The New Administration and Tax Cuts
The top item on Bush's domestic agenda, and a major campaign promise, a $1.6 trillion tax cut, was the subject of bitter debate in Congress. While Bush and his supporters claimed that the tax cuts would promote new investment and economic growth, the Democrats argued that the bill heavily favored the rich and would waste away the unprecedented budget surplus. The Senate eventually trimmed the tax cut to $1.35 trillion over eleven years, and Bush signed it into law on June 7.
Almost 60 percent of George Bush's tax cuts were limited to the wealthiest 10 percent of Americans, with the richest 1 percent of Americans receiving nearly 45 percent of the tax cuts. By November of 2006, the national debt was $8,599,573,549,780 and growing by $2.55 billion each day.
In the final two years of the Clinton administration, there were budget surpluses of $122.7 billion (1999) and $230 billion (2000). As a result of the surpluses, the $5.7 trillion national debt had been reduced by $360 billion in the previous three years. One of the most controversial aspects of the Bush tax law was a plan to send checks to 95 million people. Those advanced payments were referred to as “tax rebates.” The rebates ranged from $300 to $600 depending on whether someone was single, married, or the head of a household. The total cost of the rebates was approximately $38 billion.
By the time Americans began receiving their tax rebate checks in August 2001, the country's budget surplus was beginning to disappear. The Congressional Budget Office attributed the change to a slowing economy and the Bush tax cut. By the fall, many believed that the country was heading toward a full-blown recession.