Politics

Taxing Time For Congress

By Joel Roberts

February 3, 2001 / 2:18 PM EST / CBS

President Bush sent his tax-cut plan to Capitol Hill Thursday accompanied by a final urgent pitch, reports CBS News Chief White House Correspondent John Roberts.

Speaking at a Rose Garden ceremony, Mr. Bush said, "A warning light is flashing on the dashboard of our economy. And we just can't drive on and hope for the best we must act without delay."

The president said his 10-year, $1.6 trillion proposal would "jump-start the economy," and argued that swift passage of his plan by Congress could make the difference between growth and recession.

"All of us here in Washington, the president and the Congress, are responsible to confront the danger of an economic slowdown and to blunt its effects," said Mr. Bush.

Major Components of Bush
Tax Plan

Replacing the current tax rates of 15, 28, 31, 36 and 39.6 percent with a simplified rate structure of 10, 15, 25 and 33 percent.

Doubling the child tax credit to $1,000 per child and applying the credit to the Alternative Minimum Tax.

Reducing the marriage penalty by reinstating the 10 percent deduction for two-earner couples.

Eliminating the estate tax.

Expanding the charitable deduction to non-itemizers.

Making the Research and Development tax credit permanent. (Reuters)

The president also voiced strong support for the idea of making the tax cut retroactive to Jan. 1 so Americans can begin paying lower taxes now.

"We need tax relief now. In fact, we need tax relief yesterday, and I'll work with Congress to provide it," he said.

Under the Bush proposal, personally delivered to Congress by Treasury Secretary Paul O'Neill, a single earner making $32,000 would get back just $60 in the first year, but $500 when the plan is fully phased in.

A married couple with a $57,000 income would get back $120 in the first year, moving up eventually to $600. And a two-earner household with two children, making a combined $60,000, would get $391 in the first year, and almost $2,000 when the plan is fully phased in.

Republicans seized on the proposal, proclaiming that tax relief is on the way.

"After years of waiting, we finally have received an honest to goodness tax proposal from the White House," said House Speaker Dennis Hastert of Illinois.

Senate and House Democratic leaders, some of whom have proposed tax cut of $750 billion to $900 billion targeted at the neediest Americans, used a luxury Lexus from a local car dealer to underscore their opposition to the Bush plan at a news conference.

The Bush Tax Plan

What's In It For Me? Find out how much you could save this year and once the tax plan has been fully implemented.

"If you're a millionaire, under the Bush tax cut, you get a $46,000 tax cut, more than enough to pay for this Lexus," Senate Democratic Leader Tom Daschle of South Dakota said while holding up a muffler. "But if you're a typical working person, you get $227. And that's enough to buy this muffler."

"The president's plan is a lot like walking into a Lexus dealer, falling in love with a car, like this, that you can't afford and putting down you're entire life savings on just the down payment," House Democratic Leader Dick Gephardt of Missouri added. "It's clear you can't afford to buy this car, but you buy it anyway."

Sen. Max Baucus of Montana, the top Democrat on the Senate Finance Committee, said he was worried Congress would get carried away with tax cuts even before Mr. Bush sent up a budget showing how they fit with other spending priorities.

"I think we should call a time out," Baucus told reporters. "We are on the verge of a feeding frenzy."

Some leading Republican lawmakers say the cut should be even larger to stimulate a slowing economy and were considering adding on other tax breaks. Mr. Bush called that "inadvisable" and the White House warned that moves to beef up the tax cut could result in loss of support.

Senate Finance Committee Chairman Charles Grassley, an Iowa Republican, said he would urge Mr. Bush to veto any tax cut plan that is larger than the $1.6 trillion he proposed.