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Has the Senate Dealt a Fatal Blow to President Bush's Tax Plan?

Aired April 05, 2001 - 19:30   ET

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

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I urge the senators, when they cast the vote tomorrow, to remember there's a lot of people in our country who are beginning to hurt.

(END VIDEO CLIP)

BILL PRESS, CO-HOST: An appeal from the president as two Republicans say they may not vote for the Bush tax cut. Tonight, what is the fate of the president's No. 1 priority?

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: I think the $1.6 or the $2.5 trillion tax cut, as it was originally proposed, could be officially proclaimed as dead.

(END VIDEO CLIP)

ANNOUNCER: Live from Washington, CROSSFIRE. On the left, Bill Press; on the right, Robert Novak. In the CROSSFIRE, Democratic Senator Paul Wellstone of Minnesota, and Republican Congressman J.D. Hayworth from Arizona, a member of the Ways and Means Committee.

JULIA REED, CO-HOST: Good evening and welcome to CROSSFIRE.

President Bush's economic plan was dealt a sharp blow in the Senate yesterday, as three Republicans joined Democrats in a vote to slice the administration's "just right" $1.6 trillion tax cut by almost a third, to increase spending on education and debt reduction.

The support of one potential Republican defector, Senator Jim Jeffords of Vermont, is seen as critical if the president's tax cut is to survive intact. But Jeffords says it may take a "miracle" to lure him back.

Meanwhile, of course, the House has already passed the president's package and Senate Majority Leader Trent Lott reminds us that the current votes are "merely the whistles at the beginning of a game." How will the game end? Is Bush's tax cut really dead as Democrats are already crowing? Or will the president's biggest priority survive more or less intact? Joining me on the left is, as always, Bill Press.

PRESS: Proud to be on the left. Thank you, Julia.

Congressman J.D. Hayworth, the House is like a rubber stamp for anything President Bush wants, but fortunately, there is a more deliberative body called the United States Senate. Yesterday, they gave the president a wakeup call, slashed $448 billion from his tax cut. As Julia mentioned, to spend it on education and some other priorities. And here is what Senator Durbin indicated that vote meant. I want to see if you agree. Senator Durbin.

(BEGIN VIDEO CLIP)

SEN. RICHARD DURBIN (D), ILLINOIS: I think we can also declare today as officially the end of the New Hampshire Republican presidential primary, because if you'll recall, this whole concept of $1.6 trillion in a tax cut came as a response by Candidate Bush to Candidate Forbes. I think we can also say at this point, officially, Steve Forbes has left the building.

(END VIDEO CLIP)

PRESS: Steve Forbes has left the building and the tax cut, dead.

REP. J.D. HAYWORTH (R-AZ), WAYS & MEANS COMMITTEE: Well, my friend Dick Durbin has not only left, he is dead wrong. The fact is, the House of Representative passed that $1.6 trillion tax cut, real tax relief for real people. In the Senate, there is a work in progress. I believe in miracles. I believe ultimately, you will see the wisdom of President Bush's tax relief for real Americans actually prevail.

PRESS: Do you believe in the tooth fairy, too? There is another plan over there. And that's what Senator Jeffords, by the way, said he's going to vote for: the same thing with Senator Chafee. It's by a very moderate Democrat by the name of John Breaux, a good friend of the presidents: $1.2 trillion, instead of 1.6. It has money in it for special education, which Senator Jeffords likes. It also got money for prescription drugs for seniors.

Why doesn't the president practice what he preached during the campaign? Why doesn't he reach across the aisle and say John Breaux, let's work together, recognize his plan as dead and seek some compromise?

HAYWORTH: Well, there's a couple things we need to get to in your position in your premise, Bill. First of all, understand that under George Bush's budget, we have a 11 1/2 percent increase in education, understand that we also fulfill a lot of needs in terms of fully funding Social Security and working hard to rebuild our military, and letting, of course, letting hardworking Americans hold on to more of their money.

I believe that we have the perfect plan and we have seen it in the House with the numbers of Democrats who have joined the majority. Yesterday, close to 60. Sadly in the Senate, what you see is -- we appreciate Senator Miller of Georgia coming with us, but what you see is every other Democrat lined up to hand George W. Bush a defeat. Their using this as political gamesmanship, rather than doing the will of the people.

REED: Senator Wellstone, I want to read you a quote that I think is particularly relevant here.

"Our tax cut is intended to be a long-range lightening of drag of the tax system of the economy. Our concern is not just for next month or just for next year, but for the next decade and beyond. There should be sizable rate cuts across the board."

Now, that is not a statement from President Bush or Secretary O'Neill, but from Douglas Dillon, who was the treasury secretary to President Kennedy, who, as you know, pushed through a tax cut much larger than the one President Bush has proposed. Yesterday, you cosigned bill that would cut the Bush tax cut by nearly a third. Aren't you ashamed to throwing up these kind of roadblocks to economic recovery, when the president said today, a lot of people are starting to hurt?

