WASHINGTON – With fresh evidence of a growing national economy, President Bush yesterday outlined the tax-cutting strategy he will use to boost a beleaguered Republican Party ahead of next year’s midterm elections.

Speaking to workers at a John Deere plant in Kernersville, N.C., Mr. Bush invoked President Reagan twice during a speech in which he called on Congress to extend the temporary tax cut package that was enacted in 2003. He also highlighted recent signs of sustained economic growth and low unemployment.

Mr. Bush’s popularity, which has been hovering in the high 30% range, is at an all-time low. Top Republicans, including the former chief of staff to Vice President Cheney and the majority leader of the House of Representatives, have been indicted. With yesterday’s speech, Mr. Bush sought to turn attention from these issues and continued uncertainty in Iraq, toward an issue his colleagues can win on.

“At the start of a new century, we’ve proven that pro-growth economic policies out of Washington, D.C., do work, and can overcome some mighty obstacles,” Mr. Bush said. “At the start of the century, we recommit ourselves to the notion that the more free people are, the better off your economy will be.”

A central point of the president’s message was the call for an extension of a two-year-old reduction in capital gains and dividend taxes. Many economists point to these cuts as the engine of a recovery that has kept unemployment between 4.9% and 5.1% since May, sent non-farm employment up 215,000 last month, and resulted in an average growth in gross domestic product of 4.1% since 2003.

Republicans in the House of Representatives approved a tax cut plan last month that includes an extension of the tax cuts; Republicans in the Senate passed a plan that did not. The Senate extension was blocked in committee by Senator Snowe, of Maine, and could be reinserted in conference when the Senate returns to session next week. But the majority leader of the Senate, Senator Frist, of Tennessee, was non-committal yesterday.

“I cannot predict on the tax side,” Mr. Frist told reporters. “We’re going to very aggressively address that.”

Without action by Congress, the dividend and capital gains tax cuts expire at the end of 2008, and taxes return to their previous, higher levels, in 2009.

Democrats responded to Mr. Bush’s speech by saying that real median income has declined under Mr. Bush and that more Americans are unemployed now than when Mr. Bush took office in 2001. Citing Mr. Bush’s recent trip to China, Democrats said Mr. Bush has also allowed China have the upper hand in global trade by not forcing the country to alter monetary policies that they said result in artificially low prices for Chinese goods.

Republicans have criticized Mr. Bush for drifting away from his first term focus on the economy, with some Republicans in the House of Representatives growing openly hostile toward the administration for what they describe as its free spending. Many conservatives have pointed to the fact that Mr. Bush has yet to veto a spending bill as a sign that he is not serious about reduced spending.

Mr. Bush sought to reverse that impression yesterday by threatening to veto pension legislation that does not contain a provision forcing companies to fully fund pension plans for retired workers. Mr. Bush also chided politicians who “preach fiscal discipline while voting against spending cuts,” vowing to keep taxes low and to be restrained in how he and the Republican-led Congress spend tax revenue.

“President Bush was doing more than cheer-leading the economy,” an economist at the Heritage Foundation, Timothy Kane, said. “He’s laying out a strategy for continued economic growth. But spending discipline starts at the White House, and either they start vetoing bills, or the tax successes will be lost.”

In his speech, Mr. Bush repeatedly cited the benefits of his tax cut package to middle-class families. He situated himself on the side of optimists and entrepreneurs and against “economic isolationists who are afraid of new opportunities.” And he sounded a classic theme of supply-side economists, when he said that economies grow “when people are allowed to keep more of their own money, to save and spend.”

A policy director at the Free Enterprise Fund, Phil Kerpen, said he was encouraged by the style and substance of Mr. Bush’s speech, which he said rightly focused on current economic growth.

“I think it’s a very positive sign that he’s talking about the 2003 tax bill and the importance of preventing the now-scheduled tax hikes,” Mr. Kerpen said. “And I also think it’s positive that he’s talking about promoting global free trade. I think this speech shows that the White House is now back on track in promoting a pro-growth economic agenda.”