CNN Europe CNN Asia
On CNN TV Transcripts Headline News CNN International About Preferences
powered by Yahoo!
Return to Transcripts main page


Bush Unveils Economic Stimulus Package; Daschle Says He Won't Run For President in 2004

Aired January 7, 2003 - 16:00   ET


ANNOUNCER: Surprise! Senator Tom Daschle just says no to a presidential campaign. Why does his gut tell him not to run?

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: I'm not going to run for president because my passion is right here.

ANNOUNCER: The Democratic field minus one. How does it change without Daschle in the mix?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Cannot be satisfied until every part of our economy is healthy and vigorous.

ANNOUNCER: A stimulating speech? The president rolls out his new economic plan amid debate whether it will work.

The 108th Congress convenes with plenty of pomp and politics new faces and new challenges.

UNIDENTIFIED MALE: I'm convinced that we will find, based on our own principles find common ground to bridge this (UNINTELLIGIBLE) between us.


ANNOUNCER: Live from Washington, this is INSIDE POLITICS with Judy Woodruff.

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. I'm on Capitol Hill, where today's opening of the 108th Congress was upstaged by a single member. In this "Newscycle," Senate Democratic leader Tom Daschle revealed he'll not seek his party's presidential nomination in 2004. He says he will stay in his current job to help counter what he calls President Bush's failed economic policy. Mr. Bush formally unveiled his $674 billion, ten-year economic stimulus plan in Chicago today. He said the sweeping package would reduce taxes for all Americans who pay them, brushing aside Democratic criticism that his plan favors the wealthy.

We'll have much more in this hour on the president's plan and reaction to it. But first, our other big story, Tom Daschle's decision.

With us now, our senior political correspondent Candy Crowley and Congressional correspondent, Jonathan Karl.

Candy, lets start with you. It was a surprise.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: It was, but many believe his colleagues believe that in the end, the Senate majority leader realized he could not moonlight as a presidential candidate so he won't.


(voice-over): Tom Daschle will stay put in the Senate, promoting the Democratic agenda, doing what he can to bring Democrats back to the majority, beginning with his own Senate seat.

DASCHLE: Yes, I am going to run for reelection.

CROWLEY: As late as last night, Tom Daschle told people around him he planned to run for president and continue for a time as leader of the Senate Democrats. But sources who spoke with Daschle in recent days believe he increasingly came to see he had to choose one job or the other. Prompting what he called a gut-check. And what Daschle found was that the fire in his belly burned brightest in the Senate.

DASCHLE: I'm not going to run for president because my passion is right here. I must say, I feel as good about this decision as any I've ever made.

CROWLEY: Daschle is the second big shoe that did not drop. He joins Al Gore in the sit it out in '04 field. Two men with big names and even bigger political ambition opting out of a wide-open primary has to make you wonder whether they also weighed a run at George Bush as not worth the risk. Gore did not rule out a future run but said he could not foresee it. Daschle apparently can.

DASCHLE: There may come a time in my future when a national campaign, a campaign for the presidency, is one that I will again attain. I am certainly not discounting that at some point in the future.

CROWLEY: Daschle's no doesn't change things as much as a yes would have, but rest assured, the six men now running are relieved in a very statesman like way.

SEN. JOHN KERRY (D), MASSACHUSETTS: I think it's laudable for a number of reasons because he's the leader with experience, with respect to the Democratic campaign committee, our national recruitment efforts and the capacity to hopefully win back the Senate.

SEN. JOHN EDWARDS (D), NORTH CAROLINA: I think he made this decision for exactly the right reasons. He believes that he can do the most good for the country as the Democratic leader in the United States Senate.

CROWLEY: The truth is, all the '04 campaigns concede Daschle would have been a formidable opponent, but no one is breathing easier than Richard Gephardt. I am particularly grateful, Gephardt wrote, that I won't be facing normal a presidential debate.


CROWLEY: There are other Democrats who may yet jump into the presidential race. But Daschle's decision removes the last name on the list of question marks that could change the dynamics of the race. Barring a surprise from some big foot Democrat, this is a level playing field. The Democratic presidential nomination is up for grabs -- Judy.

WOODRUFF: It sure is interesting. OK. Candy, thanks very much.

I want to bring John Karl in now. You've done reporting on exactly how Tom Daschle reached this decision.

JONATHAN KARL, CONGRESSIONAL CORRESPONDENT: Well, really, remarkable process here. The Daschle presidential campaign was already underway. He had a de facto campaign manager, that would have been John Podesta who used to be Bill Clinton's chief of staff, he was already running the operation. Daschle's top aide in the Senate last night, at late as 7:00 was interviewing potential campaign staffers for Tom Daschle. They'd planned on announcement, that he'd announce the exploratory committee in his hometown in South Dakota on Saturday and go on a three-day campaign swing though South Dakota, Iowa, South Carolina.

Those plans were all scrapped this morning. Daschle call his staff together at 10:30 this morning, senior aides, staff in the capital, and outside advisers and told him he didn't think he could do two jobs at once, the job of running the Senate -- running the Senate for the Democrats at least and running for president.

