Bush Unveils Economic Stimulus Plan

President Bush will seek to make 2001's $1.35 trillion tax cut plan permanent and accelerate cuts slated for 2010 -- the next to last year of the plan -- as part of his $674 billion economic stimulus package, he said Tuesday.

"Americans are scheduled to receive tax cuts in 2004 and 2006 ... and the time to deliver tax rate reductions is now, when they can do the most good for American businesses," Bush said in a speech to the Economic Club of Chicago.

Bush said that last year, the nation was hit by a triple-whammy -- recession, terror attacks and corporate scandal -- but the economy is still moving forward.

"In spite of successes we have more work to do, because too many of our citizens who want to work can't find a job and many of our businesses don't have the confidence to invest and create new jobs."

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Bush said more needs to be done, and called on Congress to accelerate the tax break for married couples, scheduled for 2009, and speed up the tax credit for families with children, who aren't scheduled to get the break until 2010.

"A family of four with two earners and $39,000 in income would receive more than $1,100 in tax relief -- real money to help pay the bills and push the economy forward," Bush said "And the sooner Congress acts, the sooner help will come."

But Democrats, who have their own stimulus proposal, said the president’s plan is flawed.

"He says it will give the economy a shot in the arm, I think it will give the economy a shot in the foot," said Senate Minority Leader Tom Daschle, D-S.D. "It is a misguided plan reflective of this administration's misplaced priorities."

Under the president's plan, 92 million taxpayers will get an average $1,083 tax break, as tax cuts scheduled for 2004 and 2006 are phased in this year instead. The child credit would give an additional $400 to 34 million families who currently claim up to $600.

The cost of the bill will be $102 billion this year. The 10-year cost of the child credit is $91 billion, the marriage penalty reduction is $58 billion and reducing the marginal rates is $64 billion.

The administration estimated that 46 million married couples would receive an average tax cut of $1,716 this year, while 23 million small business owners would receive tax cuts averaging $2,042. The tax cuts would be retroactive to Jan. 1.

The plan would also eliminate taxes shareholders pay on dividends. According to the president, since companies must already pay a tax on the dividends before they are distributed, they are currently taxed twice.

"I am asking the United States to abolish the double taxation of dividends," Bush said. "By ending this investment penalty we will strengthen investor confidence. By ending double taxation of dividends, we will increase the return on investing to draw more money into the markets, to provide capital to build factories, to buy equipment, hire more people."

Democrats, however, complained that the president's plan is aimed at the wealthiest Americans.

On Monday, Democrats announced a $136 billion plan they say targets the people who actually need the help.

Democrats want to give a $300 tax credit to all taxpayers, even those who don't make enough to owe anything. They also propose a couple of business incentives, including a deduction for new investment.

Democrats want to double the amount of investments -- from $25,000 to $50,000 -- that small businesses can claim as a deduction on their income taxes. They would expand a bonus program for businesses who make large investments, but would require them to make the purchases this year.

Under the Democratic plan, states would get $31 billion for homeland security, highway, Medicaid and unemployment insurance programs.

A White House aide criticized the Democratic plan, saying that shifting federal money to states is not a stimulus.

And Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said the Democrats are late to the economic stimulus parade.

"It seems to me to be a lot of Johnny-come-lately criticism that seems unwarranted when the president has a good plan," Grassley said, who conceded that bipartisan compromises will be needed to get a final bill passed.

"I have to be a pragmatist and say that everything is on the table," he said.

On Tuesday, Bush also proposed "re-employment accounts" of up to $3,000 that people can use for child care, transportation and other costs of finding a new job.

The $3.6 billion, two-year plan would put $3,000 into individual accounts for unemployed job hunters to draw from to pay for child care, job training, transportation, moving costs and other expenses of finding a job.

"Under this new program, Americans who face the greatest difficulties in finding work will receive up to $3,000 to use in their job search. They will have great flexibility in how they use that money," Bush said, adding that a person who lands a job in 13 weeks would be able to keep any money left over in their account.

White House officials, who spoke on condition of anonymity, said 60 percent of the bonus money would go to the person when they get a new job. The rest would be awarded after six months on the job.

The $3.6 billion will be divided among states based on their levels of unemployed.

Republicans and Democrats agree on the need to help the nearly 800,000 workers who have received nearly a year of unemployment benefits but are still looking for jobs. Benefits expired at the end of December.

The Senate agreed by a voice vote on Tuesday to extend benefits by 13 weeks. The House is expected to vote on the deal Wednesday. A bill must be presented to the president by Thursday to avoid an interruption in benefits.

Fox News' Wendell Goler and The Associated Press contributed to this report.