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Republicans Celebrate Tax Cut Deal; Bush Vulnerable on Homeland Security?

Aired May 22, 2003 - 16:00   ET


ANNOUNCER: A Republican celebration on the Hill.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I look forward to signing the economic recovery bill soon.

ANNOUNCER: But is this the tax cut President Bush wanted?

America on high alert and Democrats on the attack.

SEN. BOB GRAHAM (D-FL), PRESIDENTIAL CANDIDATE: We have let al Qaeda off the hook.

REP. RICHARD GEPHARDT (D-MO), PRESIDENTIAL CANDIDATE: This administration has not done its job.

ANNOUNCER: Is George Bush politically vulnerable on homeland security?

A windfall night: Republicans raise $22 million at a GOP gala. How can the Democrats compete with such deep pockets?



JUDY WOODRUFF, CNN ANCHOR: Thanks for joining us.

President Bush has arrived in Texas for the Memorial Day weekend. But he began his day with a rare trip to Capitol Hill. His meeting with Republican House and Senate leaders featured a strong public embrace of the new $350 billion tax cut package. The deal features a range of compromises, sunsets and what critics label gimmicks. But Mr. Bush says the overall package is just what the nation needs.

Among the highlights, when the deal takes effect, less money will be withheld from the paychecks of virtually all taxpayers; 25 million American families stand to receive checks from the government as an advance payment on the child tax credit. And married couples can also expect to see their taxes reduced, including a bigger standard deduction.

Our Jonathan Karl has more on the deal and how it finally came together. (BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT (voice-over): What a difference a week makes. Today, the president went to Capitol Hill to congratulate Republicans on a $350 billion tax plan.

BUSH: This is a Congress which is able to identify problems facing the American people and get things done. These are can-do people. And I'm real proud of the work they've done. I look forward to signing the economic recovery bill soon.

KARL: Just a week ago, he derided Congress for failing to pass a much larger tax cut.

BUSH: We don't need be little-bitty in this deal. We need to be robust.

KARL: He wanted $726 billion. He settled for little-bitty. So was it a loss for the president? If it was, why are these people so upset?

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: I think it's an embarrassment to tax policy. And I think we're going to pay dearly for it for years and years to come.

KARL: The final tax cut may be less than half the size the president wanted, but it is nearly three times larger than the tax plan pushed by Democrats.

The president didn't get his complete elimination of the dividend tax, but he did get the tax cut in half. And, as a bonus, he got a cut in the capital gains tax, something long on the Republican wish list. And on size, the tax cut may be much larger than meets the eye. Republicans made most of the tax cut temporary. Some provisions expire after just two years. That will leave future congresses a choice of either raising taxes or renewing the cuts.

If they're renewed, as Republicans expect, the true 10-year cost of the tax cut could be as high as $800 billion.


KARL: Well, Judy, it's not over until it's over. As a matter of fact, there is a last-minute problem that is delaying getting this deal on to the floors of the House and Senate for a final vote.

Several sources on both sides of the Capitol say that the Ways and Means chairman, the often temperamental Bill Thomas, has refused to sign off on the deal because he has some technical concerns with the provision allowing for some state aid in this bill. We're also told that Vice President Cheney is up here yet again. If you remember, he came to the rescue yesterday. Republicans are hoping he comes to the rescue again.

He's meeting right now with Bill Thomas. And Speaker Hastert was at that meeting until just a few minutes to try to work out this last wrinkle. They hope it's just a technical problem, just a final issue, and they'll be able to get this on to the floor with a vote in the House, they still hope, today and a vote in the Senate tomorrow.

WOODRUFF: We noticed, Jon, "The Wall Street Journal" editorial page called him President Thomas today, trying to be a little tough on his taking charge on all this.

All right, Jon Karl at the Capitol, thanks very much.

Well, some Senate Democrats argue that the true cost of the tax cuts are disguised by the variety of so-called sunset provisions in the bill. In response, they say they will work to limit a required increase in the budget debt ceiling to keep it far below what the White House wants.


SEN. KENT CONRAD (D), NORTH DAKOTA: If there was ever a disconnect in Washington, it's displayed this week. On the one hand, the administration is asking to increase the debt limit by nearly $1 trillion. On the other hand, they're endorsing tax cuts that, without the gimmicks, will cost over $1 trillion. It's as though the left hand doesn't know what the right hand is doing.


WOODRUFF: Well, the House has already raised the debt ceiling to $984 billion. Senator Kent Conrad and other Democrats want to limit the ceiling to $350 billion.

In the last hour, White House Communications Director Dan Bartlett was here. And this is what he had to say about the tax cut deal.