And I'll tell you, Candy Crowley mentioned that Dick Gephardt is breathing a lot easier because of this decision. Also, senators here, Democratic senators are breathing easier because they were very worried about the prospect of Tom Daschle trying to lead this Senate caucus and at the same time running for president against many of his fellow Democratic senators.

WOODRUFF: Well, John, on that point, and Candy back to you, why are the Gephardt people and Gephardt himself so relieved about this.

CROWLEY: Look, one of the things is just money. There's only so much money out there. And what those around Gephardt and Gephardt supporters believe he and Daschle and to a certain extent Al Gore drew from the same pool. I am told that there are contributors and donors who are waiting it out, trying to see what Tom Daschle was going to do. People around Gephardt believe that now that Daschle has opted out, that those donors will fall Gephardt's way.

KARL: There's another very important factor there the state of Iowa. Iowa has to Be Dick Gephardt's best chance of guesting a jump start on his campaign. He's won in Iowa before, in 1988 and is somewhat of a neighbor, coming from Missouri. But, Tom Daschle is from South Dakota which borders Iowa. People know him in Iowa. He'd have been a tough opponent for Gephardt in Iowa. And if Gephardt's campaign is to work, he has to have a victory in the Iowa caucuses.

WOODRUFF: All right, Candy Crowley and Jon Karl.

We'll see you, Jon, later on the show. Thank you both.

Well, even as Tom Daschle opted out of the presidential race, he led Senate Democrats in challenging the president's economic plan. A formal unveiling of that package in Chicago today gave critics more to take aim at.

Let's bring in our senior White House correspondent John King.

JOHN KING, SENIOR WHITE HOUSE CORRESPONDENT: Reaction has been coming fast and furious from all quarters. Conservatives love the plan, Democrats are panning it. One word you're not hearing from either side is timid. The president today offering what all parties say is quite an ambitious, bold plan. The president did this in Chicago. What captures the headlines is the price tag. Many thought the plan would be about $300 billion dollars. Instead, the president proposing to spend $674 billion over 10 years anchored mostly on tax cuts, including eliminating the individual tax -- the income tax on corporate dividends. The White House hopes that encourages investment.

The president says 92 million Americans will get on average a tax cut of about $1,083 this year. The Bush administration also wants to speed up plans to end the so-called marriage penalty on two-earner couples. The president says over three years this plan would create, according to White House estimates, some 2.1 million jobs. That would be critical because Democrats are saying Bush is to plain for the loss of one and a one and half million jobs in the U.S. economy since he came president. He's calling on Congress to react quickly. The administration acknowledges it will need to make compromises with Democrats. The bottom line from the president today was, if Congress acts fast, the administration can move quickly to get money in the pockets of taxpayers and consumers.


BUSH: I'll order the Treasury Department to immediately adjust the amount of money withheld for income taxes to so that Americans will keep more of their paychecks right away. My speeding up the income tax cuts, we'll speed up economic recovery and the pace of job creation. If tax relief is good enough for Americans three years from now, it is good enough for Americans today.


KING: Again, the administration hoping for action as soon as possible. That, Judy, is one reason the president decided to release all the details this week, not wait till three weeks from now, when he'll deliver the State of the Union Address. A bruising battle expected with the Democrats ahead, but they're optimistic at the White House the president will get most of what he wants. WOODRUFF: John, but what about that. It's one thing to put the plan out there, something else altogether to get it through -- the house, he's got a lot of Republicans on his side. The Senate is a different story.

KING: The Senate is a different story. This in one way, this is another test for Speaker Denny Hastert who helped Mr. Bush get the head start on selling his first big tax cut plan. The strategy is anchored on the House. But yes, this is a major challenge for Bill Frist the new majority leader in the Senate and the new Republican chairman coming back into key positions. The president will be in public talking about this.

Steve Friedman, his top new economic adviser on the White House staff goes up to Wall Street tomorrow. Remember, this administration has been criticized for not catering to Wall Street. Steve Friedman's visit designed to build institutional support among investors to keep confidence up in the stock market. Vice president Cheney will give a big speech in Washington on Friday, echoing the president today. We've seen conservative activists coming in and out of the White House in the past 24 hours. The administration planning a very aggressive sales pitch.

Yes, they say down the road, there might need to be compromises with Democrat, but right now they believe the president has the upper hand in the debate and they say this will look very much like the last tax cut debate, when everyone began by saying the president would never get the 10 year one trillion dollar tax cut. In the end, remember, he did.

WOODRUFF: Indeed, he did, and we will see what happened this time.

All right, John, thanks very much.

And on the record with us now, the Secretary of Commerce, Don Evans. Mr. Secretary, it's not just some Democrats, but a number of economists who are saying this dumps $675 billion into the American economy over the next 10 years, but it doesn't do very much to stimulate the economy right now in the short run, which is they say what's really needed.

