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Inside Politics

Bush Says He Needs to Improve His Pitch for Tax Cuts; Gore Defends Clinton Administration's Military Policy

Aired August 22, 2000 - 5:00 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

BERNARD SHAW, CNN ANCHOR: The education of George W. Bush. He says his tax cut pitch needs to be more clear.

(BEGIN VIDEO CLIP)

GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL CANDIDATE: I think when people understand that we're -- I have got a lot of money that's going to be applied to different programs, that the tax relief package will become even more...

(END VIDEO CLIP)

SHAW: Also ahead...

(BEGIN VIDEO CLIP)

AL GORE, VICE PRESIDENT OF THE UNITED STATES: Our military is the strongest and the best in the entire world. If you entrust me with the presidency, I pledge to keep it that way.

(END VIDEO CLIP)

SHAW: Al Gore defends the troops against Bush's charge that the military is in decline. We'll review the status of U.S. forces and how the defense secretary figures into the political fire.

ANNOUNCER: From Washington, this is INSIDE POLITICS, with Judy Woodruff and Bernard Shaw.

SHAW: Thank you for joining us. Judy is off today.

Governor George W. Bush says polls have nothing to do with it. But in the wake of Al Gore's convention bounce, Bush now acknowledges that some voters aren't sold on his tax cut plan. And as our Jonathan Karl reports, the Republican presidential nominee is taking some of the blame for the problem.

(BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CORRESPONDENT (voice-over): Even as he plays to overflowed crowds in places like Peoria, Illinois, George W. Bush says he needs to do a better job selling his tax cut proposal. BUSH: I've got to do a better job of making it clear. I think when people understand that we're -- I've got a lot of money that's going to be applied to different programs, that the tax relief package will become even more -- people will buy into the tax relief package even more.

KARL: The message Bush says he wants to get out is that he can both increase spending and cut taxes.

BUSH: Oh, you know, you just hear some people saying: Well, you're cutting into basic programs or you're cutting into the baseline of the budget. And the surplus is really money after the budgets have been projected to increase by $3.3 trillion cumulatively over a 10- year period of time.

GORE: I will not go along with a big tax cut for the wealthy at the expense of everyone else.

KARL: Vice President Gore has relentlessly hammered Bush's tax plan, arguing that it would take away money that should be spent on other programs, including defense, health care and education. As Bush attempted to refute Gore's charges in a speech in Des Moines, he seemed to get lost in the numbers.

BUSH: We will spend $3.3 trillion over the next 10 years on top of -- on top of the $1.9 trillion budget. We still have trillions of dollars left in the surplus.

KARL: That explanation left people scratching their heads. Later, Bush aide Karen Hughes offered a translation.

KAREN HUGHES, BUSH CAMPAIGN COMMUNICATIONS DIRECTOR: He wants to make sure that people don't succumb to the misrepresentations and distortions that Vice President Gore is making.

KARL: But if a sampling of people in Peoria is any indication, Bush's message on taxes is not getting through.

UNIDENTIFIED MALE: I would like to see them pay down the debt first, before they, you know, get a big tax cut for the rich.

UNIDENTIFIED MALE: National debt would have to come first, I think -- than I think education. Tax cut would probably -- no, wait a minute, let me put defense, military in their some place, and then the tax cut. In other words, tax cut isn't very high.

KARL: And even Peoria's congressman, Ray LaHood, called Bush's $1.3 trillion "very ambitious" and said Bush needs to talk more about paying down the debt. And with visits to three schools in two days, Bush got a chance to talk his five-billion-dollar plan to promote literacy. And his aides hope the photo opportunities with school kids would send the visual message that his tax cuts won't jeopardize spending on education.

(END VIDEOTAPE) KARL: Bush says there is no way that he will back away from his tax cut plan. He calls it absolutely the right thing to do. And his communications director, Karen Hughes, says that Bush will talk about cutting taxes every single day from now until the election -- Bernie.

SHAW: Thank you, Jonathan Karl, in Missouri.

Al Gore managed to work in a dig at the Bush tax cut plan today even as he took aim at the governor on another issue: military readiness. As our John King reports, Gore rejected Bush's charge that U.S. forces are in decline. And he underscored his own military service in the process.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CORRESPONDENT (voice-over): The right to wear the hat made Al Gore welcome. He is not only the vice president, but a lifetime VFW member: Post 5021, Carthage, Tennessee.

GORE: I've believed in a strong defense. I've fought for it for all my public service, not just in an election year, but every year.

KING: The annual VFW convention is a staple for presidential contenders, and Gore took the stage a day after Republican George W. Bush accused the Clinton White House of allowing the military to run low on ammunition and parts, lower on morale.

BUSH: The current administration inherited a military ready for the dangers and challenges facing our nation. The next president will inherit a military in decline.

KING: The vice president took issue.

GORE: Our military is the strongest and the best in the entire world. If you entrust me with the presidency, I pledge to keep it that way, with whatever it takes.