DAN BARTLETT, WHITE HOUSE COMMUNICATIONS DIRECTOR: This is a big win for American families, American workers and American investors.

Six months ago, President Bush put forward a plan that addressed the specific ailments of this economy, the fact that we weren't creating enough jobs. This plan will provide rate relief to the American taxpayer. It will provide families with children tax relief. It will provide relief in the fact with small businesses, who are the real job creators in America.


WOODRUFF: Well, our Bill Schneider has been watching the tax cut battle from the start. And he joins us now with some analysis -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, it looks like a victory for the president, because, look, if the president claims victory and the Democrats claim defeat, I think that's a victory for the president. It also would never, ever have happened if the president had not worked so hard and really gone to Capitol Hill. Vice President Cheney was there and insisted that they give him this victory. This is a president coming out of a war. He's very popular. There was very little public pressure for this tax cut. Americans are worried about the deficit. Americans are seeing government services cut.

The Democrats got through their argument that this is a tax cut that mostly benefits wealthy people. And Americans, in poll after poll, say they'd rather see the money used for something else, like health insurance for all Americans. So it's a victory, but it may be a short-term victory.

A minute ago, you heard the president call this not a tax cut bill, but an economic recovery bell. The test, the political test will be, will this bill produce an economic recovery? And that means, in a word, jobs.

WOODRUFF: So, Bill, is it too soon to say how it's going to play in 20904 election?

SCHNEIDER: Well, the Republicans have a strategy here. And it's an interesting strategy. We just heard Jonathan Karl report that a lot of these tax cuts are sunsetted. That is, they are due to expire in a couple of years. And then the taxes are supposed to go back up again. That's the gimmick they used to hold down the cost of this tax bill.

Well, the Republicans know that they can go to the voters in 2004 and say: We've cut your taxes. If you elect Democrats, they'll allow these tax cuts to go, to disappear, and they'll raise your taxes. How are you going to vote on that?

They've got their issue for 2004.

WOODRUFF: OK, Bill Schneider, thanks very much.

Well, the economy, of course, remains a top priority for Americans, but new terror concerns are also having an effect. In the latest CNN/"USA Today"/Gallup poll, 49 percent of respondents said the economy should remain the higher priority for the president. Earlier this month, 62 percent said the economy should be issue No. 1.

Many of the Democratic presidential hopefuls have been increasing their criticism of the president on his approach to the war on terror. Clearly, they believe that they're on to something.

Our Candy Crowley considers their strategy.


CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): A higher state of alert at home, new terror attacks in Saudi Arabia and Morocco, sharp criticism in the political arena.

GEPHARDT: We are vulnerable to future attacks because this administration has not done its job.

CROWLEY: Still, Americans have great expectations about their own safety. A new "USA Today"/CNN/Gallup poll shows 79 percent of Americans have either a moderate amount or great deal of confidence that the Bush administration can protect citizens from terrorism.

Despite that show of confidence, Democrats see fertile ground for debate, beginning with their criticism that first-line responders, policemen and firefighters, are underfunded.

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: We should not cede this issue to a party and a president whose idea of homeland security is plastic wrap and duct tape.

CROWLEY: And on the war front, Democrats think the president is open to criticism that he took his eye off the ball when he took on Saddam Hussein.

GRAHAM: We have let al Qaeda off the hook. We had them on the ropes, close to dismantlement. And then, as we moved resources out of Afghanistan and Pakistan to fight a war in Iraq, we let them regenerate.

CROWLEY: No sale so far. Asked how much they blame the Bush administration for attacks in Saudi Arabia and Morocco, 71 percent of respondents said, not much or not at all.

While poll figures indicate it's an uphill battle, Democrats are convinced that this president, made popular by war, is vulnerable in his greatest strength. The '04 debate is tuning up.

AL SHARPTON (D), PRESIDENTIAL CANDIDATE: He can't find bin Laden. We don't know if Hussein is living or dead. And we can't find the weapons of mass destruction. We need to go after those that went after us.

BUSH: We're making good progress. Nearly one-half of al Qaeda senior operatives have been captured or killed.


CROWLEY: There's been somewhat of an article of faith that Democrats would really prefer to talk about the domestic agenda. "Yes," said one campaign operative, "we do want to talk about domestic concerns, health care and the economy. But let's face it. Nothing is a bigger domestic concern than homeland security and we have to be in that debate" -- Judy.

WOODRUFF: I guess they do.

All right, Candy Crowley, thank you very much.

Well, campaign finance rules are in effect, but the big money seems to keep on flowing. The big bucks raised at last night's GOP fund-raiser featuring the president here in Washington, that's just one of the topics I'll talk about with the two party chairmen. Democrat Terry McAuliffe and Republican Marc Racicot face off over the big issues.

