Wednesday, Jan. 8

 

Bush bounces economic plan
before Chicago bureaucrats

[JAN. 8, 2003]  In a speech he delivered before the Economic Club of Chicago on Tuesday, President Bush unveiled his administrationís plan to stimulate the economy. The overall proposal calls for a $674 billion, 10-year plan to awaken a sluggish United States economy.

Highlights of the presidentís plan call for:

--An end to taxes on dividends that are paid to investors.

--An increase from $25,000 to $75,000 as the amount a business could write off on capital investment, and this amount would be indexed for inflation.

--Lower income tax rates for families scheduled to go into effect in 2004 and 2006 would now be retroactive to Jan. 1, 2003.

--The so-called "marriage penalty" tax, scheduled to be decreased in 2009, would be decreased retroactive to Jan. 1, 2003.

--Families with children would receive an increase in the tax credit from $600 to $1,000 per child under age 17 this year instead in 2010.

--The top four tax brackets would be reduced immediately, and millions of Americans would move into the lowest bracket, at 10 percent, this year instead of waiting until 2008.

--A total of $3.6 billion would be made available to states to help unemployed people and for job retraining programs.

--An unemployed person would have up to $3,000 available for expenses incurred in looking for a job.

 

The savings for each family or individual would be dependent on many factors; however, according to administration estimates, 92 million taxpayers would receive, on average, a tax cut of $1,083 in 2003.

The presidentís plan calls for an immediate $102 billion of tax cuts in 2003, with the remaining $572 billion to be phased in over the next 10 years.

Democratic leaders immediately assailed the Bush proposal as a plan that favors the rich and proposed their own $136 billion plan focused on tax cuts, help for the unemployed and a package of aid for states.

 

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Initial reaction at the national level was evenly divided. An MSNBC poll of 36,668 people, when asked if they thought the presidentís plan would work, showed a slim 51 percent compared with 49 percent who thought the Bush plan would not work and does not do enough for the average American

On the local level, Mayor Beth Davis of Lincoln responded favorably to the Bush proposal. When asked specifically whether the proposalís allowance for a business to write off a greater amount of capital investment would aid the local efforts to build an industrial park, she responded, "The city should now move forward with the industrial park proposal, as business may be more inclined to expand."

Logan County Board member Pat O'Neill, while stressing that he is a strong supporter of economic development, wanted to take a more cautious route. "Until I see an economic turnaround nationally, I don't think pursuing the industrial park would be a wise choice at this time." O'Neill pointed to a Peoria factory that had recently closed, with approximately 200 people losing their jobs.

Clarence Barney of H&R Block in Lincoln believed that "doing away with the dividend tax" would be the major stimulus to the economy. Mr. Barney stated that he would, in fact, probably "see a decrease in business because it would make the filing of tax returns easier" if stock dividends are no longer taxed for the individual taxpayer.

The presidentís proposal will now move on to the Congress, where the House and Senate will begin debate on the plan. Both Republicans and Democrats expect changes to be made and expect some type of compromise proposal to be agreed upon, possibly sometime this summer.

[Ken Ebelherr]

For more information on the president's plan, see http://www.whitehouse.gov/.

 

 

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