KING: Gore noted his service in Vietnam, Senate support for the Persian Gulf War, and administration backing for a recent increase in military pay.

GORE: It is that year-after-year commitment to a strong American defense that makes me so concerned when others try to run down America's military for political advantage in an election year. That's not only wrong in fact, it's the wrong message to send our allies and adversaries across the world.

KING: The vice president said the number of enlisted personnel on food stamps is now less than a third of what it was when Bush's father was president. And he said veterans should think twice about the governor's tax-cut plan.

GORE: We cannot have the right defense policy in the 21st century without the right economic policy. That is why I will not go along with a huge tax cut that primarily benefits the wealthy at the expense of everyone else, which would wreck our good economy and make it impossible to modernize our armed forces, meet our commitment to veterans, and keep our armed forces ready for battle.

KING: The vice president's Vietnam service is highlighted in his campaign's first general election TV ad blitz.

(BEGIN VIDEO CLIP, GORE CAMPAIGN AD)

NARRATOR: 1969: America in turmoil. Al Gore graduates college. His father, a U.S. senator, opposes the Vietnam war. Al Gore has his doubts, but enlists in the army.

(END VIDEO CLIP)

KING: Gore's tour of duty was brief, two years in all, five months of it as an army journalist in Vietnam.

GORE: I didn't do the most or run the gravest danger, but I was proud to wear my country's uniform.

KING: Being a veteran guaranteed a warm reception here.

(on camera): And military service is a piece of his biography the campaign believes sits well with voters who know little about Gore's life outside of his eight years as vice president.

John King, CNN, Milwaukee, Wisconsin.

(END VIDEOTAPE)

SHAW: Amid the campaign debate about military readiness, CNN has learned that the Clinton-Gore administration is proposing billions of dollars in increased defense spending for the fiscal years 2002 through 2007. Pentagon officials are telling CNN they would welcome the increase, but some view it as a blatant bid to counter Republican charges that the Clinton White House has underfunded the military for years.

CNN's David Ensor has more on the political battle over military readiness and how it has put the pentagon chief on the defensive.

(BEGIN VIDEOTAPE)

DAVID ENSOR, CNN CORRESPONDENT (voice-over): As a Republican- appointed secretary of defense in a Democratic administration, William Cohen finds himself in the awkward position of defending the Clinton record against attacks by the nominee of Cohen's own party.

WILLIAM COHEN, DEFENSE SECRETARY: We have the finest, the best led, the best equipped, the best educated, finest fighting force in the history in the world. We have that today.

ENSOR: When Governor Bush looks at the same glass, he finds it half empty.

GORE: The best intentions and the highest morale are undermined by back-to-back deployments, poor pay, shortages of spare parts and equipment and rapidly declining readiness. ENSOR: In fact, as Cohen points out, the cuts in the Pentagon budget started out under President Bush, as the Cold War ended and Congress sought a peace dividend. Cuts continued under Mr. Clinton, but now defense spending is heading up again.

COHEN: We have begun the largest sustained increase in our military spending in a generation.

ENSOR: Who is right about the overall state of the U.S. military? The evidence is mixed. For example, though military procurement dropped to $43 billion in 1997, it is back up to $60 billion this year, says Cohen.

But one outgoing commander says the U.S. military would have trouble mounting another Persian Gulf War after all the cuts under Mr. Clinton. He says it is overextended.

RET. GEN. ANTHONY ZINNI, U.S. MARINE CORPS: I believe the military is too small for the current kinds of commitments we have.

ENSOR: And the figures show Governor Bush is right when he says defense spending as a percentage of the nation's gross domestic product is down since his father left office. But that's because the Cold War is over, say administration officials, and because the gross domestic product figures are skewed by the nation's booming economy.

(on camera); Still the Clinton administration is pleased to have a Republican, William Cohen, out answering the criticisms of Republican candidate George W. Bush.

David Ensor CNN, Washington.

(END VIDEOTAPE)

SHAW: And still ahead on INSIDE POLITICS, more on the military as a campaign issue. We will talk to Bush adviser Richard Armitage and Democratic Senator Carl Levin.

(COMMERCIAL BREAK)

SHAW: The Bush and Gore campaigns are offering two vastly different pictures of the United States military. Joining us now to talk more about readiness and politics, Bush international policy adviser Richard Armitage, and Senator Carl Levin, ranking Democrat on the Armed Services Committee. From Michigan, he joins us from Detroit.

Mr. Armitage, first to you, is stewardship of national defense better under Republicans than Democrats?

RICHARD ARMITAGE, BUSH INTERNATIONAL POLICY ADVISER: Well, I think if you look at the last eight years and you ask anyone in the Department of Defense if they're better today than they were eight years ago, the answer would clearly be no, not prepared to say that Democrats and Republicans over the long history of our country are lesser or able to be good stewards. SHAW: Well, why do you claim that the U.S. military has declined under President Clinton?