SEN. PAUL WELLSTONE (D), MINNESOTA: No, I'm not ashamed. I don't think about it really -- J.D. talked about it as a political strategy or a game. To me, it's really a clear choice. I mean, what you got with the president's tax cut is a sort of Robin Hood in reverse tax cuts where, over 40 percent of the benefits Paul Krugman argued in "The New York Times," closer to 50 percent of the benefits go to the top 1 percent.

And what we were saying, instead of doing that, you can have tax cuts by some standard of fairness, but you could also take about $250 billion, put half of that into debt reduction -- we're talking about Social Security and Medicare in the future -- and put half of that in education.

J.D. talked about the president's education budget. In all due respect, $24 billion over the next ten years is a pittance and you cannot realize the goal of leaving no child behind on a tin cup budget. The fact of the matter is, the people in Minnesota and people in the country would far prefer to put more of an investment in kids and education and opportunity, than they would in tax cuts, 40 percent plus going to the top 1 percent of the population.

REED: You guys, when are you guys going to let up on this phony mantra about the tax cut benefiting the wealthiest Americans? The Bush plan actually gives more tax cuts to the lowest brackets in terms of proportion, and...

(CROSSTALK)

REED: ...isn't anything else, you know, like reallocation of wealth?

WELLSTONE: Let me take your phony mantra, first of all. I would be pleased to give up on it if the facts that I state weren't true. Actually, the president talked about leaving no child behind. Do you know that, with this tax cut one-third of all children in this country, live with families that don't get a dime, 50 percent of African-American children live in families that don't get a dime, and 57 percent of Hispanic children live in families that don't get a dime? That's hardly a tax cut that leaves no child behind. It's not any mantra, but just the facts. I know you don't like those facts.

HAYWORTH: Tell the rest of the story, Paul. Tell the story about the people you outlined, the fact that they get earned income tax credits, and the fact they are not paying income taxes. You set it up -- and the other thing I have to take issue with, respectfully, you say it's not a game, why were you quoted as saying, "everything is topsy-turvy here and I'm delighted their game plan is off."

Sir, it's not a game. It's a battle and competition of ideas and the American people deserve a refund. Don't stand in their way.

WELLSTONE: Listen. For me, J.D. I think, you know this, you always have a twinkle in your eye, and I don't mind turning things upside down if I think they are really distorted priorities. And again, I will tell you, any coffee shop anywhere in the country, people would far prefer to put more money into children and education and also be serious about debt reduction, as opposed to tax cuts with over 40 percent of benefits going to top 1 percent. That doesn't meet any standard of fairness.

PRESS: Congressman, you earlier tried to blame Bush's problems in the Senate on the Democrats. Nice try. Everybody knows, look: it's a 50-50 Senate. You have Dick Cheney to break every tie. And George Bush would be sailing, if it weren't for two Republicans: Jim Jeffords and Lincoln Chafee. They're the two that have said -- they looked at it and said this plan is phony math, doesn't have the right priorities. We are not going to vote for it. Are you saying they are traitors?

WELLSTONE: Bill, Arlen Specter also...

PRESS: He did vote for that. You are right, thank you sir. The three of them, traitors?

HAYWORTH: Paul keeps a score of the vote, there. I wish he'd just take a more accurate accounting of what it means to families in America. To keep more of their hard-earned money, to spend...

PRESS: We understand that, Senator. My question is, three senators deserted your president, your party. Are they traitors?

HAYWORTH: I learned a lesson long time ago from watching Dwight Eisenhower, who said he wasn't here to indict any personalities. I'm also mindful of what Senator Jeffords said, it would take a miracle. I believe that George W. Bush and the Republican leadership of the Hill will pull off that miracle. And Senator Jeffords and others will eventually come and something else they should know.

The people's house -- remember we go to conference, whatever is passed -- the people's house will not settle for anything less than the president's plan: $1.6 trillion in tax relief.

PRESS: Well, some people have suggested that Lincoln Chafee particularly -- he's heard their criticism, he's abandoning his party, he's not helping his party. Just a little earlier on CNN's "INSIDE POLITICS," Senator Chafee was asked about that and here was his response.

(BEGIN VIDEO CLIP)

SEN. LINCOLN CHAFEE (R), RHODE ISLAND: In a way, I think there's some party loyalty here in protecting our party. If we get into trouble with too deep a tax cut, it's going to hurt our party.

(END VIDEO CLIP)

PRESS: He's probably trying to help you out, Congressman. He's probably telling you, if you really want to help the Republican Party, don't go for that.

(CROSSTALK)

HAYWORTH: He's trying to start a fight that doesn't exist. Did I mention Lincoln Chafee at all?

PRESS: You can't avoid him! He can't avoid him!

HAYWORTH: He has a right to his opinion. I believe he is wrong. And I will tell you, respectfully, the Democrats who join him, as we go into this economic slowdown, where Paul gives us this tired old bromide of class warfare, when people are really hurting, they will remember everyone who stood in the way of common sense tax relief.

