With President Bush declaring major hostilities over in Iraq, his attention and that of the U.S. Congress has quickly moved to improving the state of the American economy.

There's a lot of work to be done.

The stock market, unemployment rate and federal deficit are all in a quagmire - unable to improve but noticeably slipping over the past two-and-a-half years. President Bush, like his father, knows that tremendous war-time popularity numbers can quickly head south.

But despite the costs of the war, despite the increasing federal deficit, despite a troubling unemployment rate, the president insists on applying the same remedy he has recommended throughout his presidency - implementing a tax cut that is now estimated to cost $550 billion over the next 10 years.

Bush began by lobbying for a $750 billion tax cut package, but Congress, including many Republicans, balked, saying the nation cannot afford some or all of it.

Bush's version of the $550 billion tax cut, and the version that almost certainly will pass the House, would reduce levies on dividends, capital gains and small business investments, cut income tax rates and increase the tax credit for children.

The situation is not so clear in the Senate. On May 8, the GOP-controlled Senate Finance Committee has approved a more moderate $350 billion tax cut.

"A tax plan must apply market principles to the public interest," Bush said. "And my plan sets out to make life better for average men, women and children." But it depends on one's definition of "average" - Bush's package has been roundly criticized for favoring those in the upper income bracket.

"The President's huge tax cut package that goes primarily to upper income folks won't get it done," said Michigan Sen. Carl Levin. "Hundreds of economists, including ten Nobel Prize winners, agree that the tax cuts the President proposes will not give our economy anywhere near the jumpstart it needs. It will drastically worsen our deficit at a time when we are back in a deep deficit ditch. The President's proposed cuts also would do virtually nothing to assist our financially strapped states; in fact, it might harm them, as his proposed dividend tax provision would actually strip Michigan, for instance, of about $111 million in 2004."

Bush's own budget director pegged the federal budget deficit at $230 billion for 2003 - a number that increased by 15 percent from only five weeks before - and the red ink may grow further.

"The new projections mean that the government's 2003 shortfall could soar to $400 billion if Mr. Bush's tax cuts are approved and if war costs this year run into the tens of billions of dollars," the New York Times reported.

Such numbers would make the looming deficit the largest ever in dollar terms but smaller relative to economy than deficits in 1980s and early 1990s, the Times said.

Democrats have complained that the GOP tax plan would deepen budget deficits, drive up interest rates and slow economic growth.

"Instead of investing in our children, we will in-debt them for years to come," said House Minority Leader Nancy Pelosi, D-Calif.

Senate Democrats are proposing a more modest $114 billion tax relief package over the next 10 years. According to Sen. Minority Leader Tom Daschle, "the centerpiece of my plan is a tax cut for every taxpaying American." A family of four, making $50,000 per year will receive a tax cut of $1,630 in 2003.

The plan also eliminates the marriage penalty and accelerates the child tax credit, and includes a 50 percent tax credit in 2003 to help small businesses pay their share of insurance premiums.

"The President said recently that 'tax relief creates jobs,'" Levin said. "If tax cuts automatically create jobs, how does he explain the fact that we've lost about two million jobs since he took office, notwithstanding the fact that he pushed through a huge, trillion dollar-plus tax cut back in 2001? Following the same approach that did not work before doesn't make sense."