DON EVANS, COMMERCE SECRETARY: Well, Judy, I don't buy that. The reason I don't buy that, first of all, we're going to put under the president's proposal, we put $90 billion into the economy this year and the year 2003. But what this really provides for the American families and American consumers is some permanency as to what the tax structure will be for the next 10 years. So they can begin to plan for the next 10 years. And as people get that certainty across America, they're more inclined to spend the money. They're inclined to consume it.

WOODRUFF: I hear what you're saying, Mr. Secretary, but what about those Americans who don't own dividend paying stocks, who are, say, invested in retirement plans or who own, for example, technology stocks, which of most don't pay dividends? What do you say to them? EVANS: Well, Judy, first of all, 92 million taxpayers will benefit from this plan. You can look at the fact that an average family of four, earning $39,000 a year, will receive an additional $1,100 a year. And that's not just this year, but next year and the year after and the year after. So this plan is -- helps all Americans immediately, as the president said in his speech today.

He wants to accelerate the rates that are scheduled to be implemented in 2006, retroactive retroactively to 2003. He also wants to accelerate the reduction of the marriage tax penalty. He also wants to accelerate the increase of the child tax credit. So this is going to help families and couples all across America. This is not just a reduction of the dividend tax, but it's -- or elimination of it, but there are many other elements of this package.

WOODRUFF: But it's not that these things are not being done for the middle class. They are, Mr. Secretary. But the point is I think that many Democrats and economists are making, is that when you look at the bulk of people at the lower end of the income scale, people earning 40 -- you mentioned 39,000. People making 40,000, 50,000, they're going to get about $1,000 or so a year. But people who earn hundreds of thousands of dollars a year are going to get $20,000, $25,000. In other words, the benefits skew much more to the wealthy.

EVANS: Well, when you approach a policy a policy decision like this you ought to make the decision saying nobody wins unless we all win. Under the president's proposal, everybody wins. To that specific point, let me just say to you, that those that -- this is a progressive tax cut. Which means that those at the higher end of the tax scale will be paying a greater percentage of the taxes after this is implemented than those -- than before the tax cut was implemented. So it's a progressive tax cut. Those that are taking on a larger percentage of the burden now will take on an even larger percentage of the burden after this tax cut is passed.

WOODRUFF: All right. Well, that's just one of, I know many salvos that will go back and forth in this battle over the president's economic plan. Thank you very much for talking to us today.

EVANS: You bet, Judy, thank you.

WOODRUFF: Secretary Don Evans, good to see you, thanks very much.

EVANS: Nice to see you.

WOODRUFF: And we will hear the other side of the economic story when house Democratic Caucus Chairman Robert Menendez joins us. That's just ahead.

Also, more debate about the Bush plan and how it colored the first day of the 108th Congress.

Plus, Tom Daschle's decision in the "CROSSFIRE." James Carville and Bob Novak are ready to cast their votes on the 2004 race. WILLIAM SCHNEIDER, CNN SR. POLITICAL CORRESPONDENT: I'm Bill Schneider in Washington. I'll search the poll numbers for clues about why Daschle pass on a presidential race.


WOODRUFF: Another Bush is in the headlines today. We will tell you why coming up in our Campaign News Daily. And as the U.S. edges closer to a war in the Persian Gulf, one Democratic congressman takes action to bring back the draft. It's time to check I.P. IQ. In what city did the first U.S. Congress meet in 1789? Was it A, Philadelphia, B, New York, or C, Washington. We'll tell you the answer later on in INSIDE POLITICS.


WOODRUFF: With the new Congress now in session, President Bush may find it a little easier to push his agenda through the House and the Senate. The 108th Congress convened today with both chambers under Republican control.

Let's go now once again to CNN Congressional correspondent Jonathan Karl.

Yes, Jon, they're off and running.

KARL: They're off and running. Republicans are firmly in charge, but Democrats took some time today to celebrate the election and the formal swearing in of their new leader in the House, Nancy Pelosi, the first woman from either party in either chamber to lead her party in Congress. Pelosi was sworn in today, but one of the first things she had too to do was on the Senate floor to introduce Dennis Hastert, once again the Republican Speaker of the House. That happened on the floor and Hastert residing over a Republican majority that is actually even larger than the majority that Republicans had in the last Congress.

Incidentally, when Pelosi was elected as leader today on the floor of the House, four conservative Democrats declined to vote for her in a form of silent protest, because they believe she is too liberal. Over on the Senate side, Vice President Cheney was on hand. Vice President Cheney swearing in the new 108th Congress in the Senate. Including, by the way, 10 new senators. Nine of whom, nine of the 10 are Republicans.

There you see the swearing-in which included Elizabeth Dole, who was escorted down to her swearing in by Bob Dole. Most of the other Senate spouses had to watch from the galleries, but Bob Dole was obviously the former leader of the Senate, was allowed to escort his wife down to get sworn in.

Now, as far as how things got started here, really, the topic of discussion was this question of economic stimulus, the president's plan. You had two vastly divergent reactions to that coming from Democrats and Republicans.


