House Democratic leaders met Friday to work on their alternative to the president's plan and promised to unveil the measure soon.
Rep. Nancy Pelosi, the new Democratic leader in the House, called their discussions an "emergency meeting" because of the fact that 800,000 laid-off workers lost their unemployment benefits on Dec. 28 because of an impasse between the administration and
Congress over the best approach to extend federal unemployment assistance.
Pelosi told reporters the Democratic alternative to Bush's proposal would be "fair to the American people and will be fiscally responsible."
CBS News White House Correspondent Mark Knoller reports that the president said his economic plan would focus on job creation - to help those out of work who can't find jobs. The plan is expected to include a call for new or accelerated tax cuts - but Mr. Bush rejected criticism that he's catering to the rich.
"Some would like to turn this into class warfare," he said after giving reporters a tour of his Crawford, Texas, ranch. "That's not how I think. I think about the overall economy and how best to help those folks who are looking for work."
While Mr. Bush refused to disclose any details of the plan he will unveil in a speech in Chicago next Tuesday, the plan is expected to have three major components - an acceleration of tax relief already included in the massive 2001 tax act but not scheduled to take effect until later years, a reduction by possibly half in the current tax on corporate dividends paid to investors and an increase in tax breaks for businesses investing in new plants and equipment.
Rep. James Oberstar of Minnesota, the top Democrat on the Transportation Committee, said the House Democratic alternative may well include an acceleration in government spending on aviation and highway projects as a way to create jobs. Rep. John Spratt of South Carolina, the top Democrat on the Budget Committee, said the Democratic plan would be front-loaded, with Democrats pushing for a quick vote on extending unemployment benefits for workers who have exhausted current benefits.
One acceleration of tax relief from the 2001 act that the administration is considering is a speedup of the individual rate cuts scheduled to take effect in 2004 and 2006.
Because higher income individuals, who pay more taxes, get the biggest benefits from rate cuts, the administration had considered not accelerating the scheduled reductions in the top tax rate, currently at 38.6 percent, but instead focus just on the three lower rates.
However, this idea prompted a storm of objections from conservative groups and a senior White House official, speaking on condition of anonymity, said late Thursday that the president had decided against excluding the top rate from any acceleration.
This official, however, said that Mr. Bush still had not made the final decision to go ahead with an acceleration in the rate cuts.
Other tax relief accelerations under consideration are expanding the child tax credit to $1,000 sooner than called for in the 2001 act and providing relief from the so-called marriage penalty paid by two-earner couples more quickly than in current law.
Another key component of the president's plan is expected to be a reduction in taxes paid on corporate dividend payments, a long cherished goal of conservatives.
However, in a bow to arguments that these payments flow primarily to higher-income Americans, the administration is considering limiting the amount of the tax reduction in this area to roughly a 50 percent cut in the current tax level instead of the total elimination of dividend taxes that many conservatives would like to see.
Sen. Max Baucus, the top Democrat on the Senate Finance Committee, last month put out his own $160 billion stimulus proposal. Baucus would provide a one-time $300 tax cut for individuals and $75 billion in block grants to cash-strapped states.
In a signal that Mr. Bush will have to compromise on whatever plan he puts forward next week, Republican Sen. Charles Grassley, the incoming chairman of the Senate Finance Committee, said that any proposal will need bipartisan support "given the realities of working in a closely divided Senate."
The president's entire stimulus package is expected to cost $300 billion over a 10-year period.