Bush Calls for Making Tax Cuts Permanent
1 hour, 11 minutes ago
URL:http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=1&u=/nm/20040121/bs_nm/bush_speech_economy_dc&sid=95609869
By Tim Ahmann
WASHINGTON (Reuters) - President Bush (news - web sites) on Tuesday set the stage for an election year fight over tax cuts as he called on Congress to make permanent the reductions he had won since taking office.
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"The American economy is growing stronger," Bush said to applause in his election-year State of the Union address before Congress. "The tax relief you passed is working," he said of the cuts totaling some $1.7 trillion over ten years.
"What the Congress has given, the Congress should not take away: for the sake of job growth, the tax cuts you passed should be permanent," Bush said.
Bush cited numerous signs of renewed economic vigor, but glossed over the unusual divergence between strong growth and tepid jobs creation, saying simply: "Jobs are on the rise."
Analysts say that divergence is the main reason the economy, which has shed 2.3 million jobs since Bush took office, could prove to be a weak spot for the president when he faces re-election in November.
"I think there's just two different worlds here -- the world the president talks about and the world that Americans are living," Democratic presidential hopeful Sen. John Kerry (news - web sites) of Massachusetts told NBC.
The debate over taxes offers one of the clearest divides on economic policy between Bush and the Democratic presidential hopefuls, who have all called for repealing at least part of the tax cuts.
Ethan Siegal, president of the Washington Exchange, an adviser to institutional investors, said the call to make the tax cuts permanent sets the stage for a big fiscal battle.
"That's going to be the number one fight this year," he said. "The odds are that there are enough votes to block it."
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An ABC News/Washington Post poll released on Tuesday showed a slim majority of Americans approved of how Bush was handling the economy. But 50 percent said they would prefer if Democrats held the economic reins, compared to 43 percent backing Bush.
In his speech, Bush said the government's budget deficit, which is expected to top $500 billion this fiscal year, could be cut in half over five years by slowing growth in spending on many programs to under four percent a year.
But he offered no details on where he thought the budget ax should fall.
Stan Collender, a budget expert at public relations giant Fleishman-Hillard, said Bush's deficit-reduction goal did not appear realistic given the tax cuts.
"Not only is it not realistic, it's completely contradictory, not unless you are going to hold spending down even further than he is talking about," Collender said.
In his speech, Bush resuscitated several economic proposals that had failed to make it into law.
He called for an easing of "needless federal regulation" on businesses and reforms that would protect businesses from "frivolous lawsuits."
Bush also reiterated a call for a partial privatization of Social Security (news - web sites). "Younger workers should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account," he said.
"I think he did a good job laying out his agenda, and that will be well received by the markets," said John Davidson, president and CEO at PartnerRe Asset Management.
Bush's proposals will be offered in more detail in the $2.3 trillion budget plan he will send to Congress on Feb. 2. |