SEN. KENT CONRAD (D), NORTH DAKOTA: This is the most reckless policy I have seen pursued by any president in my adult life. This is profoundly reckless.

UNIDENTIFIED MALE: I look forward to working with my colleagues to see if we can't work in a bipartisan fashion to put together a real package that will help grow job those year. And I think that should be our challenge, not to say here's the Democrat package, here's the Republican package. I'd say let's work together as we've done historically in the Finance Committee, to see if we work together and can't pass something good for America.


KARL: Now even the Republican's -- the Democrat's -- the president's allies up here, Republicans, are saying that this plan will evolve as it goes through the Congress. There's a good chance of passing in the House but not here in the Senate, at least not as it is now as written. Several Republicans, including Lincoln Chafee, John McCain, Olympia Snowe have raised concerns about elements of this plan and have signaled that they would like to see a change. And those Democrats that helped the president pass his last plan, people like John Breaux, have been strongly critical of it.

So be sure that this plan will change as it comes through the Senate, Judy.

WOODRUFF: And just quickly, Jon, I gather something pretty interesting happened when Bill Frist showed up on the Senate floor today to take over as the Senate majority leader.

KARL: There was a very interesting moment involving Trent Lott, who is the person that Frist helped oust as Republican leader here in the Senate. Lott had come to the well of the Senate with fellow Mississippian Thad Cochran for his swearing in.

As he walked back, Daschle was standing next to Frist to shake everybody's hands. Senator Lott went over to Tom Daschle. They shook hands, they embraced, they shared a laugh and then Senator Lott walked right by Bill Frist without giving him so much as a handshake. It was a very chilly moment. You could actually feel the chill up in the spectator's galleries in the Senate -- Judy.

WOODRUFF: Hmm. Something people will be talking about for the next few days around here. All right. Jon, thanks again.

KARL: Sure.

WOODRUFF: We appreciate it.

Well, with me now to talk more about the economic issues now facing the Congress, including the president's speech today, Representative Robert Menendez of New Jersey, the newly elected chairman of the House Democratic caucus. I just talked to the president Commerce secretary, Don Evans, a minute ago. Among other things he said, you know, the Democrats are saying this plan is skewed to the rich, he said, but there's a lot in here for the middle class. He talked about doing away with a lot of the marriage penalty that middle income taxpayers. He talked about child care tax credit. He said this is a plan that is geared to the middle class.

REP. ROBERT MENENDEZ (D-NJ), HOUSE DEMOCRATIC CAUCUS CHMN.: But Judy, the problem is that we're talking about a stimulus plan this year. A lot of the president's plan is in outyears. As a matter of fact, the president's plan for -- in the context of stimulus, it is ineffective, it is unfair and it is fiscally irresponsible.

It's ineffective -- we have $32 billion more in this year in economic stimulus than the president's plan. We have 136, he only has 102. We provide more stimulus. We give that to working families and those seeking to work and we do it to small businesses and to help states, like for homeland security.

Secondly, it's unfair, because when -- on the dividends, which is the centerpiece...


MENENDEZ: ...of the president's proposal, the bottom 82 percent would get a $55 tax cut, two-tenths of the top percent would get a $45,000 tax cut.

WOODRUFF: But the point...

MENENDEZ: That ultimately -- you know, I always find it interesting when they talk about class warfare, they're conducting class warfare on Americans when that's the centerpiece of how they think they're going to stimulate the economy.

WOODRUFF: But the point they...

MENENDEZ: We need jobs now.

WOODRUFF: But the point -- one of the points they make that is that the people who already pay the most in taxes are the people who would get cuts. I mean, people who and aren't paying taxes aren't going to get cuts. People who pay minimal taxes will get some. But they're saying, The people who pay the most will get...

MENENDEZ: Depends how you structure those tax cuts.

WOODRUFF: He also said that this is...

MENENDEZ: If you're going to structure them in such a way that you're going to get $45,000 to the 0.02 of 1 percent of the top wage earners, income earners in the country and give them $45, 000, these are individuals who, for the most part, already have the resources if they were going to spend in the economy. We need to put money in the hands of middle class working families, who are truly going to spend in this economy and then create a demand for more jobs.

WOODRUFF: Let me ask you about Democrats. The House Democratic leadership has put its plan out there. You're part of that.

But you've got the -- we haven't heard from the Democrats in the Senate. You've got several senators running for president. John Kerry is talking about a payroll tax holiday. Your colleague, Nancy Pelosi, says she doesn't think that's a good idea.

Doesn't the president have an advantage here in that he speaks with one voice?

MENENDEZ: Well, the president has the majority. He has the majority in the Senate. He has the majority in the House. He obviously is the president and therefore controls the White House. So, they have absolute power and with that comes absolute responsibility.

However, that doesn't mitigate our responsibility on behalf of nearly half of the American people who we represent in this Congress to speak up with our vision of what America should be and how we stimulate this economy in the short-term. And on the long term growth of the economy, we'll be talking about that and presenting a plan in the next several weeks.