ARMITAGE: Well, I think we feel very strongly that they're overextended, they're under-resourced. We don't want to wait until we have a "desert one" debacle to bring this toward the American people, and Governor Bush made the decision a year ago to start talking out about this, because he feels that being able to provide for the national defense is the paramount duty of a commander-in-chief.

SHAW: Desert one -- you are referring to when the U.S. military plane transport plane collided with American helicopters in Iranian desert in the attempt to rescue the American hostages at the U.S. embassy in Tehran?

ARMITAGE: Yes, and that brought forward to the American public the dismal state of readiness at that time. We don't want to wait for another one of those.

SHAW: Senator Levin, any truth in what he's saying?

SEN. CARL LEVIN (D-MI), ARMED SERVICES COMMITTEE: Well I'll tell you what Governor Bush has said is not only overblown, in some cases flat-out wrong. For instance, he said when he was speaking in Philadelphia that two full army divisions are not ready for duty. Well, those divisions are on duty. And so for him to say that they're not ready for duty, number one, is wrong. But it seems to me that the men and women in those divisions, on duty in Bosnia, in Kosovo -- because those are the two brigades of divisions that he's talking about -- have a right to be mighty upset with his comments that they're not ready for duty when they are on duty. And then he uses an example of food stamps. He says, we've got a lot of soldiers on food stamps. We've got one quarter of the number of soldiers on food stamps that we did when Governor Bush's father was president of the United States. We've reduced the number of soldiers on food stamps down from 20,000 down to about 5,000. And it seems, that's the right direction to go, and that is 5,000 too many.

But to use those kind of examples to argue that then we're not ready or that morale is low, it seems to me is way off the mark, highly partisan. And in my judgment, defense should be a bipartisan issue, and not such a partisan issue, as Governor Bush is making it.

SHAW: Richard Armitage, you've got a member of the Senate Armed Services Committee saying your candidate is flat-out wrong in the claim he made in Philadelphia. What say you?

ARMITAGE: Senator Levin has clearly forgotten the testimony of some of the chiefs of services in front of his own committee, where the chief of staff of the U.S. Army, General Eric Shinseki, has said flat out, we're not a C-1 army, but the chairman of the joint chiefs of staff has said flat out that we are not able to run a two major theater-war, a construct today, as well as we could of six years ago. So I think the senator has to be a little careful about playing politics with this himself.

SHAW: Senator.

LEVIN: I've heard the testimony of General Shinseki, who says we are ready to carry out our mission, so we can't -- I am perfectly happy to go to the record and argue with Richard about that.

But the flat-out statement that Governor Bush said, that those two divisions, full divisions, are not ready for duty, when they are out duty, was flat out wrong. General Shinseki immediately said it was flat-out wrong, and also Secretary Cohen, a Republican, who we all have confidence in -- Democrats and Republicans came on the next day and said that Governor Bush was flat-out wrong when he said two division were not ready for duty.

SHAW: I take it, Mr. Armitage, you are unimpressed by the claims made by the secretary of defense?

ARMITAGE: Well, let me say, I am very impressed by Senator Levin at any time. But interesting enough, Senator Levin didn't respond to the comments of the chairman of the joint chiefs of staff immediately in the wake of Mr. Bush's discussion at the Republican convention. When the chairman of the joints chiefs of staff said that what he heard at the Republican convention was a reflection of many of the concerns that the joint chiefs of staff had been putting forward on Capitol Hill. So I think that a full exposition of the record will show that there is a serious readiness problem in the U.S. Military. There is a serious retention problem. And we're delighted that money has been put forward this year against that problem. But that's simply going after the problems of today, and it is not in any way trying to handle the future challenges which will come down the pipe.

LEVIN: The largest increase in the defense budget since Ronald Reagan, largest pay increase in 20 years -- it's all just dismissed by the Republicans in order to try to gain an advantage, those are facts.

But I want to go back to the two divisions not being ready for duty, because Mr. Armitage has not answered that. Are those two divisions ready for duty, or aren't they.

ARMITAGE: I believe those two divisions, senator, are ready for duty.

LEVIN: That's not what Governor Bush said the other night, and that's why I think an apology is appropriate.

ARMITAGE: Senator, those two divisions, I believe, are ready for duty, but one would wonder which Peter was robbed to pay that Paul, which artillery units, for instance, are not ready for duty. And you know the game as well as I do. We're delighted that those units are combat ready for C-1 -- that is their wartime mission -- couldn't be more happy.

LEVIN: I am glad to hear the adviser to Governor Bush now say that those divisions are ready for duty, sir, because that's not what the governor said. He said, not ready for duty, sir, and that hurts. That's wrong. It's responsible. I am happy to hear Mr. Armitage correct it. I hope Governor Bush corrects it. SHAW: Well, let me cut through this and ask this very basic question -- Richard Armitage, are you implying that President Clinton has been derelict in his duty as commander in chief?

