Bush Signs Law Giving $350 Billion in Tax Relief

"Today we are taking essential action to strengthen the American economy," he said in a signing ceremony in the White House East Room. "With my signature, the Jobs and Growth Tax Relief Reconciliation Act of 2003 will deliver substantial tax relief to 136 million American taxpayers."

Bush said the cut would help workers, elders, small-business owners and families with children.

"By ensuring that Americans have more to spend, to save and to invest, this legislation is adding fuel to an economic recovery," he said.

Democrats, however, criticized the plan, despite its scaled-back version. The law, which includes sunset provisions that would enable Congress to renew cuts that would otherwise expire in years ahead, is tagged at $350 billon over 10 years. Originally, Bush asked for a $725 billion measure to create millions of jobs.

"The final Republican tax break bill is being touted as a significant victory for the administration, but it is a loss for the American people," said a statement from the office of Sen. Tom Daschle, D-S.D. "The Republican bill loses jobs over the long term. It is steeply tilted against the middle class and the poor and gives huge tax breaks to the privileged few by spending the Social Security Trust Fund."

Daschle said taxes on the middle class would increase to pay for the dividend tax break and the cut in the top income rates.

"The president said he wanted to 'grow the economy.' But under this tax break bill, the only thing that is growing is the federal deficit," the statement said.

The measure passed 51-50 in the Senate, with Vice President Dick Cheney casting the deciding ballot. In the House of Representatives, it passed 231-200.

Under its provisions, phased-in tax cuts from earlier legislation are brought into play now; the rate of tax is pared down and the lowest tax bracket of 10 percent is expanded to include more people in 2003 and 2004.

Married couples would receive some relief from the so-called marriage-penalty tax, and families would receive a larger tax credit for children in the next two years, $1,000 instead of $600.

Small businesses, meanwhile, would be allowed to write off from their taxes $100,000 for investment in new equipment. Taxes on corporate dividends would drop to a top rate of 15 percent from more than 30 percent. Bush had wanted it scrapped entirely, but the Senate balked.

Also included in the $350 billion measure was $20 billion in federal aid to states.

The administration thinks the tax cuts will lead consumers to put more money back into the economy, thus fueling an increase in demand for goods and services and the creation of jobs to meet those demands.

The measure, as signed into law, would create nearly a million jobs next year, it predicted.

"This legislation is a major step forward in our economic agenda, yet other steps are also needed," Bush said. "We must hold federal spending to a responsible level. Our budget for this year calls for discretionary spending to rise only 4 percent, or as much as the average household income will go up this year. Government should follow the example of American families by setting clear priorities and by staying within them."

Bush said Congress now needed to act on other measures to shore up economic security. Among them are health-care reform, prescription drug benefits for elders and Medicare.

Bush said the Internal Revenue Service would post new withholding tax guidelines for employers Thursday.

Government checks for the retroactive child tax credit would be received by parents of dependent children starting in July, he said.