KALAMAZOO, Mich. — President Bush offered a cautiously optimistic assessment of the economy Tuesday, calling it "winded but fundamentally strong" and said that his policies on education, energy and free trade were critical for its continued health.
Bush sharpened his arguments for his package of tax cuts and restrained federal spending in a state-of-the-economy address to the Kalamazoo Chamber of Commerce.
The president's sweeping overview was designed to spell out what he views as the economy's strengths and weaknesses and to make the case for his tax cut proposals. Bush also reminded the nation anew that the economy began to cool before he took office.
"I strongly support the idea of backdating tax relief to get cash into consumer's hands as quickly as possible," Bush said. "We need an immediate stimulus for our economy."
Seizing on that initiative, Senate Democrats on Tuesday proposed a $300 tax rebate this year for every taxpayer to inject $60 billion into the economy, an approach Treasury Secretary Paul O'Neill said would have meager impact compared with Bush's 10-year, $1.6 trillion tax cut.
Senate Minority Leader Tom Daschle said his proposal to immediately lower the bottom 15 percent income tax rate to 10 percent, retroactive to Jan. 1, has broad bipartisan support — and shouldn't await passage of Bush's broader package.
"We can act now to take these two widely agreed-upon proposals off of the table and get them to the president's desk," Daschle, D-S.D., told reporters in Washington. "Let's get this done now."
The proposal, which would permanently lower the bottom tax rate to 10 percent at a cost of about $460 billion over 11 years, would provide single taxpayers with a $300 check this year, $600 for a married couple.
Checks would be sent to addresses based on the 2000 income tax returns and W-2 information received this year by the Internal Revenue Service; there would be a provision for people who don't get checks to file claims for the money.
Rates should be reduced permanently, Bush said. "Tax relief that gets yanked away next year is not such good news," he said.
The president's plan would also lower the top tax rate from 39.6 percent to 33 percent. It is that proposal that causes Democrats to complain that his plan would mostly benefit the wealthy.
Administration officials have said they might be willing to delay Bush's repeal of the estate tax to make way for a larger and quicker income tax break.
"But I want to stress, it's a matter of delay, and it's not delay for 25 years," White House economic adviser Lawrence Lindsey told USA Today. "It's a delay for maybe a year or two."
In a sign of a strengthening economy, the Conference Board's consumer confidence index rose to 117 this month, the first increase since September, from February's revised 109.2. The March index was the highest in three months.
The unexpected increases suggest consumer spending may pick up in coming months and preserve the economic expansion, which began its 11th year this month.
"The worst is behind us and the recovery may have begun," said Richard Yamarone, senior economist at Argus Research Corp. in New York. Consumers are still confident because they "still have jobs. There's nothing more that influences confidence than employment, and consumers remain fully employed."
The president has warned in recent weeks that the economy is "sputtering" and has argued that tax cuts could bolster it.
"The American economy is like a great athlete at the end of the first leg of a long race — winded, but fundamentally strong," Bush said. "My policies face reality as we found it and lay the foundation for future growth."
Bush sent Congress a plan to overhaul public schools shortly after taking office and was arguing Tuesday that it would boost the nation's productivity in the long run. He has warned that the energy crunch that threatens to cripple California could spread, and he declared Tuesday that a broad national energy policy was crucial to safeguarding the nation.
Meanwhile, Federal Reserve Chairman Alan Greenspan said economists need to put more emphasis on ways to better analyze the output of an increasingly complex society.
He told the National Association for Business Economics Tuesday this effort is likely to yield more benefits than trying to build ever-more-complex computer models.
Contributing: Bloomberg News Service