a quick victory in the House, where Republican discipline is firm, the Post explains. One person working with the White House told the newspaper Mr. Bush has sent word to House GOP leaders that he would not mind their increasing the package's size, which could increase the president's leverage in the Senate.

In the radio address, Mr. Bush said his tax-cut proposals would plow $59 billion into the American economy by the end of 2003, as he proposed more corporate crime-busting dollars as a way to boost investor confidence.

Mr. Bush announced in his weekly radio address that he would ask Congress to approve an $842 million 2004 budget for the Securities and Exchange Commission - nearly double the 2002 level. The SEC was given $438 million for 2002.

For the current fiscal year, $568 million was requested. The SEC, like most government agencies, is still functioning under 2002 funding levels because lawmakers have not approved spending for the 2003 budget year that began Oct. 1.

Mr. Bush also said his budget request, due to lawmakers at the beginning of February, would include an additional $25 million for the Justice Department to expand corporate fraud investigations. The money would pay for 118 new FBI positions, including 56 agents, and 94 new hires in U.S. attorney's offices, Mr. Bush said.

"The SEC and the Justice Department are the referees of corporate conduct," the president said. "Under my budget, they will have every resource they need to enforce the laws that punish fraud and protect investors."

But as recently as October, the White House was defending its request for Congress to give the SEC $200 million less than was demanded by a new law to fight corporate fraud.

Now, Mr. Bush - aware that Americans' faith in the markets has been shaken by financial scandals and that a strong expected recovery has not materialized - has sought to show renewed resolve to calm economic jitters.
He replaced his economic team and, earlier in the week, unveiled the 10-year, $670 billion tax-cut program meant as a salve to the economy.

An ironic twist of timing had New Mexico Gov. Bill Richardson delivering the Democrats' radio response Saturday. The former U.N. ambassador under President Clinton engaged in talks in his home state with North Korean officials in an escalating nuclear standoff with the Mr. Bush administration.

Democrats have sought to skewer the president for proposing a stimulus package they say disproportionately benefits the wealthy and has little short-term economy-boosting potential.

Some governors also have estimated that Mr. Bush's proposal to eliminate taxes on stock dividends could cost states several billion dollars because of the effect on state taxes.

Richardson promoted a $50 billion alternative plan from the Democratic Governors Association. It would provide temporary tax relief, short-term federal assistance to deficit-burdened states, more help for workers who have lost jobs and investments in schools and other projects that would create jobs.

"Our challenge is to help Washington pass a real stimulus plan that puts money in the pockets of those who will spend the money right away - the unemployed middle-class working families - while recognizing the condition of cash-strapped state governments," Richardson said.

Mr. Bush pitched his package, which includes $3,000 "re-employment accounts" for jobless workers, speeded-up income tax and marriage penalty cuts, accelerated child credits and the centerpiece dividend tax cut.

"We must take steps to speed up the economic recovery and to strengthen public confidence in the integrity of American corporations," Mr. Bush said.