Seeking to counter criticism that his economic policies favor the rich, President George W. Bush said the plan he will unveil next week to stimulate the economy will focus on jobs and the unemployed.
"I'm concerned about all people," Bush said Thursday. "I understand the politics of economic stimulus, that some would like to turn this into class warfare. That's not how I think. I think about the overall economy and how best to help those folks who are looking for work."
Two of the major elements of the plan, which Bush will detail in a speech in Chicago on Tuesday, are expected to be a reduction in taxes on stock dividends and an acceleration in the cuts in personal income tax rates included in the 2001 tax act -- items that would benefit higher-income taxpayers the most.
White House officials, who spoke on condition of anonymity, said there was still an intense debate inside the White House over details of the proposal, which is expected to offer about US$300 billion in new economic stimulus measures over the next decade.
They said the president's plan was likely to include acceleration in tax cuts scheduled to take effect in 2004 and 2006.
The administration had considered not accelerating cuts in tax rates for the wealthiest Americans, currently at 38.6 percent. But a senior White House official said late Thursday that the president had rejected this suggestion.
But in an effort to deflect criticism that the plan is biased in favor of the wealthy, tax reductions on corporate dividends are not expected to go as far as a total exemption from taxes.
One possibility would be to exempt just the first US$1,000 in dividend payments each year. That would make stocks more attractive to average investors but would do little to relieve the tax burden of the very wealthy, who receive much more in dividend payments each year.
Bush said he believed the economy remains strong despite a series of setbacks in 2002.
"I hope the American investor realizes that this economy is pretty darn strong given the fact that we've been through a recession and a terrorist attack, a breach of corporate confidence because of some malfeasance, and yet the economy still grows," Bush said.
On the other hand, conservatives are concerned that Bush may be swayed too much by Democratic attacks and will end up presenting Congress with a watered-down stimulus proposal that won't provide enough in investment incentives for the wealthy and businesses to jump-start the weak economy.
"If Bush did put out a plan that surrendered to the class war critics, he would lose many in his conservative base," said Stephen Moore, president of the Club for Growth.
Daniel Mitchell, an economist at the conservative Heritage Foundation, said his group was worried the administration would trim back too much on tax incentives.
"There is no question that the left will try to drag out the pagan god of class warfare and say this is just a sop to the president's rich friends," Mitchell said.
"The purpose of making these changes is to get more investment into the economy and create more jobs. That's what really matters."
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