WASHINGTON – President Bush met with some of the nation's top economists on Tuesday in order to get some expert input on the economic plan he wants Congress to pass in short order.
"We had a great discussion about the plan," Bush said in remarks to reporters following the meeting. "They have given good advice and sound judgment and for that, I'm grateful."
Bush's 10-year, $670 billion tax package has been a heated topic of debate in recent weeks, with Democrats slamming the proposal for not doing enough for American taxpayers this year, when they need it the most. Democrats and a few Republicans have vowed to fight Bush's plan, saying it caters to the rich and advocates proposals that will help Wall Street more than Main Street.
Among other things, the Bush plan eliminates double taxation of dividends and provides a $400-per-child increase in the tax credit for families with children. At a cost of $64 billion, Bush also wants to rush to this year all of the individual income tax rate cuts enacted in the June 2001 tax package and slated to come into effect in 2004 and 2006.
The administration has been staunch in its defense of the plan and insists the proposal will aid small businesses in particular.
"It is a plan that recognizes that economic growth is not as strong as it should be," Bush said after the meeting with economists. "It's a plan that's good for all Americans. It is a plan that addresses our needs and it's a plan that Congress needs to pass."
Among the 15 financial experts who attended the White House tête-à-tête were chief economists from Morgan Stanley, Bank of America, JP Morgan Chase and Bear Stearns. Academia was represented as well with economic professors and scholars from institutions such as Harvard, Carnegie Mellon and Stanford universities.
Attendees mostly included those with conservative views on issues such as tax cuts and reducing the size of government. But White House spokesman Ari Fleischer said at least two of the economists opposed Bush's 2000 presidential campaign.
Harvard economist Martin Feldstein chaired the Council of Economic Advisers during the Reagan administration. Wayne Angell is a former Federal Reserve Board governor selected for the Fed by Ronald Reagan; and Allan Meltzer headed a commission created by congressional Republicans, which issued a highly critical report of the International Monetary Fund and the World Bank.
After the meeting, some economists applauded the Bush plan.
"I think this is a really very good plan," Feldstein said. "It addresses the short-run questions of how to provide a short-term boost to the economy, which has been slowing down, but also focuses on the long run."
Meanwhile, in a hearing sponsored by the Senate Democratic Policy Committee Tuesday, Democratic lawmakers took turns blasting Bush's proposal and touting their own stimulus plan.
"The first order of business for this Congress — after protecting the American people — must be to jump-start our economy and create jobs now," said House Democratic Leader Nancy Pelosi of California. "Instead, Republicans are proposing long-term tax cuts that do little to stimulate the economy in the short term, while exploding the deficit as far as the eye can see."
House Democrats have put forth a package they say will create 1 million jobs this year — whereas the Bush plan creates fewer than 190,000 — and provides an immediate boost of $136 billion in 2003. The cost of that party's plan, Democrats say, is one-seventh of what the Bush plan is.
Pelosi also criticized the Bush plan for ignoring states' needs.
"One can only conclude from looking at his plan that he has forgotten about the states," she said, noting that while the Democrats' plan provides over $31 billion in targeted assistance for states, "the president's plan actually worsens states' fiscal outlook by eliminating the tax on dividends" so states collect less money from the federal government.
"Unless we address the needs of the states," she said," their budget shortfalls will dampen the stimulative effect of any efforts we make here in Washington."
The White House has argued that no economic stimulus comes from transfers of federal money to the states.
Bush planned to visit St. Louis, Mo., Wednesday to pitch parts of the plan that are meant to help small business.
In his weekly radio address Saturday, Bush noted that his proposal will give $23 million small business owners an average tax cut of $2,042 this year.
"Small businesses stand to gain a great deal from this measure," Bush said in his address. "After all, more than two-thirds of taxpayers who pay the highest marginal tax rates are small business owners who include their profits when they file their individual tax returns with the IRS."
Bush said he'll also ask Congress to increase the amount of money small businesses can deduct from their taxes for investment in new equipment from $25,000 to $75,000 — adjusted for inflation — saying, "this reform would give small businesses a further incentive to make the investments on which our economy depends."
This provision, the smallest item in the package, will cost $16 billion.
The Associated Press contributed to this report.