But right now, we're talking about getting people to work in 2003. Democrats put more money in 2003. We put it in the hands of working families. We put it in the hands of those looking to get work. We put it in the hands of small businesses and the states who need it.

WOODRUFF: Representative Robert Menendez, newly elected to the House leadership. Thank you very much for talking with us.

MENENDEZ: Thank you, Judy.

WOODRUFF: We appreciate it. We'll be talking to you more...

MENENDEZ: Absolutely.

WOODRUFF: As the session gets on...

MENENDEZ: Absolutely.

WOODRUFF: Thank you.

Well, there are a number of plans on the table to help jobless Americans. And here is a quick rundown of who is proposing what.

A 13-week, $7.2 billion extension of unemployment benefits was quickly approved by the Senate today and it is expected to pass in the House as well, although House Democrats had proposed extending the benefits for 26 weeks. In addition to that, President Bush wants to give the jobless $3,000 worth of personal re-employment accounts he's calling them. The money could help pay for job training, child care and moving expenses. As an incentive to get a job, you can keep any leftover money if you are employed in 13 weeks. Now this bush plan would cover 1.2 million people and they're saying it would cost more than three and a half billion dollars.

House Democrats want to avoid any future battles over extending unemployment benefits by guaranteeing in law that those benefits last 26 weeks. And jobless Americans would be eligible for the House Democrats' proposed $300 per worker tax rebate as long as they briefly were employed during the year.

So, who has the better remedy for the economy, President Bush or the Democrats? We'll get the take from the left and the right coming up on INSIDE POLITICS.

Plus, with Tom Daschle out, who benefits? Our Bill Schneider has the latest polls on the Democratic race for the White House.


WOODRUFF: It's time again to check your "IP IQ." Earlier we asked, in what city did the first U.S. Congress meet in 1789? Was it A, Philadelphia, B, New York, or C, Washington? The correct answer is B. The first U.S. Congress met in 1789 in New York City. This is not be confused with the First Continental Congress, which met in Philadelphia in 1774.


WOODRUFF: Even with Tom Daschle out, it is still a crowded field of Democrats. So, who are the front-runners in the race for the White House? Some interesting numbers in a moment, but, first, this "News Alert."


WOODRUFF: The military draft was ended 30 years ago. And Defense Secretary Donald Rumsfeld repeated again today that there would be no draft.

Well, Tom Daschle says he's not running for president, because his passion lies in the Senate. But public opinion of the emerging Democratic field may have influenced him as well.

Our senior political analyst, Bill Schneider, is joining us now.

All right, Bill, was Daschle going up or down in the polls?

SCHNEIDER: Well, Judy, let's take a look.

In December, after Al Gore made his announcement, Joe Lieberman and John Kerry were the front-runners. At 10 percent, Daschle was in the second tier, along with Dick Gephardt. As of last weekend, both front-runners had slipped: Lieberman down seven points, Kerry down four. Now, Daschle was at 14. He actually went up four points.

So, why get out? Look at who the front-runner was as of last weekend: five guys, Lieberman, Kerry, Daschle, Edwards, Gephardt. Everybody is a front-runner, which means nobody's a front-runner. Daschle was the best-known candidate, after Joe Lieberman, but he just didn't instant stand out. The candidate with momentum was John Edwards, up nine points since mid-December. Smokin'.

Edwards made a smart move when he announced his plans the day after New Year's. He got a whole day of news coverage. Edwards, who consults with Bill Clinton, is now the front-runner among Southern Democrats, while Lieberman and Kerry lead the field outside the South.

WOODRUFF: So, which candidate, Bill, do you think stands to benefit the most from Tom Daschle deciding not to run?

SCHNEIDER: Well, you might guess Dick Gephardt. But you'd be wrong. He's another congressional leader, but our polls show Daschle's decision might actually help John Kerry. Daschle and Kerry were getting support from the same kind of Democrats, in a word, upscale.

Kerry's the front-runner among white Democrats, high-income college graduates, and Democratic voters who think of themselves as independents, also among Democratic men. He's a military hero, after all. Kerry's a high-class, high-minded, New England patrician. Daschle was also doing well with that same, let's say, NPR crowd. Now Kerry has less competition.

WOODRUFF: Now, what about Joe Lieberman? You didn't mention him.

SCHNEIDER: Well, Lieberman's the front-runner, Judy, among women, younger Democrats, lower-income, noncollege, urban and minority Democrats, the kinds of Democrats who liked Al Gore, Lieberman's patron.

Take a look at African-American Democrats. This may surprise you. The front-runner among black Democrats is not Al Sharpton. It's Joe Lieberman. Wow. Now, that's the Clinton legacy, from Bill Clinton to Al Gore to Joe Lieberman. Eventually, Democrats may discover that Joe Lieberman is not Al Gore, that John Kerry is not Michael Dukakis, and that John Edwards is not Bill Clinton. And that's when things will get interesting.

WOODRUFF: Indeed. And they may even get interesting before then.

OK, Bill, thanks a lot.