And later:


UNIDENTIFIED MALE: And the winner in Florida is:


WOODRUFF: Another cliffhanger election featuring the state of Florida. We check the comparisons between the 2000 election and "American Idol."



BUSH: And I'm proud of the United States Congress. The Congress is focused on results. And they have delivered tremendous results for the American people.


WOODRUFF: President Bush raising money last night here in Washington for Republican House and Senate campaign committees. About $22 million was raised from the more than 7,000 people who attended. Under the McCain-Feingold campaign finance reform law, individuals can give $25,000 each year to a party committee, with a $57,500 limit for a two-year cycle.

Well, former Senate Majority Leader Trent Lott was among those on hand for the fund-raiser. "The Washington Post" reports that, when he was asked whether he would help campaign for the president's reelection, Lott replied -- quote -- "He didn't help me when I needed it, but this isn't about me." Today, Lott said -- quote -- "I wasn't full of bitterness. Actually, I was saying, look, of course I support the president. I've been doing everything I can to help this president."

INSIDE POLITICS back in 90 seconds.


WOODRUFF: We're joined now by Republican Party Chairman Marc Racicot and Democratic Party Chairman Terry McAuliffe.

Terry McAuliffe, we just heard Dan Bartlett and others from the White House saying, quoting the president, saying this tax cut good for America; it's going to provide jobs; how can Democrats possibly be against it?

TERRY MCAULIFFE, DNC CHAIRMAN: Well, I'd be all for it if it would create jobs in the country. And that's the issue. And that's what the 2004 campaign is going to be about, who is going to do a better job of creating jobs; 2.8 million jobs have been lost since George Bush has been in office. George Bush himself said a month ago that $350 billion was itty- bitty. It was reduced down from $750 billion. It is loaded with gimmicks, as you know: the marriage penalty tax, the tax credit for children, the small-business investment tax credit. They're all sunsetted. They go away in a year or two. So this was not bipartisan. They had to do all kinds of gimmicks to get the tax bill passed. Our big problem is, we don't think it will create jobs.

WOODRUFF: Well, even considering all that, Marc Racicot, you have a new poll out today, NBC/"Wall Street Journal," that says 64 percent of Americans, almost two-thirds of Americans, say that they would prefer other ways of stimulating the economy to tax cuts. Could this potentially be a problem for the president?


The fact of the matter is, history is on our side, too. President Kennedy did this back in the '60s. Reagan did it in the '80s. It had the stimulative effect that they were looking for. The opposition, Terry's party and his candidates for president, of course, are talking about raising taxes and spending more money. So, you know, there was more proposed in terms of spending during the 2003 budget cycle, by three times, as compared to what's in this presently existing tax cut.

So the fact is, this is a traditional question about whether or not you put more money back in the hands of taxpayers, which the president has done, or you spend more, which the Democrats want to do.

WOODRUFF: Terry McAuliffe, I'm going to quickly change -- because I know you're going to deny that Democrats are for raising taxes.

MCAULIFFE: I'm just going to say, 31 percent of Americans -- of taxpayers don't get anything out of this tax package; 48 percent of Americans get less than $100. If they think this is what's going to stimulate this economy and create jobs -- as you know, three out of 10 people graduating from college this year, there is no job for them.

We want a tax cut, but we want a tax cut that is going to stimulate the economy. Give it to people who need it, who will spend it immediately.

WOODRUFF: Let me ask you about another kind of money. The Republicans raised $22 million at a fund-raiser in Washington last night. This is a year and a half before the election. The expectation is, the president is going to raise $200 million. The Democrats really are out of this game, aren't they?

MCAULIFFE: Well, we're going to have a big fund-raiser on June 25 where we're going to raise about a million and a half dollars.

Listen, there's no question, George Bush in 2000 broke every record in the book. He was the greatest fund-raiser of all time. And guess what? We actually got more votes than he did in the 2000 presidential election. They're going to have a lot more money than we're going to have. We need enough, Judy, to hit our threshold and get our message out. And we will have that.

The DNC, the party, we're in the best shape we've ever been in. We're debt-free for the first time ever. Our direct mail is up. We're in very good shape. We'll never have as much, but, listen, it doesn't surprise me. He did it in 2000. They're for money. We're for votes.

WOODRUFF: And, Marc Racicot, isn't this, despite campaign finance reform, still a system that rewards big contributors? They get invited to cocktail parties, to breakfasts, to golf tournaments with either the president or top people in the administration, briefings and so forth.

RACICOT: Absolutely not.

