President Bush wants Congress to cut taxes, a move he says will create more jobs in a struggling U.S. economy. Republicans and Democrats are divided over the size of those cuts.
With both houses of Congress now agreeing on the need for lower taxes, the challenge for President Bush is getting tax cuts big enough to meet his goal of one million new jobs by the time he runs for re-election next year.
The Senate Monday opens debate on a $350 billion plan. That is less than what the president wants but is still larger than the goal set by some Democrats.
The president has given up on his original proposal of more than $700 billion in cuts over the next 10 years. Now, he is pushing for a $550 billion plan approved Friday by the Republican-controlled House of Representatives.
"We need at least $550 billion in tax relief over the next decade, big enough to make a real difference in the paychecks of American workers, big enough to help entrepreneurs create more jobs, and big enough to give our economy the boost it needs," the president said.
In his weekly radio address, the president said April's six percent U.S. unemployment rate shows that Congress needs to act quickly.
"These reforms would bring immediate help throughout our economy," he stressed. " They would leave more money in the hands of families who need it, to make purchases and to pay the bills. And this tax relief would give employers greater incentives and resources to invest in new equipment. The result will be more jobs, and that is our goal."
Democrats say the president's plan unfairly favors the rich by eliminating taxes on corporate dividends, and provides no help to state governments facing their own budget shortfalls.
In the Democratic response to the president's radio address, New Jersey Governor James McGreevey says bigger federal tax cuts mean less money for the states.
"Every dollar we are in the red is a dollar that we can't invest in our economy, schools that won't be built, bridges that won't be repaired and jobs that won't be created," governor McGreevey said. " Today, 46 states face crippling budget deficits totaling $70 billion. Any plan to stimulate the country's sagging economy can't succeed, unless the states are part of the economic recovery."
Governor McGreevey says state budget deficits will force tax increases and service cuts that will hurt the overall economy and drive up the deficit.
"We need to understand that the administration's economic proposals will result in even larger deficits, a bigger mountain of debt and more borrowing to pay our bills. It's the opposite of recovery," he said.
The New Jersey governor says the Democratic plan would return the nation to the days of balanced budgets and what he calls "responsible spending" by investing in education, roads, and small businesses to create more jobs.