After months of negotiations, the Republican-led House passed a $550 billion tax cut package on a party-line vote that more closely resembles a request by President Bush than a different bill being debated in the Senate.

The 222-203 House vote calls for a reduction in taxes on dividend income, capital gains and small business investments, and accelerates the reduction in income tax rates and child tax credits to make a portion of them retroactive to 2003.

"The $550 billion we have available now to stimulate the economy — and remember that is a $10 trillion economy — is barely enough depending on what you do," said House Ways and Means Committee (search) Chairman Bill Thomas, R-Calif., who ushered the legislation through the House.

"What we want to do is get the most dollars into the economy as soon as possible," said House Speaker Dennis Hastert, R-Ill.

Thomas had supported the president's $726 billion stimulus plan first introduced four months ago and said the House had passed it but could not get Senate support.

The White House immediately issued a statement by the president.

"I commend the House for making great progress toward passing a jobs and growth package that will spur economic growth and create jobs for American workers ... I look forward to building on this success to deliver the economic boost America's workers deserve,' the statement reads.

House GOP leaders said the package is estimated to create 1.2 million jobs.  Commerce Secretary Don Evans was on hand on Capitol Hill to congratulate GOP leaders, saying the package had three objectives.

"The first one is jobs and the second one is jobs and third one is jobs," Evans said. "It helps most the individual who doesn't have a job."

Democrats had sorely opposed the measure, saying it would drive up the deficit and do nothing to spur economic growth contrary to what the president suggested when he first introduced his $726 billion measure four months ago. The budget deficit could reach $400 billion this year and is projected to be more than $300 billion next year.

"Instead of investing in our children, we will indebt them for years to come," House Minority Leader Nancy Pelosi, D-Calif., said.

House Minority Whip Steny Hoyer, D-Md., said House Republicans refused to allow debate because they knew the bill wouldn't hold up under scrutiny.

"The Republicans apparently lacked any confidence in the validity of their proposal and so in effect they gagged the overwhelming majority of people," Hoyer said.

"I would hope that the American public would be outraged. They will be very disappointed by the [provisions in the bill].  It will plunge the economy deeper in debt," he added.

Thomas said Democrats who opposed the legislation were more concerned with returning to "a near-death situation when they return to the Democratic caucus" than passing a jobs package.

"The debate [on the floor] was not about stimulating the economy, it was about getting ready for the next election. That is the wrong debate for the wrong time," he said, adding, "We cannot do what we need to do abroad if we are not strong at home,"

On Thursday, the Senate Finance Committee (search) approved a $350 billion measure bearing many of the same elements. Moments before approval, senators added 20 extra provisions, making the children's tax credit more generous for low-income families and paring some taxes on alcohol sales, gunsmiths, archery products and betting on horse races. Provisions also were added that would raise some taxes.

Bush's $726 billion proposal was dominated by his near-$400 billion plan to erase taxes people pay on corporate dividends, but opposition by Democrats and moderate Republicans has forced Congress to shrink the proposal.

"We are going to make it better," Treasury Secretary John Snow said Thursday of the pared-down tax plan. "We don't think this is the end of the road."

The House bill would lower the top income-tax rate on dividends from U.S. companies to 15 percent, down from its current high of 38.6 percent. Thomas said giving the tax breaks to stockholders of foreign firms would hurt congressional efforts to keep American companies from moving overseas for tax reasons.

Under the House measure, capital gains — the increased value of property — would also be taxed at no more than 15 percent (5 percent below its current maximum). Low-income earners would pay a 5 percent rate for both capital gains and corporate dividends.

The House legislation cuts the rates of the top four brackets and reduces taxes paid by millions of married couples.

Business tax breaks include quadrupling the current $25,000 that small businesses can expense for business equipment.

The Senate's smaller, $350 billion price tag came after GOP moderates refused to accept more, saying they feared it would drive up deficits. The Senate Finance panel approved it by a near party-line 12-9 vote with Sen. Blanche Lincoln, D-Ark., joining the committee's 11 Republicans. It is expected on the Senate floor as early as Monday.

Overall, it would cut some taxes by $421 billion over the coming decade while raising others by $71 billion. The biggest tax increase is $35 billion that would come from ending the $80,000 U.S. income-tax exemption for Americans on salaries earned overseas.

The bill also contains $20 billion in new spending for cash-strapped states, paid for with $20 billion raised by extending customs user fees and other savings.

It would let all shareholders receive at least $500 yearly in tax-free dividends from U.S. and many foreign companies, rising to as much as a 20 percent deduction beginning in 2008.

Like the House, the Senate measure would make other reductions in income taxes and levies paid by some businesses.

Lincoln voted for the measure after her proposals were included to make the children's tax credit larger for many low-income people and to make more families eligible for it.

The Senate committee rejected a parade of Democratic amendments aimed at providing a wage tax credit, extending unemployment benefits and increasing state aid to $30 billion.

The Associated Press contributed to this report.