ARMITAGE: I am implying that the President of the United States Clinton has underfunded the U.S. military for the past several years. It is not for me to say he's derelict in his duty or not. That is a simple statement, and I'll stand behind it.

SHAW: Senator?

LEVIN: Republicans have controlled the Congress, by the way, for the last six years, really want to appropriate money. But putting that aside. largest increase since Ronald Reagan in defense, biggest pay increase in 20 years; that's a pretty good record, a pretty solid record, and I think that the president can be proud of it. More important, when you talk to General Shelton, chairman of the joints chiefs, he says, we are ready to carry out our mission. Secretary Cohen says we are the readiest, the best-trained force we've ever had in history. There is, to me, a very reliable source. Secretary Cohen will not misstate a fact for any political or partisan purpose. He is a straight shooter, and he is shooting on this one and I think the people can rely on him.

ARMITAGE: I think the people should also be aware, senator, that Republican-led Congress has each year but one since 1994 added money to the administration's budget request.

LEVIN: We've added slightly; the president has signed the bills.

SHAW: Gentlemen, on that note, thank you, Richard Armitage and Senator Carl Levin for joining us on INSIDE POLITICS.

LEVIN: Thank you, Bernie.

ARMITAGE: Thank you.

SHAW: Quite welcome. Very interesting.

Now to that New York Senate race and a decision by the Securities & Exchange Commission closing its inquiry into option trading by Republican Congressman Rick Lazio. The SEC said today it will take no action against Lazio regarding a $14,000 profit from a 1997 sale of stock options in the brokerage firm Quick & Reilly. Critics had raised questions about Lazio's ties to campaign donors on the board of the brokerage.

Meanwhile, Lazio and his Senate opponent, first lady Hillary Rodham Clinton, are engaged in a statewide ad war. The latest Lazio campaign ad, which began running statewide last week, touts the congressman's record.

(BEGIN VIDEO CLIP, LAZIO CAMPAIGN AD)

NARRATOR: These are all significant pieces of legislation that have passed the U.S. Congress. Who is the congressman behind all of this legislation? Rick Lazio. Eight very effective years in Congress. Rick Lazio.

(END VIDEO CLIP)

SHAW: Today, the campaign of Hillary Rodham Clinton released this response ad.

(BEGIN VIDEO CLIP, HILLARY CLINTON CAMPAIGN AD)

NARRATOR: The end to nursing home standards, the largest education cuts in history, the slashing of Medicare by $270 billion. Who voted for all this? Rick Lazio.

(END VIDEO CLIP)

SHAW: The Clinton campaign says the ad will run for at least a week and called this one of the larger ad buys of the campaign.

Also in New York state, the state Democratic committee is airing a Spanish ad that harshly criticizes Lazio's record on Hispanic issues. The state Democratic Party says it will air ads on Spanish radio stations in New York City through November.

Now, there's much more ahead on this edition of INSIDE POLITICS.

Still to come...

(BEGIN VIDEO CLIP)

BROOKS JACKSON, CNN CORRESPONDENT: Big tax cut? If Al Gore is elected, you can pretty much forget about it.

(END VIDEO CLIP)

SHAW: Brooks Jackson on the candidates and two different approaches to the issue of taxes.

Plus...

(BEGIN VIDEO CLIP)

AL GORE, VICE PRESIDENT OF THE UNITED STATES: That's the difference in this election. They're for the powerful. We're for the people.

(APPLAUSE)

(END VIDEO CLIP)

SHAW: Is Al Gore sending a populist message? Our Bill Schneider says not exactly.

And later, does George W. Bush have reason to worry? We're going to ask Kate O'Beirne and Jake Tapper.

(COMMERCIAL BREAK)

SHAW: We will have more of this day's political news coming up, but now a look at some other top stories.

The threat to Puerto Rico from Hurricane Debby appears to be lessening, but that isn't preventing several airlines from canceling flights that serve parts of the Caribbean.

We turn now to CNN's Frank Buckley in San Juan for the view from there -- Frank.

FRANK BUCKLEY, CNN CORRESPONDENT: Bernie, the rain continues to fall lightly occasionally here in Puerto Rico, and there are still some light winds. But generally speaking, the wind has not been much of a factor here. The rain could still continue to pose some problems for some of the residents here, and emergency management officials will be watching through the evening hours to make sure that there isn't any flash flooding or any mud flows.

There is one hurricane-related death that has occurred here in Puerto Rico. A man who was climbing on his roof to prepare for the hurricane fell to his death.

Many people have been preparing over the last 24 to 36 hours in a variety of ways, going to stores to purchase things, also boarding up their windows, taping windows.

They were anticipating water and power outages: Neither of those has been a problem today. In fact, many people were on the beaches here today. They were on the beaches because the surfers and the boogie boarders were out on the beaches today enjoying the waves. It's an activity that's of course not recommended on days like these, but it's one that's irresistible to some people.

Activities that were cut back today included schools. Schools were closed as were government offices.

