Administration dismisses O'Neill criticism of tax plan

WASHINGTON -- The Bush administration insisted Monday that the effort to win congressional passage of a new round of tax cuts remained on track despite criticism from former Treasury Secretary Paul O'Neill.

President Bush also met Federal Reserve chairman Alan Greenspan on Monday for a private lunch "to exchange ideas frankly about the state of the economy," presidential spokesman Ari Fleischer told reporters.

He did not disclose any specific details of the discussions or indicate whether Bush used the occasion to seek Greenspan's support for the new tax cuts.

The Fed chief provided a valuable boost to Bush in January 2001 when he switched from favoring the use of budget surpluses to pay down the national debt and said the size of future surpluses made a large tax cut feasible. The administration used that support to win congressional passage in May 2001 of a $1.35 trillion, 10-year tax cut, which Democrats blame in part for bringing back sizable budget deficits.

O'Neill, in his first public comments since being forced out of the administration in December, said he saw only minor value in the centerpiece of Bush's $674 billion economic stimulus plan, the elimination of taxes on corporate dividends.

"I would not have done it," O'Neill said in an interview published Sunday in The Pittsburgh Post-Gazette.

Bush demanded the resignation of O'Neill in early December after he had publicly expressed doubts about the need for further tax relief to boost the economy. Administration officials have said they believe that railroad executive John Snow, nominated by Bush to succeed O'Neill, will be a more effective salesman of the president's tax cut proposals.

Asked about the criticism from O'Neill, Treasury spokesman Robert Nichols said: "We don't share that view, obviously. The president went a different direction."

Nichols said the administration believed the plan Bush unveiled last week is "the right package at the right time. It's the right size."

Nichols said that while Snow, the chairman of CSC Corp., has not yet been confirmed as the new Treasury secretary, the administration would use a number of other officials to sell the tax package, with planned trips around the country by other Cabinet members and other political appointees at the Treasury Department.

Commerce Secretary Donald Evans visited a jobs center in Dayton, Ohio, on Monday and promised that the administration would remain focused on the economy "until the last person without a job finds a job."

Dayton was the first stop on a two-day, three-state tour Evans was making to promote the administration's new economic stimulus package, which in addition to eliminating federal taxes on corporate dividends would also speed up other tax relief included in the 2001 legislation.

Fleischer told reporters that the administration understands it will take several months to get new tax cuts through Congress. The White House intends to seek support for its proposal from both Republicans and Democrats, he said.

So far, a number of Republican senators have voiced objections to portions of the plan. Sen. Charles Grassley, R-Iowa, the chairman of the Senate Finance Committee, has expressed doubts over whether Bush will be able to get his entire plan through the Senate, where Republicans hold only a two-vote majority.

Grassley has suggested it might be easier to win relief in the area of taxes on capital gains -- profits made from the sale of assets such as stock -- rather than in eliminating the federal tax on corporate dividends.