Bush Says Economy Is 'Looking Up'

KANSAS CITY, Mo., Sept. 4 -- President Bush, hailing signs of recovery in the American heartland, said today that the U.S. economy is "looking up" and renewed his call for further tax cuts that would cost about $1.1 trillion over 10 years.

"America's economy today is showing signs of promise," the president said on a quick visit here intended to boost remaining elements of his domestic agenda. "The hard work of our people and the good policies of our government are paying off."

Bush, standing on a stage with banners proclaiming "JOBS," "GROWTH," and "Strengthening America's Economy," praised the "amazing resilience" of the economy but acknowledged that despite a number of favorable signs, job growth remains stubbornly sluggish. As Bush's Democratic opponents point out regularly, the economy has shed 2.5 million jobs during Bush's term.

Bush, under criticism from Democrats for not having more economic policies to increase job growth, today unveiled what the White House called a "Six Point Plan for the Economy," a repackaging of domestic policies Bush had previously proposed, including one to make permanent almost all of the tax cuts passed over the past three years.

Bush aides said they believed it was the first time he had called for making tax cuts permanent since he signed his third tax cut into law this spring. Bush has long favored permanent tax cuts but embraced the temporary cuts this spring, and aides insisted at the time that it was not the administration's policy to pursue further tax cuts each year.

Making such cuts permanent would cost $1.1 trillion over 10 years, according to the Congressional Budget Office. But Bush said his tax relief to date had only accounted for 25 percent of the budget deficit, and he said the deficit would be cut in half over five years if Congress follows his spending guidelines.

Democrats immediately derided Bush's plan as a failure to offer new proposals. "He just served up more presidential platitudes," said House Democratic Whip Steny H. Hoyer (Md.). "I think the American people now realize that President Bush never had an economic plan for our nation and he does not have one now."

Bush, in his speech today, addressed such criticism. "Some critics who opposed tax relief to start with are still opposing it," he said. "What they're really saying is they want to raise taxes."

The president credited his earlier tax cuts for the economic gains, saying "as many as 1.5 million Americans who went to work this morning would have been out of a job" without them. Still, he added, "even as this economy is looking up, it's hard to feel confident if you're somebody looking for a job."

Full of economic optimism, Bush cited a variety of indicators: July housing starts at their highest level since 1986, rising orders for goods, services and high-tech equipment, and a bullish stock market. But Bush said large gains in productivity has reduced companies' need for hiring -- a phenomenon that, while healthy in the long run, has made the recovery relatively jobless so far. To create jobs, Bush said, "our economy must grow faster than productivity increases."

Such growth -- greater than current productivity growth of 6.8 percent -- is a tall order. To meet it, the White House offered its "six-point" collection of items Bush has already offered: Health insurance proposals such as expanding medical savings accounts; limits on jury awards for malpractice and other lawsuits; expanding domestic energy production; more free-trade accords; and making permanent almost all of the temporary tax cuts passed in the last three years.

Bush said Congress should make permanent the elimination of the estate tax, a reduction in the capital gains tax, breaks for small business investment, a higher child tax credit and a lower penalty paid by married couples. "When we threw out the old taxes, Americans didn't expect to see them sneaking in back -- through the back door," he said.

Bush spoke before a friendly group of business people at a downtown auditorium here in Kansas City, which, according to a report this week by the Federal Reserve, has had slowing layoffs and gains in manufacturing.

The Federal Reserve found that most regions reported improved conditions, with scattered signs of increased investment and hiring. Other economic reports this week showed that while demand for goods is increasing, new claims for unemployment benefits climbed last week to the highest level since mid-July.

Staff writer Jonathan Weisman in Washington contributed to this report.

© 2003 The Washington Post Company