Economists led by 10 Nobel laureates Monday attacked President Bush's roughly $674 billion tax-cut proposal, arguing that the cuts fail to address the problems facing the U.S. economy and will add to long-term budget deficits.
Their signed statement, to run this week as a full-page advertisement in the New York Times, comes as Congress prepares to examine the details of the Bush proposal.
Economic growth that is not sufficient to generate jobs, corporate scandals, business overcapacity and uncertainty continue to weigh on the U.S. economy, the statement said.
"The tax plan proposed by President Bush is not the answer to these problems. Regardless of how one views the specifics of the Bush plan, there is wide agreement that its purpose is a permanent change in the tax structure and not the creation of jobs and growth in the near term. The permanent dividend tax cut, in particular, is not credible as a short-term stimulus," said the statement, signed by more than 400 economists.
The Nobel laureates include Joseph Stiglitz, who served on the White House council of economic advisers under President Bill Clinton.
The economists' statement is sponsored by the Economic Policy Institute, a liberal Washington think tank.
The four-paragraph statement, made public at news conference Monday, said the economy is expanding but not fast enough to create jobs.
The administration plan calls for an end to taxes paid by individuals on corporate dividends and acceleration of planned income tax cuts.
Administration officials, including Treasury Secretary John Snow, are planning a series of meeting this week across the country intended to generate public support.
The proposal, which has come under fire from congressional Democrats, will reduce federal revenues by nearly $700 billion over the next decade.
Democrats argue the tax cut will benefit mostly the wealthy while adding to budget deficits. Republican backers argue the tax cuts will lift economic growth and bring in more revenues.
Moderate Republicans who hold key votes in the narrowly divided Senate are, however, cool to the proposed dividend tax cut, the centerpiece of Bush's plan.
Lawmakers this week will begin to take a closer look at the plan. The Senate Finance Committee has scheduled two days of hearings this week.
Separately, Federal Reserve Chairman Alan Greenspan is expected to his offer assessment of Bush's proposal in testimony on Tuesday to the Senate Banking Committee and Wednesday to the House Finance Committee.
© Reuters 2003