Well, more moves in the early presidential race top today's "Campaign News Daily": Just one day after forming his exploratory committee, there's word that Congressman Dick Gephardt has hired a coordinator for the important Iowa caucuses. He is John Lapp, who ran Iowa Governor Tom Bill Vilsack's successful reelection bid.

In Gephardt's home state of Missouri, the race is on to succeed him in Congress, whether he wins or loses the Democratic presidential nomination. Sources close to Gephardt say he has decided not to run for reelection to the House next year. Democratic state Senator Steve Stoll says that he will run for Gephardt's seat.

And, in Florida, Governor Jeb Bush kicked off his second term today, renewing speculation about his presidential aspirations. The governor's family was there for his swearing-in ceremony, including his parents, former President and Mrs. Bush, and his daughter, Noelle, who was allowed to leave a drug treatment facility in Orlando for the day.

Well, of course, the current President Bush was busy today rolling out his economic stimulus package. Up next: Economic experts from different sides of the political coin debate the dollars and the details in the president's plan.


WOODRUFF: With me now to talk more about President Bush's economic stimulus plan are Gene Sperling, who was a chief economic adviser to former President Bill Clinton; and Stephen Moore, with the Club for Growth.

Gentlemen, thank you for talking with us.

Gene Sperling, to you first.

The president, the people around the president are saying something like 100 million American people are going to get an average of $1,000 a year tax rebate, as an average. Now, how could that be a bad idea?

GENE SPERLING, FORMER CLINTON ECONOMIC ADVISER: Well, Judy, I think it would be a great idea for you and I to each get five more mansions and nice cars, etcetera. But when you're doing the budget for your economy for our country, you have to focus on your priorities.

And there was a real priority on stimulating growth right now. And therefore, Democrats, I think, will work very much with President Bush if he wants to focus on those portions of his proposal that give working families tax cuts this year and accelerate business investment, large and small business investment, in this year.

But the difference becomes, President Bush has also used this just as a context for another very, very expensive tax cut that, as you've heard, is enormously tilted towards the upper-income taxpayers; $88,000, I believe, goes to people over $1 million. Now, certainly, Judy, average people benefit as well.

But what bothers me the most is that, when we get into this mode, any time in life where somebody says you can have everything for free and there's no problems, you know that that's usually not the case. And I fear this president is digging our nation in a greater and greater fiscal hole at a time when we not only have Social Security and Medicare deficits, but a new homeland security challenge as well.

WOODRUFF: Let me bring Stephen Moore in. What about this accusation, Stephen More, by not just Gene Sperling, but others, that it's putting the government in a fiscal hole and the benefits are going mostly to the rich?

STEPHEN MOORE, CLUB FOR GROWTH: Well, I think the top priority for this nation right now, Judy, is to get this economy moving again. And we've got to do whatever we can, not only to get more Americans back to work, but also put some juice in the stock market, which has been down for two straight years. It's a terrible bear market we're in right now.

I applaud what President Bush did today. He came out with a very bold and big and ambitious plan. I think that 98 million Americans who are investors are going to benefit from this. Anyone who owns stock is going to see an increase in the valuation of their stock. We've seen a little mini rally just as the president came out with this plan. So, I think a plan oriented towards trying to stimulate investment, try to stimulate a rebound in the stock market and a little rally is a very good thing right now.

WOODRUFF: Why isn't that right, Gene Sperling? I mean, we're talking about stimulating the economy; 20-some billions dollars are going to go into the economy this year under the president's plan.

SPERLING: Well, Judy, as I think you've heard the Democrats say, in Congresswoman Pelosi's plan, you get $136 billion in stimulus in this year.

So, the goal was to allow deficits to go up to stimulate growth this year. But what bothers me is that President Bush is using this as a pretext for a long-term tax cut, again, tilted towards higher- income taxpayers, but even more bothersome to me, something that we really, truly cannot afford as we go forward. And I think that the stock market will reflect the underlying growth and productivity in the economy.

And what's more important is to get a sound, long-term future back, fiscal future. So, let's stimulate growth right now and get long-term growth by returning to fiscal discipline.

WOODRUFF: Stephen Moore, you get the last word here.

MOORE: Well, Judy, the problem with that analysis is, we're never going to get back to a balanced budget, nor are the states and cities, which also are in huge fiscal holes right now, if we don't get this economy moving.

The Democrats have said, we need to do something more quickly. I say let's vote on this President Bush plan as quickly as possible. Congress has now reconvened. We should be able to pass this in the next eight weeks, get the dividend tax duty cut done, get the income tax rate cuts done. I think it's going to stimulate the market and I think it's going to stimulate job growth.

And you know what? I think it also makes President Bush politically invincible in 2004, because he's got a plan that is broadly appealing to so many Americans.

WOODRUFF: Stephen Moore, Gene Sperling, thank you both. And we may well get a vote in the next weeks and months. Thank you both. We'll see you soon.

MOORE: Thank you, Judy.

SPERLING: Thank you.

WOODRUFF: Well, as you can tell, Democrats have a lot to say about the president's economic stimulus plan.

