The cuts have been estimated to total $670 billion over the next 10 years. Bush told a meeting of business executives sponsored by the Economic Club of Chicago that the plan would "speed up economic recovery."

The key proposal in the package is the elimination of the tax that shareholders pay on stock dividends, which are paid yearly out of profits by many companies. The package also brought forward to January 1 the implementation of income tax cuts previously scheduled for 2004 and 2006.

"The most obviously bogus claim made is that ordinary taxpayers are the beneficiaries," stated the Financial Times. An estimated 42 percent of the monetary gains will go to the top 1 percent of taxpayers. Those among "America’s seniors" who will receive windfalls from the tax cut on dividend payments are "the very rich pensioners," the London-based daily noted.

According to the Tax Policy Center, those with income of more than $1 million a year would rake in about $89,000, while working people who earn $21,350 would save $47. As one example, John Snow, the president’s newly appointed treasury secretary, would keep more than $600,000 a year in tax on dividends from his 2 percent stake in the CSX railroad company.

Bush said that the tax cut scheme is aimed at bolstering "investor confidence" and would "draw more money into the markets to provide capital to build factories, to buy equipment, hire more people."

The Wall Street Journal, a strong supporter of the measures, claimed they would also free up "the increasingly large pile of frozen capital" tied up in retained earnings that have built up as companies have allegedly refrained from dividend payouts to avoid paying the taxes. During the 1990s, it reported, corporations purchased their own stock in the effort to boost values--a maneuver that helped inflate the stock market bubble of that period.

Not all capitalist commentators shared the Journal’s enthusiasm. "If enacted," reported the Financial Times, the package "would be the 16th big tax change in two decades." The impact of the proposed tax cuts on dividends would amount to less than 1 percent of the economy in the first year, it said.

"The effect on investment, growth and jobs is likely to be minimal... and the stimulus effect on the economy will be paltry," added the British paper.

While doing his best to present the package in a positive light, Bush also noted the high and persistent levels of unemployment. The official unemployment rate reached 6 percent last November--about 8.5 million jobless workers, the highest level in eight years. "Manufacturing jobs have declined for 28 months in a row," he said to the business executives, "and the unemployment rate is projected to rise even further in the short run."

The next day Bush signed into law a belated bill extending for 13 weeks federal unemployment benefits to 800,000 workers whose checks were cut off in December after Congress adjourned without extending their temporary benefits. The legislation also provides 13 weeks of emergency federal compensation for an estimated 1.6 million people who could exhaust their 26 weeks of state benefits before the end of May. Millions more, however, will continue to receive no unemployment benefits.

The package includes other provisions partly tailored to counter criticism that it is skewed to the rich. The child care credit would be increased by $400 to $1,000 per child, while provision has been made for a "re-employment account" of up to $3,000 for job training and other expenses related to job hunting. The president didn’t say if these funds would be made available to all unemployed workers.

Bush also proposed raising tax deductions for small businesses on their purchases of capital equipment from $25,000 to $75,000.

Vin Webber, a former Congressional leader for the Republican Party, acknowledged the vote-catching dimension of the package. He contrasted it to the "debacle" of tax raises enacted by the first President Bush, whose "own base thought he was doing the wrong thing." By contrast, Webber said, "this president has turned that inside out and around" with his tax cuts.

Both the economic proposals by Bush and the counterproposals by Democrats are being used as part of the unfolding campaign for the 2004 elections.

Democratic Party politicians have proposed a smaller-scale alternative with its own built-in inequalities. Their main proposal would be a one-time tax rebate of $300 to every taxpayer regardless of income. Slightly less generous depreciation rules for small businesses and a little more aid to state governments are included.

While the Democrats demagogically criticize Bush’s plan as " a gift to the rich," noted the Times, they "are less likely to emphasize that Mr. Bush’s plan would provide bigger tax cuts for many people at middle-income and lower-income levels than theirs would," through the $400 per-child increased family rebate.  
 
Brief celebration
Despite its promotion as a boon for business, Bush’s announcement only buoyed stock markets for a couple of days. Stock market investors had "second thoughts about their initial enthusiasm" for the tax cut program, the Wall Street Journal reported January 9. "A strong profit recovery still isn’t guaranteed," the big business paper noted, as "worries of about the strength of corporate profits and the risks of war...which had been pushed aside the Bush proposals, returned to investors’ minds."

"Even by Wall Street’s notoriously short attention span, the stock market surge surrounding President Bush’s $657 billion plan to fix the economy earlier this week was uninspiring," wrote CBS.MarketWatch.com editor David Callaway in the January 9 edition of the online publication. "A one-day nod to the prospect for lower taxes tax-free dividends for investors gave way to more real concerns about a weak earnings season and a looming war with Iraq."

Within three days coverage of the tax plan was competing for headlines with more bad news on the jobs front, as the government reported that the economy had shed 101,000 jobs in December, with retailers hiring fewer people for the holiday season and manufacturing suffering a further month of decline.

On January 8 the aluminum giant Alcoa provided a shock to the markets by reporting a greater than expected loss and announcing plans to lay off 8,000 workers. "Alcoa provided the first peek at an industrial bellwether and it clearly shows that the recovery on the industrial side isn’t here yet," John Forelli, portfolio manager for the Boston-based investment firm Independence Investments, told the Wall Street Journal.
 
 
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Working-class program  
 
 
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