"By leaving American families with more to spend, more to save and more to invest, these reforms will help boost the nation's economy and create jobs," George W. Bush said in his weekly radio address, adding that he would sign the bill in the coming week.
|The tax-cut will lead to "greater |
demand for goods and services,"
"When people have extra take-home pay, there's greater demand for goods and services. And employers will need more workers to meet that demand," Bush said, saying tens of millions of families and small businesses would benefit from the tax cut.
Congress narrowly passed the proposal on Friday in a dramatic vote that required US Vice President Richard Cheney to cast the deciding vote.
The bill is the centerpiece of Bush's economic policy, which he hopes will allow him to win re-election in 2004 and lay to rest his father's failure in 1991.
With $ 320 billion in direct tax cuts, $ 20 billion in aid to states and $ 9.5 billion in refundable credits for families who do not earn enough to pay income taxes, the plan is an ambitious effort to kickstart the US economy.
The most controversial part of the bill cuts taxes on dividends paid to shareholders and on capital gains to a maximum of 15%.
The move has been widely criticised as being bound to produce a short-term spurt for the US economy at the expense of its longer-term viability.
|Greenspan has voiced |
his concern over the
state of the economy
Analysts argue that the new tax cuts, other than adding about one percentage point to the economy could help insulate Bush from charges that he is not trying hard enough to boost the economy and create jobs.
But they also say that the cut will provide little relief to the middle class and the working poor and will undermine the economy by fueling huge budget deficits in the future.
"You have to be careful in politics. What looks like a sweet victory one day can turn into a bitter debacle the next," said Doug Brinkley, director at the Eisenhower Center for American Studies at the University of New Orleans.
"While it's a modest victory, it's no cause for celebration. The economy is suffering and there is very little indication that this type of tax cut is going to rejuvenate it," Brinkley said.
Republican insiders said new proposals for further tax cuts could emerge as early as September. Bush is said to be determined to make the tax cuts permanent and planned to renew his push for the complete elimination of taxes on corporate dividends.
The Saturday edition of the Washington Post called the move “a gamble over which economic force will prove more significant: a rise in the federal deficit, or an investment boom that could create a million new jobs.”
It is the first time that such a major tax cut is approved in the face of such deep budget deficits for the federal government. The 2003 deficit is expected to be the largest ever: an abrupt reversal from the budget surpluses Bush inherited from Clinton.
"It gives Bush the image of a leader, an impression as someone who cares and someone who is effective -- all of which are good arguments for people to hire you for four more years," Allen Lichtman, an American University historian who studies presidential elections, told the Washington Post.