President Bush unveiled his $674 billion tax cut plan yesterday.

He called for the acceleration of across the board tax cuts and a $400-per-child increase in tax credits for families with children.

The centerpiece of his plan is the scrapping of taxes investors pay on dividends.

The White House claims 92 million Americans would gain an average tax cut this year of around $1,000 under the plan.

But Democrats attack the proposal as a windfall for the wealthy. Reuters reports Vice President Dick Cheney would have saved over one hundred thousand dollars in 2001 under the plan. (Cheney himself is expected to promote the proposal in a speech to the U.S. Chamber of Commerce on Friday.) President Bush would have saved $16,000.

The Los Angeles Times reports the huge tax cuts could reshape the federal government’s role in society as profoundly as the tax and spending plans President Reagan drove into law more than 20 years ago.

By proposing nearly $700 billion in additional tax cuts when the government is already facing large budget deficits and projecting steady increases in military spending, Bush has laid out a fiscal blueprint that could constrict spending for years to come on the domestic priorities Democrats favor.

The New York Times reports Bush’s proposal is raising alarm among state and local officials. Budget experts say scrapping taxation of corporate dividends will cost state and local governments tens of millions of dollars a year. States are already facing their largest shortfall in half a century, as much as $85 million for 2004.

Tape:

• President Bush unveils his tax plan, 1/07/03.

Guest:

• Robert Greenstein, executive director of the Center on Budget and Policy Priorities.

Related link:

• Center on Budget and Policy Priorities report