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Tax Cut Battle Royal Shaping Up

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President Bush has signed onto key provisions of an economic stimulus package whose price tag could reach $600 billion over a decade, administration officials tell The Associated Press.

Aides had previously put the likely 10-year cost at about $300 billion. And The New York Times says in its Saturday editions that the $600 billion figure was twice as high as even Republican lawmakers were expecting.

Mr. Bush's economic growth package probably will include a blend of tax cuts, billions of dollars in aid to financially strapped states facing huge budget gaps, and extended unemployment benefits, administration officials said late Friday, speaking on condition of anonymity.

The president signed off on portions of the plan Friday at his ranch in nearby Crawford after returning from a visit with troops at Fort Hood in central Texas.

The plan is already drawing fire from Democrats.

Senate Democratic Leader Tom Daschle used his party's weekly radio address Saturday to bash the president's tax-break plan, saying it's "the wrong idea at the wrong time to help the wrong people."

The plan, the South Dakota senator argued, would almost exclusively benefit the wealthiest Americans, while ignoring middle-income families.

Pointing out a disparity, Daschle said that under Mr. Bush's plan, those who make more than $1 million a year would get a tax break of $24,000, while those who make between $40,000 and $50,000 a year would get a break of $76.

Democrats say they are putting together a rival proposal that will be fairer and do less harm to the government's budget. 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, said afterward, "What you see is the administration perhaps using the term 'stimulus' as a Trojan horse to reel in some favorite tax breaks for the high end that they're so fond of."

Driving up the cost of Mr. Bush's economic growth plan from $300 billion to perhaps $600 billion are several factors, sources say: first, his inclination to accelerate tax cuts enacted last year for all brackets, instead of exempting the top bracket.

Also, the president was considering including an expanded tax break for businesses to encourage more capital investment and possibly making a down payment in fixing problems in the alternative minimum tax. It was originally intended to make sure the wealthy did not escape paying some income taxes but is now hitting more and more middle-income taxpayers.

Mr. Bush may also endorse an even bigger cut in dividend taxes than the 50 percent reduction administration officials were considering last month, the Times says.

The president is scheduled to unveil his plan Tuesday in a speech in Chicago.

White House officials didn't say how big Mr. Bush's final tax proposal would be but said the plan was more aggressive than previously reported when it came to tax cuts for investors and people in the highest tax brackets.

Even a 50 percent reduction in dividend taxes would total about $150 billion over 10 years and would probably be the main part of his tax plan. Under the plan, the tax benefits mostly go to the wealthiest taxpayers because they are the ones who receive most dividends.

The Times said Mr. Bush also was likely to propose speeding up previously scheduled rate reductions for all taxpayers.

Democratic lawmakers endorse tax breaks for lower- and middle-income families.

In his radio remarks, Daschle said the president's proposal won't help middle income families, won't contribute to economic growth or make the country more secure. Instead, he said, it will put the nation deeper into deficit and debt.

Daschle said he'll work to replace Mr. Bush's plan with a proposal for immediate tax relief for middle-income families.

"It is wrong to divert to special interest tax breaks the funds we need to make our country safer, stronger and more prosperous," he said.

Daschle apparently is leaning strongly toward making a run for the White House, though close aides say the decision is not final and they don't know when he'll announce his decision.

He has not said whether he would give up his Senate leadership post if he runs for president, but senators have been maneuvering to fill that position should he give it up.