WASHINGTON, 4 January 2003 — The White House yesterday was putting the finishing touches to President George Bush’s $300 billion (187 billion pounds) stimulus plan to boost the sluggish US economy, and tackle arguably the biggest threat to his re-election next year.
The centerpiece of the package, to be unveiled by Bush in Chicago on Tuesday, will be a 50 percent cut in dividend income liable to tax. This on its own is likely to cost around $150 billion over the next 10 years. Existing scheduled tax cuts will be accelerated as well.
But in order to blunt Democratic charges that this Republican administration is pandering to the rich, the measures are likely to include an extension of unemployment benefits and an increase in child-care tax credits, to $1,000 from the current $600 per dependent child.
Despite Bush’s buoyant poll standings, the White House is worried that the economy could yet prove his Achilles heel, bringing him down just as it did his father in 1992. “It’s the economy, stupid,” was Bill Clinton’s mantra then as he mercilessly hammered President Bush Sr. for his apparent indifference to the problems of ordinary Americans.
Indeed the similarities between today and a decade ago are striking — a recession officially over but whose effects still lingered, weak business investment, a feeble stock market and rising unemployment. Last month the jobless rate rose to a nine-year high of 6 per cent — meaning 1.5 million jobs have been lost since Bush took office in January 2001.
Speaking at his Texas ranch this week, the son was at pains to show his concern. “I am worried about those who are unemployed,” Bush told reporters. “I think about the overall economy and how best to help those folks who are looking for work.” He took aim at Democrats for their fixation with “class warfare”.
The latest economic data is mixed. Construction spending rose 0.3 percent in November, spurred by the strong housing market, the Commerce Department reported yesterday. But consumer confidence, crucial to consumer spending which accounts for 70 percent of the economy, is sagging, while corporate investment has yet to recover from its slump in the last two years.
By announcing his plan now, just as the new Republican-controlled Congress convenes, the White House aims to impose its agenda, and counter charges it is concerned with war against Iraq to the exclusion of all else.
But it may face problems on Capitol Hill, especially in the Senate, where Republicans have a bare 51-49 edge, far less than the 60-seat majority needed to end debate on a contentious measure.
Democrats are bound to object that Bush is again favoring the rich, who will benefit most if the $1.35 trillion tax cut package of 2001 is phased in more quickly. But deficit-hawk Republicans may resist measures which swell the federal deficit further, projected at some $300 billion this year. (The Independent)
