Leading the charge against the president's new economic proposal, Senator Daschle is describing the plan as "the wrong idea at the wrong time to help the wrong people."

It is true that the plan provides little short-term stimulus and benefits primarily the wealthy, while also adding significantly to the budget deficit. But its centerpiece, the elimination of individual taxes on stock dividends, isn't a bad idea, and need not favor the "wrong people" -- provided the country is willing to pay for it.

Start with some history. Once upon a time, when robber barons and stock jobbers ruled Wall Street, smart investors knew better than to believe in corporate accounting. As today's investors have learned the hard way, companies have countless opportunities to manipulate earnings, from simple record-keeping tricks to outright fraud.

And so, in deciding which stock to buy or sell, investors used one simple rule: "Show me the money." Companies that could not consistently pay out cash dividends to their investors could not attract capital -- no matter what dog and pony show they might offer on their prospects for future profits. Writing in 1934, in their seminal work, "Securities Analysis," Benjamin Graham and David Dodd surveyed the wreckage on Wall Street and concluded that not only were dividends the surest sign of a company's true value, but that management should have to seek shareholder approval before using earnings for any other purpose.

Today, the corporate tax code is a legal amalgamation that makes economists cringe and accountants giddy. Dividends are taxed twice, capital gains are taxed at preferential rates and interest on borrowing is tax deductible at the corporate level. The result? Dividends, the best indicators of a company's health, have fallen out of favor while debt-loaded corporations seek to boost their shares with promises of profits to come.

It was these promises, fed by talk of a "new economy" and technology "paradigm shifts," that led to outlandish increases in stock prices during the 1990s. The favoritism shown towards capital gains helps to explain why companies like Enron were not held to account sooner, since investors were left clueless about how much cash the company was actually generating.

Changes in the tax code to make dividends once again attractive would level the playing field. The policy measure, originally proposed by President Carter, could help to prevent some of the follies and abuses that led to the bursting of the 1990s Bubble Economy, while also helping to prevent the recurrence of Enron-type accounting scandals. But, importantly, the high cost of such a reform should be equitably borne, not just shoved off on future taxpayers.

Financing such a tax cut through borrowing, as the Bush administration proposes, is unconscionable at a time when war is looming, deficits are soaring and long-term obligations to Social Security and Medicare remain unfunded. Moreover, not only is the $368 billion price tag difficult to justify, the huge windfall to the best-off is nearly impossible.

How then to deal with the cost and fairness issues? Take the dividend idea and wrap it into a more comprehensive plan to reform, rather than reduce, taxes.

One possibility would be to trade the planned reduction in the highest marginal income tax rates for the dividend tax cut. The most ardent tax cutters will argue that taxing income would be a drain on growth, but that can be said of any tax. The question is, which tax creates the greater inefficiency? High marginal income tax rates might persuade some high-income people to work less than they otherwise would, but the double taxation of dividends creates massive inefficiencies in capital markets that hurt investors and workers alike.

An even better option would be to include the dividend tax cut as part of more comprehensive reforms to the corporate tax code. Again, striving for revenue neutrality, changes could be made that would improve the incentives companies face regarding the choices between equity and debt and dividends and capital gains, without draining government coffers for the effort.

Supply-siders will ardently claim that cutting taxes is more important than worrying about deficits. Luckily, there are still those in Congress who think mortgaging the future to pay for tax cuts today is a supply-side game we tried in the past that failed, and to get this fiscally responsible contingent on board, changes will have to be made to the President's plan.

If the purpose is to improve the tax code and spur economic growth, a plan that does not increase structural deficits will be more effective than the one on the table. If however, the plan is intended more as a payoff to influential constituencies including the wealthy and seniors, it should be scrapped altogether.