WASHINGTON – Treasury Secretary John Snow said Tuesday that President Bush's proposal to accelerate the tax cuts passed in 2001 was running into little opposition in Congress but he acknowledged that the proposal to slash dividend taxes was facing a lot of questions from lawmakers.
Snow, appearing before a group of Washington lobbyists at the U.S. Chamber of Commerce, received assurances from Bruce Jostin, the chamber's top lobbyist that his group would "do whatever we can to enact this policy."
The administration is counting on support from the business community to overcome what has so far been sizable opposition from Democrats who have branded Bush's proposal as an expensive tax cut that would mainly benefit the wealthy and result in huge budget deficits.
Bush unveiled his jobs and economic growth plan in early January and it was formally introduced by supporters in Congress last week. Snow was scheduled to be the leadoff witness as the House Ways and Means Committee began hearings on the legislation on Tuesday.
The $695 billion, 10-year tax cut plan would accelerate into this year the rate reductions and other tax cuts passed by Congress in 2001 and scheduled to be phased in over 10 years. The 10-year cost of the 2001 tax cut has been put at $1.35 trillion.
Snow said the president feels it makes no sense to wait for that tax relief, which Congress has already approved, given that the economy needs the boost right now as it struggles to emerge from the 2001 recession and what has so far been a relatively jobless recovery.
"Putting more money into people's pockets right now will get people spending and get the economy's engine spinning a little faster," Snow told the chamber audience.
Snow, who has been making the rounds of congressional offices since taking over the Treasury job on Feb. 4, said he did not "see us running into a lot of opposition" on the tax acceleration part of the stimulus package.
But he said the proposal to eliminate the double-taxation of stock dividends was "drawing the fire."
Snow sought to answer critics' complaints that the dividend proposal, which would cost $385 billion over 10 years, would flow primarily to the wealthy who hold much more in stock than average families.
Snow said that argument neglected the fact that half of American families own stock now and that 40 percent of those stock owners earned less than $50,000 per year.
Snow said that as much as one-half to two-thirds of the projected cost of the dividend proposal would be recouped by the government through the beneficial effects of the plan, such as boosting the overall stock market and promoting stronger overall economic growth by lowering the cost to businesses of making productivity-enhancing investments.