The airport remained open, but as you mentioned airlines canceled flights in and out of Puerto Rico.

Within the hour, the governor will meet with heads of government agencies here to make their assessments of this day and to make some judgments and decisions about tomorrow.

One additional note: There are 219 people that remain in shelters today. These are public shelters that are set up for residents of Puerto Rico, and mostly as a precaution. Government officials saying that they have no evidence of any flooding or damage here in Puerto Rico -- Bernie.

SHAW: OK. Thank you, Frank Buckley, with the latest from there, San Juan.

Meantime, the southeastern United States keeps a very close watch on Debby as the storm turns its way toward that region. For the latest, let's check in now with Orelon Sidney at the CNN Weather Center.

ORELON SIDNEY, CNN METEOROLOGIST: Bernard, thanks a lot. We have new configurations to the hurricane watch and warning. Hurricane warning has been dropped for San Juan and points eastward. Head though out to Hispaniola, the northern coast of the Dominican Republic into the extreme southern Bahamas, a hurricane warning is in effect, which means hurricane conditions are expected within 24 hours. For parts of the Dominican Republic in the west to Haiti north of Port-au- Price, then continuing along the coast to Cuba into the central Bahamas, hurricane watches are in effect. That means hurricane conditions are possible within the next 36 hours.

We have seen some organization throughout the day. An eye has actually formed, though we're looking now -- I think that this is probably the central dense over (UNINTELLIGIBLE) we're starting to see here. It's kind of hard to pick it out.

But generally, the center of the storm has headed off to the north of San Juan, which is certainly some very good news for us.

The very latest coordinates have already come in now: 45 miles north of San Juan, Puerto Rico (UNINTELLIGIBLE) the center. The winds, 75 miles an hour, moving to the west-northwest at 21.

New track is also in, which takes it continually up through the Bahamas, up to category two by 2:00 p.m. Friday, just off the coast of Florida.

This has a very wide margin of error. It could be anywhere from out across the northern Bahamas into the Gulf of Mexico. Right down the center of that would be into Central Florida, so we certainly still have to keep an eye out for what's going to happen with this storm downstream.

The strongest squalls continue across the northern portion of the eye. So you're going to get light rains, some light winds across most of Puerto Rico and the Virgin Islands -- Bernard.

SHAW: Thank you. Orelon Sidney with the latest there, and now let's go to Asia, where coastal residents of China are bracing for a fierce storm that already has caused some serious problems on Taiwan.

Super typhoon Bilis slammed into the island earlier today with winds topping 160 miles an hour. At least two people were killed. This storm has uprooted trees and knocked out power to tens of thousands of people. At least two villages have been evacuated because of the threat of mudslides.

A pall is hanging over the Russian naval base near Murmansk today as the nation mourns the loss of 118 crew members aboard the Kursk. Russian President Vladimir Putin met with the wife of the sub's commander and relatives of other crew members. Many Russians resent the way Putin's government responded to this disaster.

History's most expensive accident investigation ended today with safety investigators blaming a short circuit for the explosion that sent TWA Flight 800 crashing into the Atlantic four years ago killing all 230 people onboard. The National Transportation Safety Board says it was most likely a power surge that triggered a fuel tank explosion minutes after the jet took off from New York.

Bridgestone/Firestone will airlift tires from Japan in order to help replace the 6 1/2 million tires recalled here in the United States. Also, Ford Motor says -- Ford Motors says it's closing truck plants in three states and using the 70,000 tires intended for new vehicles to replace recalled Firestones.

Interest rates will remain unchanged, at least for now. Federal Reserve policy-makers reached that decision earlier today. This move was widely expected in the face of slowing economic growth.

When INSIDE POLITICS returns, our man Brooks Jackson goes beyond the political bickering to give us the bottom line on the Bush and Gore tax plans.

(COMMERCIAL BREAK)

SHAW: As we noted earlier in our lead story, Governor George W. Bush suggested today that voters may be confused about some aspects of his tax cut plan. So we thought this would be a good time to review Bush's proposal and Al Gore's, as well.

CNN's Brooks Jackson has been scrutinizing both candidates' plans in hopes of separating the facts from the political hype.

(BEGIN VIDEOTAPE)

JACKSON (voice-over): Here's who George W. Bush says would benefit from his big tax cut.

SYBIL JOHNSON, WAITRESS: I have two kids, two dogs, a new house we're working on, and a job.

JACKSON: Sybil Johnson is just the sort of waitress mom Bush says needs a tax cut. Listen...

GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL CANDIDATE: Under current tax law, for example, a single waitress supporting two children on an income of $22,000 faces a higher marginal tax rate than a lawyer making $220,000. Under my plan, she will pay no income tax at all.

JACKSON: Sounds good, but look more closely. The truth is that Bush's hypothetical $22,000-a-year waitress, who makes a bit more than our waitress, isn't paying any income tax now. In fact, she gets a $1,688 refund thanks to the earned income tax credit, a subsidy benefiting low-wage workers.

