Bush tax package under pressure

Any short-term relief must be linked to 10-year plan, he says

Republican leaders have also offered the possibility of some kind of "mid-course" adjustment that would allow legislators to consider reducing the tax cut - but not be bound to do so - if surpluses shrank. Asked about this idea, Bush said last week that "it depends on what it is. There are a lot of ideas now being floated out in the Congress, and I'm open-minded."

`Cautious' projections

Yesterday, Bush argued that even if the economy weakened more than budget projections assume, there would be plenty of surplus money for his tax cut to remain in effect.

"We can proceed with tax relief without fear of budget deficits, even if the economy softens," Bush said. "The projections for the surplus in my budget are cautious and conservative."

Bush said that "even if the slowdown were to turn into a recession," Congressional Budget Office projections suggest that the 10-year surplus would shrink by only 2 percent.

For weeks, the White House has insisted that Bush has been blunt with Americans in speaking about the nation's economic troubles. Administration officials have disputed complaints from Democrats and some economists that the president contributed to a slowdown by "talking down" the economy.

But a recent CNN-Time poll indicated that three out of five Americans believe Bush's gloomy words might actually have worsened the economy. Sixty percent of those polled also said that they think the economy is headed for a recession.

Indeed, Bush said yesterday that there was "urgent" need for tax relief and repeated that the economy is struggling. He told the crowd in Kalamazoo that "Michigan has been hit especially hard. According to the latest figures, unemployment has risen more in Michigan over the past year than in any other state of the union."

He added: "More than a few consumers counted on their earnings in the stock market to help them carry their obligations. They need tax relief fast. In fact, they need it yesterday."

But the president was careful also to offer some optimism about the nation and its economy. "We pioneer new technologies and new industries," he said. "The world's shrewdest investors put their money in America."

Some positive news

Some positive economic news also emerged yesterday. The Conference Board reported that consumer confidence rose this month for the first time in six months.

In coming weeks, partisan battles over the tax cut are likely to intensify. The Republican-led House is expected to approve parts of Bush's tax-cut package this week. And the evenly divided Senate is scheduled to vote next week on the size of the total tax cut to be included in the 2002 budget.

The Democrats' plan, in addition to giving all taxpayers a $300 rebate, also would drop the lowest income-tax rate from 15 percent to 10 percent immediately.

"Let's get this done now," Senate Minority Leader Tom Daschle said yesterday. "We can act now to take these two widely agreed-upon proposals off the table and get them onto the president's desk."

Bush's plan calls for reducing all rates, which has led Democrats to charge that his package benefits the wealthy most.

Bush used his speech yesterday to note that economic indicators began to show signs of trouble when President Bill Clinton was still in the White House.

"The American economy began slowing last summer," Bush said. "But we know how to emerge from trouble."