By Deb Riechmann
WASHINGTON -- President Bush signed a $70 billion tax cut bill yesterday that Republicans hope will help their standing with voters as they head into the fall elections with worries about retaining control of Congress.
''Our progrowth policies stand in stark contrast to those in Washington who believe you grow your economy by raising taxes and centralizing power," said Bush, joined at the signing ceremony by Vice President Dick Cheney.
Democrats overwhelmingly opposed the legislation, saying the tax cuts on capital gains and dividends will flow mostly to the rich.
The GOP says the tax cuts, first enacted in 2003, have created 5.2 million jobs since August 2003 and bolstered tax revenue by nearly 15 percent last year.
According to the White House, the cuts have helped spur growth by keeping $880 billion in taxpayers' pockets during the past five years.
''The bill I sign today is a victory for the American taxpayers and is a strong lift for our economy," Bush said.
The Senate passed the bill, 54 to 44, on May 11.
The legislation provides a two-year extension of the reduced 15 percent tax rate for capital gains and dividends; it was to expire at the end of 2008.
The measure extends for one year recent changes to the alternative minimum tax to prevent that tax from snaring more upper middle-income families. The tax was designed to hit the very wealthy. Now, however, it is common for taxpayers, especially those with families in high-tax states, to pay the AMT on incomes of $100,000 and more.
The GOP sees the extensions as a chance to raise approval ratings for the president and the Republican-controlled Congress. Public opinion surveys put the ratings at their lowest points in the Bush presidency.
''With this bill," Bush said, ''we're sending the American people a clear message about our policy: We're going to continue to trust the American people with their own money."
Voters will not feel the impact before the November election; for investors, the impact won't be felt until 2009.
Democrats say the cuts favor the wealthy and oil companies. They point to other tax breaks that are languishing in the Senate -- for college tuition, state and local sales taxes, and research and development. Each expired in December.
''The Republican tax cuts do little for middle-class American families and widen the gulf between the rich and poor," said the second-ranking House Democrat, Representative Steny H. Hoyer of Maryland.
For a family making between $40,000 and $50,000, the cuts will mean an additional $46, he said. In the long term, Hoyer said, they will ''add to our record-setting deficits and undermine America's ability to invest in job training, education, healthcare, and other priorities."
Bush also renewed his threat to veto legislation to pay for the war in Iraq and hurricane relief at home because the spending bill has so many election-year add-ons. He has set a limit of $92.2 billion for the war and hurricane relief, plus $2.3 billion to prepare for a possible bird flu pandemic.
''If this bill goes over the limit or includes nonemergency or wasteful spending, I'll veto it," Bush said.
Passage of the tax cut extensions was the first step of a two-track strategy for advancing the GOP's election-year tax cut agenda. A separate bill containing up to $23 billion in tax breaks backed by Republicans and Democrats is expected to advance soon as a follow-up.
It would preserve tax deductions for state and local sales taxes, a tuition tax deduction, a tax break for teachers who buy their own school supplies, and the research and development tax credit for businesses.
Even though Democrats generally opposed the tax cut extensions, they back the alternative minimum tax relief. At about $34 billion, it is the single costliest part of the bill.
The tax was established in 1969 to ensure that all taxpayers pay at least some tax, but it was not indexed for inflation.