When we come back: Democratic Senator and presidential hopeful John Edwards tells me what he thinks about the plan and whether it would help or hurt the country.



EDWARDS: They put ornaments on it to make it look like the plan is focused on regular people, when it is not. It's true that helping people with unemployment benefits is very good. It's money into the economy. Those people need help. That's the right thing to do. It's also true that tax cuts for the middle class are a good thing, because that money will, in fact, go back into the economy.

But what the president is not talking about is that he's accelerating tax cuts for the richest 1 percent of Americans.


WOODRUFF: I spoke with the Democratic presidential hopeful and senator from North Carolina, John Edwards, after President Bush unveiled his economic stimulus proposal today. Edwards also says that most of the benefits from the Bush plan will not make it directly into the economy.

Well, political analyst Ron Brownstein of "The Los Angeles Times" is with me now.

Ron, you've been doing some heavy thinking about the president's plan. And one thing it seems like you and others agree on, the president was bold. Whether you agree or disagree with what he did, this is not a timid proposal.

RON BROWNSTEIN, CNN POLITICAL ANALYST: This is really a breathtaking proposal, when you consider the backdrop.

We're still at a 51-49 majority in the Senate. We are looking at large federal deficits for at least the next several years. And we are possibly heading into a war with Iraq and a sort of ongoing war against terrorism that is imposing significant demands on federal spending.

And against that backdrop, to come forward with a $670 billion tax cut, following the $1.3 trillion tax cut in 2001, really represents an ambitious efforts to redirect the basic fiscal direction of the federal government and to really change the priorities of what the federal government is doing.

WOODRUFF: You're saying that the design is here, as you said it was in the -- under President Reagan, to restrict the amount of money available for domestic spending.

BROWNSTEIN: Now, whether or not that is the design or the intent, that is clearly one of the potential effects of what he is doing here.

You look at a situation in which we're talking about large, sustained deficits, big increases in defense spending, and now another large round of tax cuts, and that is almost, without avoidance, going to put a squeeze on the rest of domestic spending, especially the nonentitlement programs, the discretionary programs like education and so forth.

And it's going to be one of the principal lines of argument, I think, as this goes forward. Does this leave room for anything in what President Bush described as the compassionate conservative agenda in 2000?

WOODRUFF: So, you say it may be just coincidence that it may work out that way?

BROWNSTEIN: Well, it's clearly a reflection of the priorities. And what they've done here is said that increasing defense, increasing homeland security, and now cutting taxes rank higher in their own priorities.

And that's why, Judy, I think, in almost all respects, you're going to see a very polarized debate about this in Washington, similar to 2001. There's not a lot in here for even for centrist Democrats to grab on to. For example, there's no aid to the states, which is a top priority for Democrats. On the other hand, as Steve Moore showed, there's a lot for Republicans to be enthusiastic about. And you may see a kind of polarized debate, as we had during Bush's first year.

WOODRUFF: But the president needs some moderate Democrats to get this through the Senate.

BROWNSTEIN: Unless he can do it by reconciliation and basically try to squeeze it through almost entirely on Republicans, plus a very small amount of Democrats from the states he carried in 2000.

WOODRUFF: All that is something to think about. And we will.

Ron Brownstein, thanks very much.

BROWNSTEIN: Thank you.

WOODRUFF: When we come back: The buck stops here. Now that Tom Daschle has made his big decision, James Carville and Bob Novak will put their 2 cents in. (COMMERCIAL BREAK)

WOODRUFF: With us now from the -- oh, yes.

President Bush is back from Chicago, arriving back at the White House after making his major economic speech in Chicago, unveiling his plan to stimulate the American economy.

With us now from the CNN "CROSSFIRE" set, as we watch the president: James Carville and Bob Novak.

James, you just listened to the president a few hours ago. And, you know, what did you think? Is this something that plays to his base and is that smart?


I think the Democrats are appalled at the irresponsibility. This is probably the most irresponsible proposal put forward by any president, any modern American president. And you can see the reaction among Democrats, even moderate Democrats, has been against this. He's going to lose any number of Republicans on this.

So, I think it sparks a real, real good debate. And I think it's going to be a very, very interesting time in Washington. And I truly look forward to being in the middle of this debate. And I think "CROSSFIRE" and INSIDE POLITICS and shows like this are going to be the beneficiary of this kind of stupidity and this kind of irresponsibility.

WOODRUFF: Bob Novak, politically smart for the president to do it this way?

ROBERT NOVAK, CNN POLITICAL ANALYST: I think it was the right thing to do.

I agree with James on one thing. It's going to spark a great debate. James and people of his ilk don't understand capitalism. They don't understand that this is really something that the economy badly needs. Cuts in dividend rates, it's going to have immediate increases in the stock market. And, of course, it's going to have a tremendous, 1 1/2-1, 2-1 increase in the gross domestic product. This is the best tax plan that I can imagine.


NOVAK: Wait a minute. Don't interrupt.


CARVILLE: ... Bill Clinton and Bob Rubin. And if they would listen to Bob Rubin, they'd know what they were doing.

