Bush fiscal stimulus: Will it help?

President Bush is about to become the first resident of 1600 Pennsylvania Avenue to propose two economic stimulus packages during his first term in office.

The Bush tax cut, Part 2 - which the president plans to unveil at a Chicago appearance Tuesday - is focused largely on an economic recovery that is still not creating many new jobs. Not exactly the performance a president can use to trumpet strong economic stewardship. The Democrats are already letting Mr. Bush hear about this.

Americans, too, will soon be feeling the effects of state budget woes, either through tax hikes or cuts in services.

The new stimulus plan is also tied closely to a lesson Bush learned from his father: When it comes to the economy, there is no such thing as trying too hard. "He needs to court the American family that has gone through hard times if he is to be reelected," says Fred Dickson, director of research at D.A. Davidson & Co. in Lake Oswego, Ore.

Thus, on Tuesday, Mr. Bush will unveil a new attempt to rewrite the tax laws and give a fiscal kick in the pants to the economy. Unlike his first $1 trillion tax cut, the latest effort will be more targeted, especially to the nervous business and investment community. If the President is to get those new jobs he wants, he'll have to count on businesspeople confident enough about the future to build new plants and hire new workers. And, to get the money they need to build those factories, they will need healthy stock prices - indicating that investors, too, are confident.

Thus, the centerpiece of the stimulus package is expected to be a reduction in the taxes paid on dividends and a temporary opportunity for business to get bigger write downs of equipment purchases. The dividend cut - although controversial - might enable some companies to get their stock prices up by, in essence, giving investors a bigger cut of the profits.

There will be something for the man in the street too: a speedup of a prior rate cut, perhaps a child care tax credit, and an extension of unemployment benefits. And, in an effort to broaden the political appeal of the bill, there might be some help for troubled state budgets. The details, including the cost, will be released when the President addresses the Economic Club of Chicago. But, there are reports it will cost $600 billion over 10 years.

"It's an attempt to make us feel better," says John Silvia, chief economist at Wachovia Securities in Charlotte, N.C. "It says 'We care, we're doing something.' "

But even before the President could detail his new package, Democrats lambasted it and promised to derail it. They called it an effort to help the rich and well-connected. Sen. John Kerry of Massachusetts told the Associated Press that the package is "a stimulus mirage, not a plan for economic growth." President Bush quickly retorted that his critics wanted to make his plan a matter of "class warfare."

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