We asked accountant Charlie Bish to calculate exactly how much Bush's waitress and Bush's $220,000-a-year lawyer would benefit under Bush's plan. His $22,000-a-year waitress gains $114. Her after-tax income increases by 1/2 of 1 percent.

Our waitress is not impressed.

JOHNSON: I could put a penny in a cup for the whole year and I can see that.

JACKSON: But that $220,000 lawyer? He gains more than $7,000, increasing his after-tax income more than 4 1/2 percent. Just simple math.

CHARLIE BISH, ACCOUNTANT: Whenever you cut the tax rates, basically the people at the higher end of the spectrum will tend to enjoy a better savings simply because of the numbers.

JACKSON: The heart of Bush's plan is an across-the-board rate cut, dropping the top rate from 39.6 percent to 33 percent, and lowering the bottom rate from 15 percent down to 10 percent. It'd also abolish the estate tax, increase deductions for two-earner families, allow non-itemizers to write off charitable deductions.

BOB MCINTYRE, CITIZENS FOR TAX JUSTICE: The truth of it is it's a pretty traditional Republican tax cut plan that gives 60 percent of its benefits to the top tenth and 42 percent of its benefits to the top 1 percent.

JACKSON (on camera): So the richer you are, the more you would gain under Bush's tax plan. And not only that, it would consume most -- and some say all -- of the budget surplus outside Social Security.

(voice-over): The Bush plan would cost $1.3 trillion this decade, according to the bipartisan Joint Tax Committee of Congress. Right off, that's most of the $2.2 trillion non-Social Security surplus projected by the Congressional Budget Office and an even bigger bite out of the $1.9 trillion forecast by the administration's Office of Management and Budget. But even that's not the whole story.

WILLIAM GALE, BROOKINGS INSTITUTION: That $1.9 trillion figure is funny money. According to my calculations, a better estimate would be about 0.3 trillion.

JACKSON: Bush's tax cut by itself would shrink the surplus an estimated $275 billion, because the national debt would not be paid down as fast and the government would have to pay more interest. The surplus would shrink even more if Congress boosts military spending as promised or expands Medicare to cover prescription drugs or -- well, you get the idea.

And our waitress mom? She'd rather have day care than a tax cut.

JOHNSON: That helps a lot of single parents a whole lot more than giving them a tax -- an earned tax credit at the end of the year.

JACKSON: A big tax cut? If Al Gore is elected, you can pretty much forget about it.

GORE: We can afford a series of targeted tax cuts.

JACKSON: Stop right there. "Targeted tax cuts"? What does that mean?

GORE: Tax cuts to buy health care, to pay for child care, to save for college and lifelong learning.

JACKSON: In fact, Gore opposes any outright rate cut that would favor most those who pay the most: upper-income taxpayers.

GORE: I would a whole lot rather have targeted tax cuts to help working families than a massive tax cut that primarily benefits the wealthy.

JACKSON: Gore's broadest tax cut would increase the standard tax deduction for married couples: no help for upper-income marrieds who itemize. Gore's other targeted cuts include tax breaks for health insurance, child care, college expenses, long-term health care, even a permanent tax credit for business research. Hardly tax cuts at all, some say.

MCINTYRE: Well, what Gore has proposed is a whole bunch of government spending programs that would be run by the Internal Revenue Service.

He's got a plan to encourage people to buy more energy-efficient appliances. Who's in charge of that? The Energy Department? No. The Internal Revenue Service. And down the list. It adds up to about 500 billion in spending programs that would be run by IRS.

JACKSON: The tax code already is growing more complicated. Taxpayers spend untold billions trying to comply. And Gore's list of proposed new tax breaks makes advocates of a simpler tax code cringe.

GALE: For any of these proposals, like child credits or retirement saving credits or health credits, there are simple ways to do it and there are complicated ways. History tells us that politicians will eventually choose the complicated ways, the reason being that they can satisfy more constituents by doing that.

JACKSON: Republican George W. Bush says the growing federal surplus is money the government doesn't need and should give back.

BUSH: The surplus is not the government's money. The surplus is the people's money.

JACKSON (on camera): But Gore would use the surplus to pay down the national debt by the year 2013, more quickly than Bush proposes. That would put downward pressure on interest rates. And Gore says lower interest rates benefit family budgets just as well as federal tax cuts.

Brooks Jackson, CNN, Washington.

(END VIDEOTAPE)

SHAW: Up next, is Al Gore's focus on working families a call for class warfare? Our Bill Schneider parses the vice president's statements and their political meaning.

(COMMERCIAL BREAK) SHAW: You know, in the last week, Al Gore has emphasized this single phrase: "the people not the powerful." So what exactly is he saying with do those words?