NOVAK: Shouting stupid things...

(CROSSTALK) NOVAK: Well, wait a minute. I want to finish my sentence.

Shouting stupid things isn't going to help you, James, because what this is, this is an act of courage to defy the demagoguery of the left wing, such as Mr. Carville.

WOODRUFF: All right, I'm going to interrupt, because I want to ask you both about Tom Daschle. We have got less than a minute.

James, is this good for the Democrats that Tom Daschle is not running for the president?

CARVILLE: It's good to the country.

I talked to Pete Rausch (ph), Senator Daschle's No. 1 aide, today. And I think one of the things is, Senator Daschle was so appalled at the irresponsibility which was going to be proposed here that he thought it was in the best interests of not only his party, but his country to stay and fight this kind of irresponsibility, because he doesn't want to straddle future generations of Americans with debt.

We need to go back to the Clinton plan, which was fiscal responsibility, where we got the highest growth rates we've ever gotten in this economy, under a regime of this kind of thing. We need to get Bob Rubin and people like that back in there and get these clowns out of there right now. They're clowns. They don't know anything.

NOVAK: That's absolutely...

CARVILLE: Bob Rubin was the best treasury secretary we ever had.

NOVAK: That's absolutely ridiculous. This election has been held. You won't recognize that, James, but it has been held. And this is a plan that's going to go over well with the American people.

And the idea that Tom Daschle is staying to fight this plan, he's staying because he had no chance to be nominated. The fire is out of his belly. The thing that's good about it is, it probably helps Dick Gephardt.

CARVILLE: America owes Tom Daschle a debt of gratitude to stay here, because he's going to defeat this thing. And he knows that it's wrong. And I saw what Senator Conrad said. And I admire Senator Daschle for being a courageous man and a good American.

WOODRUFF: All right, I'm glad I don't have to sit between the two of you every night. I'm glad I get to talk to you from a few miles away.

Bob Novak and James Carville, thank you both.

And when we return: Is the U.S. economy too big for President Bush's stimulus plan to work? Our Bruce Morton checks in with some experts to hear what they have to say. (COMMERCIAL BREAK)

WOODRUFF: James and Bob really are good friends.

Well, President Bush claims that his economic stimulus package will spur business development and create more than two million new jobs over the next three years. Democrats, of course, are skeptical. So, which side is right?

Our Bruce Morton weighs in now on the Bush plan.


BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): It's a big plan, $674 billion over 10 years. But is it the right plan to perk up an economy everyone agrees is sluggish? As always with the economy, it depends on whom you ask.

ALLEN SINAI, DECISION ECONOMICS: It's a big number in a $10 trillion economy and it's probably worth half-a-million, 600,000 jobs. I'm talking about the whole package now, not any one particular component.

MORTON: Yes, but?

ROBERT GREENSTEIN, CENTER ON BUDGET AND POLICY PRIORITIES: You look at the plan, $674 billion in costs over 10 years, only $100 billion of it in the first year. Stimulus means getting money into the economy now.

SINAI: It's front-loaded. I think the number for 2004 is probably $100 billion of stimulus in total. That's 1 percent of GDP. That's pretty sizable.

MORTON: One percent of gross domestic product is pretty sizable. It will spur growth, most agree.

SINAI: The 100 percent exclusion of dividends from taxation will certainly help the stock market. And that, in turn, will help the economy.

MORTON: Yes, but there is a cost. The federal government is running a deficit now caused by President Bush's first tax cut and the war on terror. A new tax cut, plus the likelihood of war with Iraq, will make that deficit worse.

GREENSTEIN: And while the economy may get a little more efficient from the change in dividend taxation, the economy will be hurt significantly by the larger, long-term deficits.

MORTON: Deficits will probably mean higher interest rates and will hurt some industries. It's a question of where the bottom line is.

SINAI: Our studies say that we'll get more growth and more jobs from the overall package than we will be hurt by the higher interest rates. But higher interest rates will hurt interest rate-sensitive areas of the economy, like housing. There's no doubt about it. And those deficits, if they persist for years and years, will ultimately -- could be another big problem for us.

MORTON: Greenstein prefers something like the House Democrats' plan, one shot in the arm for the economy, not a 10-year program.

GREENSTEIN: It puts more money into the economy in the first year than the Bush plan, at one-seventh the long-term cost, no cost, really, after the first year.

MORTON: Sinai thinks the country needs a long-term program. The hope is:

SINAI: The economy will grow enough to generate enough tax receipts, so that the deficits from this program that we already have will not become permanent.

MORTON: Who's right? Jobs, families and the name of the next president may depend on the answer.

Bruce Morton, CNN, Washington.


WOODRUFF: Thank you, Bruce.

That's it for INSIDE POLITICS. I'm Judy Woodruff. We thank you for joining us.


Won't Run For President in 2004>

© 2004 Cable News Network LP, LLLP.
A Time Warner Company. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines. Contact us.
external link
All external sites will open in a new browser. does not endorse external sites.