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Wednesday February 28, 2001

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Dems say Bush's tax cuts' 'too good to be true'

By The Associated Press

WASHINGTON - President Bush sought to rally the nation yesterday behind massive tax cuts, promising to lead Washington along "a different path" with increased spending on popular programs, less government debt and a $1 trillion reserve fund.

"I hope you'll join me and stand firmly on the side of the people," Bush said in remarks prepared for delivery before an almost evenly divided Congress on the 39th day of his presidency.

In the first test of his leadership, Bush was trying to convince the American people and their legislators that cutting taxes would boost the sluggish economy and ensure that Congress doesn't squander the surplus on pork-barrel spending. Polls suggest voters are lukewarm to Bush's tax-cut package, which he presented on the campaign trail 14 months ago.

"Unrestrained government spending is a dangerous road to deficits, so we must take a different path," Bush said in remarks released by the White House. "The choice is to let the American people spend their own money to meet their own needs, to fund their own priorities and pay down their own debts."

With the government awash in budget surpluses, the nation's 43rd president offered something for everybody over the next decade: $1.6 trillion in tax cuts, including reductions in every income bracket; $2 trillion in debt reduction; increased spending for education, conservation and other programs; and protections for Social Security and Medicare.

"If it sounds too good to be true, maybe it is," House Minority Leader Dick Gephardt, D-Mo., said. "We think we should be more skeptical, more cautious, in approaching this tax cut." Democrats are proposing targeted tax cuts of up to $1 trillion over 10 years, nearly twice as much as they supported a year ago.

Bush proposed increasing spending for Social Security, Medicare and entitlement programs by $81 billion - much of which is due to the routine growth of the entitlement programs.

He also would increase discretionary spending by an additional $26 billion, a 4 percent increase. That is a bit higher than inflation but lower than the growth of government in each of the last three years.

Bush said his plan will pay off $2 trillion of the $3.2 trillion in publicly held debt over 10 years. It would leave enough money, he said, for a $1 trillion contingency fund "for unexpected needs (and) additional priorities."

Bush advisers said that possible uses for the reserve could include extra debt reduction if actual federal surpluses shrink below current projections and added spending for defense, agriculture or other programs; or instituting personal saving accounts that workers could use to build up retirement nest eggs.

The address was Bush's first chance to showcase his agenda on a broad stage. After a brief inaugural address Jan. 20, the president has struggled to make his arguments heard above the din generated by former President Clinton's pardons, a spy scandal, a shooting at the White House and an airstrike against Iraq.

"A budget's impact is counted in dollars, but measured in lives," Bush said, promising enough money for "excellent schools, quality health care, a secure retirement, a cleaner environment and a stronger defense."

The speech was set in the House's ornate chamber, where history and recent controversies mingled in memories. Dwight D. Eisenhower delivered his State of the Union speeches to a Republican Congress in the mid-1950s, the last GOP president to do so until Bush. Two years ago, Bush's predecessor was impeached in the same chamber and sent to trial in the Senate, where he was acquitted.

Even before Bush stepped to the podium, Republicans sought to show momentum for tax cuts by announcing support from a GOP senator who has consistently voted against tax cuts, George Voinovich of Ohio. They also scheduled a committee vote this week on the cornerstone of Bush's package, an across-the-board income tax cut.

The president is buffeted on all sides by his 14-month quest to cut taxes across the board - from Democratic partisans who say the package is too large, GOP activists who say it's too small and a majority of voters who tell pollsters they prefer smaller tax cuts aimed at the middle class.

The president's budget tightening would force spending cuts in several areas, including homeless assistance, the Energy Department, high-tech initiatives and farm programs.

Bush has tried to focus attention on his bigger-spending plans for popular programs, such an 11 percent increase at the Education Department, a Medicare prescription drug plan and a modest increase for U.S. military salaries and housing.

In other areas, Bush wants to form a commission to study Social Security reform, increase the child care credit, reduce taxes on newly married couples, gradually repeal taxes on estates and allow taxpayers who don't itemize to deduct charitable contributions.