President George W. Bush on Monday launched a public campaign to sell his proposed 10-year $1.6 trillion tax cut as "tax relief for everybody" and said he wanted to make it retroactive to Jan. 1.
Surrounded by three families who would benefit from the tax cuts estimated to average $1,600 annually per American family, Bush said his across-the-board cuts in marginal tax rates were fair to taxpayers and would help stimulate a slowing economy.
"My plan addresses the struggles of American families and respects their judgment. It doesn't tell families how to spend their money. It doesn't single out some Americans for relief, while leaving others out. It's tax relief for everybody who pays taxes. That's what the times and basic fairness demand," Bush said.
The Democratic congressional opposition attacked the plan, saying it was too generous to the wealthy and risked causing federal budget deficits. Many Democrats favor smaller tax cuts, targeted to lower and middle income taxpayers.
Bush is to submit the tax cut to Congress on Thursday, after three days of touting the plan in public events. He also spent the weekend pitching it to meetings of lawmakers.
The president told reporters he would favor revising the legislation in Congress to make the tax cut retroactive, as a way to hasten any economic stimulus in the package.
Taxpayers could feel the impact of a retroactive cut as early as one month after a bill is passed, if withholding rates were adjusted to reflect the tax cuts, said Bush's top White House economic adviser, Lawrence Lindsey.
Said Bush, "I strongly believe that a tax relief plan is an important part of helping our country's economy recover. And I think expediting money into people's pockets is going to be a key ingredient."
RESISTS "LOADING UP"
Bush vowed to resist anticipated strong pressures in Congress to "load up" the tax package with extra cuts, as proposed mainly by some Republican lawmakers.
"Some in Congress view this as an opportunity to load up a tax relief plan with their own vision of tax relief. I want the members of Congress and the American people to hear loud and clear, that this is the right size plan, it is the right approach, and I'm going to defend it mightily," he said.
Lindsey told reporters that opening the bill to extra provisions would delay it. He declined to say whether Bush would consider separate tax legislation carrying extra cuts.
The plan was considered a long-shot during last year's presidential campaign. But Bush's case has been buoyed by a broad endorsement from Federal Reserve Chairman Alan Greenspan, new signs of an economic slowdown and an increased $5.6 trillion federal budget surplus projection from the Congressional Budget Office last week.
"People, I think, recognize that we're going to have tax relief. The fundamental question was how big and when," Bush told reporters on Sunday after meeting House of Representatives Democrats at a retreat in Pennsylvania.
Bush met Greenspan for lunch on Monday and was expected to discuss the tax plan with him, Fleischer said. But Fleischer declined to provide details of the discussion.
As Bush proposed in the campaign, income tax rates would be cut across the board. The top marginal rate would be cut to 33 percent from 39.6 percent, and the lowest rate would be cut to 10 percent from 15 percent. The number of rates would be cut to four from five.
The plan would also eliminate estate taxes, reduce disparities in tax treatment for two-income married couples and double the $500 per child tax credit.
WEALTHY GET BIGGEST CUT
Wealthy taxpayers would receive by far the greatest benefits in dollar terms. But Bush says his plan would give the greatest percentage reductions to those with moderate incomes targeted by alternative Democratic proposals.
Bush signaled he was was unwilling to consider moderating the reduction in the top tax rate.
"I think it's important to cut all tax rates," he said.
House Democratic Leader Richard Gephardt of Missouri led the party's response to Bush's plan on Monday.
"We believe that America should not spend all of its national resources on a massive tax giveaway for the wealthiest Americans, which is precisely what President Bush's plan does," Gephardt said in a written statement.
He said Democrats favored tax relief that targeted benefits to families who "need tax cuts the most" and would leave enough money to repay the national debt, improve education and shore up the Social Security and Medicare systems.
Robert Rubin, Treasury Secretary under former President Bill Clinton and now chairman of the executive committee of financial services giant Citigroup , told Reuters in a telephone interview he favored a "moderate" tax cut, but stopped short of saying the Bush plan was too large.
"I've been on the record for years as saying fiscal discipline is central to the good things that have happened in this economy over the last few years," Rubin said. "You can have a moderate tax cut that's commensurate with that."
The three families Bush met on Monday represented all but the highest of the four proposed tax brackets. Asked why no one represented the wealthiest bracket, Bush said, "Well, I beg your pardon, I'm representing them. I got a little pay raise coming to Washington from Austin, I'll be in the top bracket."
Paul Peterson, of Richmond, Va., whose wife and two young daughters accompanied him for the White House event with Bush, said the tax cut would be a big help.
Under Bush's plan, the Petersons would see their federal income tax burden, most recently $1,055 on an income of $36,675, completely eliminated.
"It's going to put more money into our pocket ... There's a whole raft of things I could put it toward which we desperately need," he said.