Our Bill Schneider joins us now from Los Angeles to explain -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Bernie, class struggle? That's a very odd thing to be talking about at a time of unprecedented prosperity. Now, what some people heard last week in Al Gore's acceptance speech sounded like: Arise, ye prisoners of starvation! Arise, ye wretched of the earth! Ten years after the collapse of the Soviet Union, has Marxism finally arrived in America?

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): What did Gore say that struck terror in the hearts of the privileged classes?

GORE: That's the difference in this election. They're for the powerful. We're for the people.

SCHNEIDER: The people? Is comrade Gore calling for the People's Republic of America? Sounded like it to some.

BUSH: A candidate who will pit one group of people against another, a candidate who wants to wage class warfare to get ahead.

SCHNEIDER: Others heard echoes of William Jennings Bryan, the American populist hero and three-time Democratic nominee for president.

(BEGIN VIDEO CLIP)

WILLIAM JENNINGS BRYAN, DEMOCRATIC PRESIDENTIAL NOMINEE: Thou shall not crucify mankind upon a cross of gold.

(END VIDEO CLIP)

SCHNEIDER: Populism was a radical protest movement that peaked during the depression decade of the 1890s. It pitted farmers against cities, poor against rich, honest workers against the evil money power. You could hear some of that paranoid style in Al Gore's remarks last week.

GORE: So often, powerful forces and powerful interests stand in your way.

SCHNEIDER: But was Gore really dividing class against class? Listen to the groups he targeted.

GORE: Big tobacco, big oil, the big polluters, the pharmaceutical companies, the HMO's. Sometimes you have to be willing to stand up and say no so families can have a better life.

SCHNEIDER: Gore's not talking about a class of Americans. He's talking about special interests. He was not using the language of populists like Bryan, he was using the language of progressives like Theodore Roosevelt. Progressives were reformers, not radicals, and they emerged during a period of prosperity. Progressives did not divide class against class. They chose specific targets, like party bosses, big-city machines and corrupt industrialists whose abuses had been exposed by muckraking journalists.

The progressives attacked greed, not wealth, and they did so in the name of all the people.

GORE: I know one thing about the job of the president: It is the only job in the Constitution that is charged with the responsibility of fighting for all the people, not just the people of one state or one district, not just the wealthy or the powerful, all the people.

SCHNEIDER: For progressive reformers, the battle was the public interest versus the special interests.

GORE: If you entrust me with the presidency, I will put our democracy back in your hands and get all the special interest money, all of it, out of our democracy.

SCHNEIDER: That's not Karl Marx Gore. That's Teddy Roosevelt Gore.

(END VIDEOTAPE)

SCHNEIDER: Why is Gore doing this? Well, it could have something to do with the fact that the Republicans have nominated two Texas oil men and the fact that the GOP has collected record sums of money from wealthy individuals and interest groups. Democrats would like to depict George W. Bush as a front man for the big money boys: a bully target, Teddy Roosevelt would have said -- Bernie.

SHAW: Thank you, Bill Schneider, in Los Angeles.

And when we return, George W. Bush, will his focus on military readiness resonate with voters?

Kate O'Beirne and Jake Tapper are up next.

(COMMERCIAL BREAK)

SHAW: Joining us now, Kate O'Beirne of the "National Review" and CNN's "CAPITAL GANG," and Jake Tapper of Salon.com.

What do you make of this shift in the polls, Jake?

JAKE TAPPER, SALON.COM: Well, it's fairly normal post-convention for every candidate to experience a significant bounce in the polls. George W. Bush had some after his convention. But I think also largely what's going on here is the race is neck and neck, which is where both the Gore campaign and the Bush campaign knew it would be around this time. Bush is still relatively an unknown, where Gore has gotten a lot of negative press, and is, of course, not exactly fresh to the voters.

KATE O'BEIRNE, CNN "CAPITAL GANG": The Bush campaign had been predicting, as Jake said, following the Gore convention, the Democratic convention, they expected the polls to show a really tight race. That was dismissed as so much spin, but it seems that they were also dismissing polls showing their own candidate 15 points ahead. Those polls they knew were inaccurate, too. People I talked to in Austin are now predicting that their candidate come Labor Day will inch up again and be ahead by five or six points, so we'll see if they're right. They're not expecting these polls to sustain themselves over the next two weeks, the polls showing a tie.

SHAW: Any worries that they're not talking about?

O'BEIRNE: They know they are up against a really tough candidate who is working incredibly long hours, so they know they have a real race on their hands, but they keep pointing to Al Gore rarely breaking 50 percent in the past 18 months, and despite his convention and the good press he got out of it, they remain convinced that Al Gore has a real -- has a tougher selling job to the public than does Governor Bush.

TAPPER: One other interesting about the campaigns that they're waging is George W. Bush's acceptance speech, he really launched several attacks at Al Gore, and did so in a humorous way, but he really went very negative. And one might think, boy, in an acceptance speech, that's very odd for somebody to go so negative. But not really, because the Bush people are smart, and they know that it is incumbent upon them to drive Gore's negatives even further than they are.

