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In Latest Debate Bush, McCain Spar Over Tax Cuts, Class War

By David S. Broder and Terry M. Neal
THE WASHINGTON POST -- BEDFORD, N.H.

On a day that George W. Bush received two major endorsements, he found himself locked in the first serious policy dispute of the campaign with his major rival for the GOP nomination, Arizona Sen. John McCain.

Bush accused McCain of shortchanging the middle class on tax cuts and McCain fired back that Bush’s $483 billion, five-year plan would squander money that will be needed for Social Security on tax breaks for the well-to-do.

Under his plan, Bush said, a family of four in New Hampshire earning $50,000 would receive a tax cut of roughly $2,000 a year. McCain’s plan, he said, would give that same family a cut of $200. He also said that McCain doesn’t do enough for people with lower incomes. “His plan doesn’t address the people who live on the outskirts of poverty working hard to get to the middle class.”

But McCain sharply disputed that assertion, saying that “60 percent of the benefits from Bush’s tax cuts go to the wealthiest 10 percent of Americans and that’s not the kind of tax relief that Americans need.” By contrast, McCain claimed, all of the benefits of his own, smaller plan would go to people in the bottom three-fifths of the income scale. “I’m not giving tax cuts for the rich.”

McCain said another “fundamental difference” was that the governor would use “the entire surplus” projected for the next decade to finance tax cuts, while McCain would save most of it to extend the life of Social Security and Medicare, pay down the national debt and reserve only the remaining fraction for tax cuts, some of which would be financed by “closing corporate welfare loopholes and eliminating wasteful spending.”

McCain’s tax plan, which is due to be amplified next week, would expand the 15 percent bottom bracket upward, end the “marriage penalty,” provide relief for Social Security recipients who continue working and eliminate taxes on estates up to $5 million. McCain priced his plan at $500 billion over 10 years.

Continuing the thrust and parry, Bush spokesman Ari Fleischer accused McCain of pitting rich against poor. He said McCain “sounds a lot like Al Gore and the Democrats and it would be very unfortunate if a Republican joined the Democrats in this class warfare.”

The sharp exchange came as the two rivals campaigned in neighboring cities in New Hampshire, where polls show them locked in a close race for the first in the nation primary on Feb. 1. The disagreement reflected a change for the two men who have gone out of their way to compliment each other.

Bush was endorsed in New Hampshire Tuesday morning by Elizabeth Dole and and Iowa by Sen. Charles E. Grassley.