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Last Updated: Tuesday, 22 April, 2003, 19:25 GMT 20:25 UK
Battleground turns to economy

By Steve Schifferes
BBC News Online, Washington

House Speaker Dennis Hastert (left) with President George W Bush
President Bush must rally congressional Republicans

President Bush has returned to Washington after the Easter break, determined to put domestic priorities at the top of his agenda.

With the Iraq war virtually over, Mr Bush will begin touring the country to spread his message that growth and prosperity depend on passing his tax cut bill, which is stalled in Congress.

On Thursday, the president will fly to Ohio to speak at a tank factory, carrying his message to a manufacturing heartland.

George W Bush is determined not to suffer the fate of his father, who failed to win re-election in 1992 despite his triumph in the first Gulf War.

And opinion polls suggest that the economy, not the post-war reconstruction of Iraq or the war terrorism, are now the top priority of US voters.

Difficult issues

Although Mr Bush's approval ratings have risen to about 70% since the fall of Baghdad, they are not as high as those enjoyed by his father in 1991 at the end of the first Gulf War (which peaked at 89%).

Mr Bush has reasons for optimism about his prospects in 2004

And Mr Bush has relatively little time to convince Congress to pass his key bills by the summer.

They would then come into effect in the next budget, which runs until the end of October 2004, just before the presidential election.

Mr Bush's top priority has been passing his "jobs and growth" tax plan, which will abolish taxes on dividends for investors in the stock market at the cost of $726bn over 10 years.

But so far the Senate and House of Representatives have failed to agree on the size of the tax cut, with moderate Republican Senators holding out for no more than $350bn.

Focusing on Ohio

It is no accident that Mr Bush's first post-war trip will be to Ohio, the home state of Senator George Voinovich, one of those Republican moderates

Last week, conservatives ran television ads in Ohio and Maine, home of fellow moderate Republican Senator Olympia Snowe, comparing the two senators to the French as disloyal allies of President Bush.

Mr Bush has indicated that he will accept $550bn, which would still give him room for most of his dividend tax cuts.

But moderates, citing research from the non-partisan Congressional Budget Office, say even that would increase the Budget deficit substantially, and do little to stimulate growth.

However, Mr Bush may get credit with the electorate for attempting to tackle the issue - and some forecasts predict that the economy will indeed grow more strongly in 2004, although not enough to reduce unemployment substantially.

It has grown by 2 million since Mr Bush took office.

Medicare reform

Another key piece of the president's domestic policy agenda - health care reform - is also facing tough going.

Mr Bush has boldly tried to link support for a long-sought prescription drug benefit for senior citizens with a major reform of the state-financed Medicare system, which pays most of the hospital and doctor bills of the elderly.

His argument that they should join private health care plans which limit choice of doctors and require more co-payments in order to get the prescription drug benefit is not proving popular in Congress, where many small states and rural areas lack such a network of private providers.

And the cost of the reform - some $300bn - and the yet unresolved issue of the exact size of the drug benefit which will be provided - is another obstacle.

The poor initial presentation by the White House, which allowed details of the proposal to leak out to the press before it reached key congressional leaders, has also diminished support for the move.

Democrats' dilemma

Yet Mr Bush has reasons for optimism about his prospects in 2004.

No clear and credible Democratic candidate has yet emerged among the nine contenders.

And the Democrats still need to prove their credibility on issues of national defence and terrorism, something that was not an issue 10 years ago.

The Democrats are also deeply split over the war, with many still angry at Mr Bush.

That could make it more difficult for Democratic moderates to win selection as the party's presidential candidate during the series of gruelling primaries which are set to begin next January.

Congress limits tax cut package
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