President Bush is forging ahead on his economic package, arguing Monday that the latest quarterly productivity rate (search) of 4.8 percent demonstrates that the workforce is still active, but more needs to be done to encourage growth in the economy.

As usual, the president is combining his speech on the economy with a discussion of the success of the war against Iraq (search) and efforts to rebuild that nation.

"We'll stay to help the Iraqi people build a government of, by and for the Iraqi people, and then we're coming home," Bush said.

The commander-in-chief headed to Little Rock (search), Ark., on Monday on his way back to the nation's capital after a weekend at his Texas ranch.

The president arrived late in the morning at the Little Rock airport, then traveled to Robinson Auditorium downtown to meet with local business people. The visit to Arkansas marks his first foray into the state since the spring of 2001, when he attended his first political fund-raiser as president.

Bush has proposed a $726 billion, 10-year tax cut plan that has already been trimmed by Congress, led by his own Republican Party, to no more than $550 billion. It remains stalled in the Senate, which has voted to hold any tax reduction to no greater than $350 billion. The White House has conceded that it would be satisfied with $550 billion.

The president pointed to several economic figures to justify his tax cuts, including an unemployment rate of 6 percent. The president said his cuts would promote stimulus and increase jobs.

Democrats and moderate Republicans say they're concerned about the growing deficit, and that the president's 2001 tax cut should act as evidence that cuts don't stimulate the economy.

The deficit is projected to top $400 billion in each of the next couple of years. Bush acknowledged that this year's deficit grew dramatically because of the costs of funding the war in Iraq, but said he's not afraid to increase the deficit if it means reducing the unemployment rate.

"I am concerned about the deficit but I am foremost concerned about people looking for a job," he said.

"We need to set our priorities, fund those priorities, always know whose money we're spending in Washington, D.C., and remember the deficit. We are never going to get out of deficit if we overspend," Bush said.

He added that a 4 percent increase in spending is the national average for households and should be good enough for Congress.

Key committees in the House and Senate are looking at package details this week.

On the Senate side, one plan would phase out the dividend tax, not dump it immediately as Bush wants. Republicans argue that such tax reductions will aid the investment markets, helping the whole economy recover. Meanwhile, Democrats attack the cuts as a windfall for the rich -- and want any stimulus plan to include aid to states.

Democrats have said the president's package, with its focus on reduced taxes on investment dividends drawn almost exclusively by upper-income taxpayers, doesn't benefit all Americans.

House Ways and Means Committee Chairmen Bill Thomas, R-Calif., introduced his own tax-cut plan last week. Thomas wants to take a more cautious approach to cutting taxes, preferring to cut both the dividend tax and the capital gains tax to 15 percent from 38.6 and 20 percent respectively.

Thomas' panel will consider the bill Tuesday and expects the House to debate it Friday.

Bush said Monday it makes more sense to just cut the dividend tax because it will benefit senior citizens who rely on the income, and that it will help to prevent corporations from offering "pie-in-the-sky" projections.

Under the president's plan, income tax rates scheduled to decrease next year would start dropping retroactively from Jan. 1, 2003. The child tax credit would increase from $600 per child to $1,000 for three years. Married couples would also get a larger standard deduction for three years. Fewer people would be hit by the alternative minimum tax.

Small businesses would be able to deduct up to $75,000 of their expenses for three years, and businesses could also depreciate up to 50 percent of their assets.

Referring to a couple that owns a company that would qualify for the deduction, Bush said, "They said, 'We don't mind spending money to make money but we need to have money in the first place' -- sounds like sound economics."

Bush is trying to convince the state's Democratic senators to vote for the plan, but he is having trouble winning over senators from his own party.

Arkansas' junior senator Mark Pryor said if Bush wants to win him over, he may want to try courting him better.

"No one from the White House has contacted me about [Bush's] economic stimulus plan, not even a low-level staffer," Pryor said. "It just seems curious to me that he flies all the way to Arkansas to talk about his plan, but one of the people sitting right here -- just down the street from him at the U.S. Capitol who actually has a vote on the plan -- has not even been contacted."

Bush also said that the government is working hard to protect the homeland and has had great success stopping Saddam Hussein's regime from financing terrorist operations.

"The best way to secure America is to make sure we get the enemy before they get us, and that's exactly what is going to happen," he said.

Bush's visit to Arkansas comes less than a week after he declared aboard the aircraft carrier USS Abraham Lincoln that "the United States and our allies have prevailed" against Saddam's Iraq. The president visited the carrier off the California coast to help welcome home the first large contingent of the U.S. military that saw action in and over Iraq.

Bush will host Spanish Prime Minister Jose Maria Aznar at the White House on Wednesday for a "meeting and working dinner." It is the president's opportunity to thank Spain for its support of the war.

"Spain stands among America's closest allies in the war on terrorism and the effort to bring peace and democracy to Iraq," McClellan said.

The president was supposed to spend Monday in Canada, but canceled his plan last month to show his discontent with that nation's decision to oppose the war.