Bush unveils $674 billion economic stimulus package

CHICAGO -- President Bush put forward a "growth and jobs" economic stimulus plan on Tuesday that would provide tax relief to an estimated 92 million Americans by accelerating income tax rate cuts, wiping out all federal taxes on stock dividends paid to investors and boosting the child tax credit by $400 per child.

The administration estimated its latest economic stimulus package would carry a 10-year price tag of $674 billion, more than double what the administration was indicating would be the cost of the program as late as last week.

In an address to the Economic Club of Chicago, the president said the economy is strong, "yet there are warning signs I won't ignore, and I hope the Congress doesn't ignore."

The two major elements of the package would be a total elimination of the federal tax that investors pay on their stock dividend earnings and an immediate acceleration -- retroactive to Jan. 1 -- of the tax rate cuts that had been scheduled to take effect in 2004 and 2006.

The administration said that $102 billion of the cost of the program would occur in 2003 and the rest of the $674 billion total cost would be spread out over the next decade.

The biggest element of the package would be the total elimination of taxes on corporate dividends which the administration estimated would cost $364 billion over 10 years.

The acceleration of the tax rate cuts in the 2001 tax law would cost $64 billion while the acceleration of the child tax credit, currently at $600, would cost $91 billion, according to administration's estimates of 10-year costs.

Bush's 10-year $1.35 trillion tax package that Congress passed in 2001 called for further rate cuts but not until 2004 and 2006. It also phased in increases in the per-child tax credit but the $1,000 level would not have been reached until 2010.

Help with marriage penalty

The administration also proposed accelerating planned relief from the so-called marriage penalty that hits two-earner couples. Accelerating relief for the marriage penalty, which would have been fully effective in 2009, was estimated to have a 10-year cost of $58 billion.

"This is a plan that provides tax relief to the working citizens," Bush said Monday. "It's a plan that is a very fair plan. It's a plan that recognizes when somebody has more of their own money, they're likely to spend it, which creates more jobs."

The administration estimated that the various elements to accelerate tax breaks in the 2001 legislation would provide tax relief to 92 million taxpayers with the average reduction totaling $1,083 in 2003.

Breaking that figure down further, the administration said in a fact sheet that 46 million married couples would receive an average tax cut of $1,716 this year while 23 million small business owners would receive tax cuts averaging $2,042.

The administration said its package would provide $1,100 in tax relief this year to a typical family of four with two wage earners making a combined income of $39,000.

The president's Council of Economic Advisers estimated that all the tax relief, by providing consumers and businesses with more spending power, would boost economic growth and create an additional 2.1 million jobs over the next three years.