In some ways, you see that even going on right now. The Bush campaign is sending out press releases that are very, very negative about Al Gore, while at the same time, George W. Bush faults Al Gore for being the negative candidate.

O'BEIRNE: And they think that Al Gore's going to have to at some point in the fall, start attacking Governor Bush, and they're hoping to make it more difficult for Al Gore to attack their candidate by pointing out to the public what a negative campaigner he is, somehow inhibit that kind of negative campaigning on Gore's part.

SHAW: And the Bush campaign tactic of raising questions, serious questions, about the readiness of the United States military, is that going resonate with voters?

TAPPER: No, I find it bizarre. I find the whole argument bizarre, not only because of the debate that you had earlier with Armitage and Senator Levin and whether or not the military is prepared, which indeed the joint chiefs chairman, said, you know, the day after Bush's speech, that Governor Bush's speech was incorrect, that, you know, the military is ready, and it's more than two divisions that are ready.

But in addition, Governor Bush gave a speech today in which he called Al Gore and President Clinton AWOL on veterans affairs, and I just think that's a very odd line of reasoning, and I know within the Gore camp, they think that it's very strange that somebody, who unlike like Al Gore -- Al Gore having served in the Army during Vietnam. Governor Bush avoided the draft by serving in the National Guard. And in addition, there is this year that Governor Bush can not account for while he, supposedly, was in service in the National Guard. By using phrases like AWOL, he raises a vulnerability of his own, that I think is an interesting and perhaps bad campaign move.

O'BEIRNE: The debate over military readiness, and resources for the military and how the military ought to be deployed post-Cold War is long overdue. Members of Congress have been frustrated for sometime with the Democratic administration. They have -- Republicans on Capitol Hill demanded tens of billions dollars in funding for the military above President Clinton's request. So if they're pointing now to the fact that their ready -- and plenty of military commanders will dispute that. The Navy talks about being 10,000 sailors shy. The Air Force projects being short 2,000 pilots in another two years. Morale is low. This is a terrific debate, and I think Governor Bush is going to be helped enormously by having Dick Cheney on the ticket.

SHAW: What's the strategy behind it? Using the phrase AWOL. We all know what that means -- Away Without Leave. They must have some polling that indicates that Gore is vulnerable.

O'BEIRNE: Well, the issue of a strong military has always benefited Republicans. Now obviously the military has a reduced role post-Cold War, but the public does recognize we still have commitments, and we have to have troops that are trained and equipped to meet those commitments. I think there also is, playing to a base of vulnerability, Democrats have had some time, with respect to the military. Are they as tough, with respect to military issues, as are Republicans? I think they see a vulnerability.

TAPPER: Kate's absolutely right. This has traditionally been a Republican issue. I don't know that it works this year, I don't know it works this year with Al Gore, a Vietnam veteran, on the ticket, running against two individuals, who both avoided the military during the Vietnam War. I don't know that it does.

SHAW: This debate about the debates -- are both men just jockeying for position?

TAPPER: Yes, this is tiresome. This happens in every campaign, whether it's alderman against alderman, or you know, at the presidential level, who wants to debate how many debates, and it goes on. Everytime there is an election, this happens. I do think that, you know, Governor Bush would like there to be not to a tremendous number of debates, because, obviously, debate is more Al Gore's format than his, but in addition, he'd probably prefer a format that enables their personalities to get across more than the Al Gore team would like.

O'BEIRNE: There will be plenty of jockeying. This one might as well be taking place at Belmont. But I think as long as the governor has committed to a total of five debates -- three presidential and two vice presidential -- I think it's going to be sort of tough for the Gore camp to claim he's ducking in anyway. And given that he's up against, by all accounts, a far more formidable debater in the person of Al Gore, I think Bush camp is going to want to -- as Jake said, control at least some of the format to better benefit their candidate.

SHAW: And Bush does not like the dictates of the Commission of Presidential Debates?

TAPPER: Well, no, but I think it's also true that you hear the expectation game going on right here with Kate. I mean, they are already raising the bar so high for Al Gore -- Oh, he's a great debater, we know he's a great debater, this is, you know, Gore's format. No matter what happens, you know, if you go by the expectations game, George W. Bush -- who is not an idiot -- George W. Bush is going to exceed expectations.

O'BEIRNE: Yes, I think that's true. I think Al Gore owing to his reputation has already sort of lost the predebate expectations game.

SHAW: Kate O'Beirne and Jake Tapper, thanks very much.

TAPPER: Thank you.

SHAW: We're fresh out of time. You're quite welcome.

And that's all for this edition INSIDE POLITICS. But of course you can go online all the time at CNN's allpolitics.com.

And this programming note: Former New York Congresswoman Susan Molinari and Senator Mary Landrieu of Louisiana will be discuss the gender gap in the presidential race tonight on "CROSSFIRE." That's at 7:30 p.m. Eastern.

I'm Bernard Shaw.

"WORLDVIEW" is next.

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