NEW YORK (CNN/Money) - Now that the U.S. war with Iraq is over, President Bush has sharpened his focus on the economy, particularly his push for a bigger tax cut than the one recently passed by the Senate. Bush claims the bigger cut will lead to more job growth, but economists aren't so certain.

Though Bush is unlikely to get the $726 billion tax cut he originally wanted, he can at least rest assured that the debate over whether to cut taxes is history. The only questions now are which taxes will be cut and how big the cuts will be.

Bush makes the argument seem like a simple one -- if a $350 billion tax cut will create jobs in an economy that desperately needs them -- about 2.6 million people have lost their jobs since March 2001, when a recession began -- it stands to reason that $550 billion would create even more jobs.

President Bush was in Ohio on Thursday promoting his proposed plan for at least $550 billion in tax cuts over a decade. CNN's Suzanne Malveaux reports. Play video (QuickTime, Real or Windows Media)

"Some in Congress say the plan is too big. Well, it seems like to me they might have some explaining to do," Bush said in a speech Thursday at a Canton, Ohio, ball-bearing factory. "If they agree that tax relief creates jobs, then why are they for a little bitty tax relief package?"

But the issue is a bit more complicated than that. Most experts agree that, if the Senate gets what it wants, limiting tax cuts to $350 billion, the less-controversial cuts would be the most likely parts of the plan to pass. Those include an acceleration of tax-rate cuts scheduled for 2004 and 2006, the reduction of the so-called "marriage penalty" and an increase in child-care credits.

Left out in the cold, in that case, would be the president's plan to eliminate most individual taxes on dividends. Bush and his supporters say cutting or eliminating these taxes would provide an immediate boost to the stock market, which would only help the economy.

"It will lead to an increase in stock market value, which will help bring initial public offerings back into market, along with merger and acquisition activity, which has been sorely missed in past two or three years," said Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson, Inc., a financial services firm in Chicago. "That added financial market activity comes along with a lot of real economic activity as well."

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Wesbury -- who was one of several economists to sign a statement recently supporting the Bush plan -- thinks a $550 billion tax-cut package, which would include about $200 billion in phased-in dividend-tax cuts, would boost economic growth to about 5 percent -- a far cry from recent growth, including the first quarter's anemic 1.6 percent growth the government reported Friday.

Without the dividend tax cut, however, Wesbury thinks GDP could grow at 4 to 4.5 percent, which is still well above the 3.6 percent average annual growth rate in the nine years before 2001.

In fact, very few economists believe the dividend cut would have created many jobs in the short run, when the economy -- and millions of Americans -- need them most.

"The positive impacts of the dividend tax exclusion will take a while to work through the system," said Douglas Lee, economist and director of Economics From Washington, a private consulting firm in Potomac, Md. "It's not clear to me that, in 2003 or 2004, the economy is going to behave very differently regardless of whether we choose the $350 billion or the $550 billion package."

The Business Roundtable, a private association of CEOs, recently commissioned a study by accounting firm PricewaterhouseCoopers that supported the White House plan, but said the dividend cut would add only about 100,000 jobs and just $9 billion to GDP in 2003.

Still, one might argue, 100,000 jobs are better than no jobs -- why not go ahead and cut the dividend tax anyway?

The opposition arises mainly from worry about what bigger and bigger tax cuts will do to the federal budget. Even the more modest Senate tax-cut plan would create deficits of $347 billion in 2003, $385 billion in 2004 and $294 billion in 2005, all smashing, in dollar amounts, the record of $290 billion set in 1992.

Some economists note that these deficits are smaller, as a percentage of GDP, than the 1992 deficit, and some argue deficits are acceptable if they fuel greater economic growth, which will eventually boost tax revenue and eliminate future deficits.

Others aren't so sure, worrying that the government will have to borrow to finance the deficits, sucking money from the private sector, driving up interest rates and slowing down the economy.

Many economists agree that this "crowding out" effect is not likely to happen in the short run, since credit demand is slack among both businesses still recovering from a borrowing binge in the late 1990s and consumers, who have been taking advantage of low rates to buy cars and houses like they were going out of style.

"Japan is the perfect living laboratory for the proposition that massive fiscal stimulus is not necessarily going to cause interest rates to rise," said James Grant, editor of Grant's Interest Rate Observer, referring to the world's second-largest economy, where interest rates are near zero, despite aggressive government spending.

Eventually, however, the White House and many economists assume the economy will recover, and demand for credit will recover along with it. If the government is still borrowing money at that time, the "crowding out" could begin.

"If deficit spending goes well beyond 2005, 2006, 2007 or 2008, it will lead to crowding out," said Sung Won Sohn, chief economist at Wells Fargo & Co.

Sohn thinks the $350 billion tax-cut plan alone could add a full percentage point to GDP growth -- but he also thinks the economy would recover without it, raising the question of whether the benefits of the plan are really worth the risk.

"The stimulative effect [of the plan] could be pretty powerful," Sohn said. "The downside is what could happen to the budget deficit in the long run -- are we building in long-term deficits? If so, that could raise inflation and interest rates, hurting capital spending and productivity gains in the long run."