The bottom line is, over the course of the last year and a half, over 600,000 new contributors, with an average contribution, I think, in the $40 to $60 range, have come to the Republican National Committee. It's because there's leadership. They believe in this president. And as a consequence of that, they want to support him and support the team that has tried to put forward an agenda that makes sense to America.

WOODRUFF: Let me also turn to a subject that we're hearing the Democratic presidential candidates bring up. And that is homeland security.

No matter how much they talk about it, Terry McAuliffe, aren't they fighting an uphill battle here trying to say that this president, who helped win a war in Afghanistan, who helped win a war in Iraq, is still fighting a war on terror, has been slacking in homeland security, in the country's security?

MCAULIFFE: Well, the homeland security, the whole idea of homeland security, the legislation, as you know, was a Democratic idea. It took President Bush eight months for us to bring him along kicking and screaming to join with us on the homeland security legislation. He's not funded it to the level that we would like to see it funded. We need more money for fire, for police and for nurses.

We feel very confident where we stand as a party on homeland security. We feel very confident in the history of where the Democratic Party has been on keeping our country safe. But, ultimately, the election is going to come down to who do the Americans think are going to do a better job of creating jobs? They have lost jobs in this country. The bottom line is, 2.8 million people have lost their jobs since he became president.

WOODRUFF: But, Marc Racicot, what about the arguments


RACICOT: Well, they're not near as confident as what they'd like to say. There was a Democratic memo from consultants the other day that said that the American people, 86 percent of them, agree with the president and have confidence in him.

The fact of the matter is, this is a political attempt to attack the president, rather than attack the problem. And the bottom line is, this president has made extraordinary levels of funding still available to states, that haven't drawn down on all of that funding. This party, the Democrats, are the ones that delayed the implementation of the Department of Homeland Security.

WOODRUFF: I can't let you go without asking you, all the reporting out there that you're going to head the president's reelection campaign committee, that there's going to be somebody else named to your job, maybe an elected official, do you want to share any of that information with us today?

RACICOT: I wish I had some information to share with you, to be quite honest with you.

WOODRUFF: You mean you don't make all these decisions?

RACICOT: I don't make these decisions. I just know I'm going to support this man between now and 2004.

WOODRUFF: Who does make those decisions?

RACICOT: The president of the United States.

WOODRUFF: And a man named Karl Rove, maybe?

RACICOT: I think the president is always the one who has talked to me about it.

WOODRUFF: The president of the United States.

MCAULIFFE: I know I'm not in the running.


WOODRUFF: Terry McAuliffe, Marc Racicot, good to see you both. We hope to have you back again soon.

MCAULIFFE: Thanks, Judy.

WOODRUFF: Thanks very much.

Question: How do the folks back in Pennsylvania view Senator Rick Santorum? Ahead in our "Campaign News Daily," we'll have the first poll of state voters since Santorum's comments on gays caused controversial headlines.


WOODRUFF: He's running for president, but one of his daughters is stealing the headlines -- the story next in our "Campaign News Daily."

(COMMERCIAL BREAK) WOODRUFF: Checking the headlines in our "Campaign News Daily": Republican Senator Rick Santorum appears to have mostly weathered the recent controversy over his comments about homosexuality. A Quinnipiac University poll of voters in Santorum's home state of Pennsylvania finds 55 percent approve of his job performance. That's the same as before his statements made national headlines. Santorum's disapproval rating, however did rise from 20 percent to 33 percent.

In the new issue of "People" magazine, the daughter of Congressman and Democratic presidential candidate Dick Gephardt talks about what it was like to tell her parents that she is a lesbian. Chrissy Gephardt also discusses life as the openly gay daughter of a presidential candidate and the importance of having the full support of her family.

The woman whose signature is on all U.S. currency is stepping down, with an eye for running for office in California. Rosario Marin today announced her resignation as U.S. treasurer. She is widely rumored to be considering a run for the Senate against Democrat Barbara Boxer.

INSIDE POLITICS returns in a moment.


WOODRUFF: A hotly contested race, a razor-thin margin, the outcome incorrectly reported. The 2000 presidential election? No, "American Idol."


UNIDENTIFIED MALE: Out of 24 million votes, only 13,000 votes separate the two of you.

Earlier, they gave me a number, a tally, that the difference between the votes was 13,000. Our accountant was drunk. Apparently, it was still very, very tight, but 1,335, just over 1,335 votes difference between the two of you.


WOODRUFF: Well, in the end, Ruben actually won by 130,000 votes, still a closer margin than the Bush-Gore race. And for those of you who are wondering, he did carry Florida.

That's it for INSIDE POLITICS. I'm Judy Woodruff. Thanks for joining us.


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