WELLSTONE: The irony here, you know, I love hearing J.D. and Senator Lott and others becoming Keynesian economists. Being a Keynesian economist, I appreciate it. The problem is that almost all of the Republican tax cuts, when they take real effect, is five, six, 10 years out.

If you want to have an economic stimulus, do the tax cut according to standard of fairness, don't have 40 percent of the benefits going to the top 1 percent, get it to middle, working, low and moderate income families who will spend the money now, and you still will have money for debt reduction. I can't believe now I've become the conservative next to this irresponsible death tax cuts that Republicans want to do.

And you know what? Again, in our state and in your state, J.D, we hear from people, they say fully fund the IDEA program idea for kids with special needs, do better by making sure kids are kindergarten-ready, help us reduce class size...

HAYWORTH: And who stepped up to the plate for that? The Republican Congress.

WELLSTONE: ... that's what people believe in. I'm so proud of that amendment that Tom Harkin and I did yesterday. I think it's all about the priorities of people in the country.

HAYWORTH: And there are a lot of farmers and a lot of ranchers in Minnesota, Paul, and when they don't get the death tax relief, sir, you are hurting those families and those people and those workers, real people.

WELLSTONE: By the way, J.D., in Minnesota and in Arizona it's about the same. They are, all together, 610 families in our state with close to population of close to five million right now that pay that tax. This state tax goes to the top 2 percent of the population. It's the most outrageous proposal of all that you make!

HAYWORTH: Sir, that's just a fundamental misunderstanding.

PRESS: All right, there will be more misunderstandings, and we got more time, we are just going to take a break. And when we come back -- OK, we know there is going to be some kind of a tax cut, the question is what programs are going to be cut to pay for the tax cut? When we come back.

(COMMERCIAL BREAK)

PRESS: Welcome back to CROSSFIRE. As the Senate gets set to vote on President Bush's budget and tax cuts, it's not Democrats who are giving him fits, it's fellow Republicans, concerned not only with the size of the tax cut, but how he would pay for it. What programs will be cut? Who will pay the price?

Here to debate the big budget issues tonight: Republican Congressman J.D. Hayworth of Arizona and Democratic Senator Paul Wellstone of Minnesota, of course. Julia Reed's sitting in again tonight on the right -- Julia.

REED: Senator Wellstone, you keep talking about the children of this country, and everybody is concerned with them, but wouldn't they be better off if we had a thriving economy?

I want to go back to this nonsense about Bush's tax cut only benefiting the rich. The fact is that most business in this country are sole proprietorships and partnerships, and they all pay the top tax rate, which is 39.6 percent. Bringing that down to 33 percent would have a huge effect. Why do you want to discourage this kind of entrepreneurship in this country?

WELLSTONE: You know, I am really sorry, because of the connection, I don't know that I heard your whole question, and I apologize if I don't do it justice, but I think you were saying "let's talk about economic prosperity, isn't that the most important thing, to get the economy going?"

REED: Well, I also wanted to point out to you that -- I mean, we keep talking about those rich folks who are getting the benefit, is that most businesses in this country are sole proprietorships and partnerships, and they are in the top tax rate.

WELLSTONE: Right. A couple points. First or all, again, right now, what you want to do is you want to have more people consuming. That's part of what will drive the economic performance. I think everybody agrees on that.

If you're going to do that, you don't want to have tax cuts that are so tilted to the top of the population...

REED: That's not the top of the population!

WELLSTONE: Wait a minute, you want to get it top the people who are most likely to go out and buy that washing machine, because they can't afford it right now, and they've been waiting to do so...

(CROSSTALK)

WELLSTONE: ... let me finish. Second of all, on the whole issue of children: again, you leave a lot of children behind. J.D. said, well, they come from families with incomes under 26,000, don't necessarily pay income tax. They pay payroll taxes. Most of the people in this country, most families, pay more in payroll taxes today than in income taxes, and they pay sales taxes as well.

The third point I would make, which goes back to education, is you certainly want to make sure you continue to invest in education, because if you invest in education, you are going to have a high morale, productive work force, which is key, by the way, to economic performance.

And then finally, in all due respect, the part with president's tax cuts is that most of it takes effect -- full effect -- actually, down the pike. You ought to make sure that it does it now. But they don't do that, and the reason they don't -- if these tax cuts took full effect next year, they would be so expensive that it would be outrageous. That's the problem they have.

HAYWORTH: The bottom line: so many misstatements, so little time.

Paul, the bottom line is this: go back to the folks you say don't get any help. Yes they do! Earned income tax credits! They get help, and the fact is -- I think Paul gave us an interesting vignette earlier -- $24 billion in new spending on education? Just not enough.

You know what the bottom line is with the left? They'll always add another dollar. You can never outspend them, can never out- promise them, but you can come up with a plan that works for all Americans. Paul, please abandon the gamesmanship! Let's go to work for meaningful tax relief for all Americans, to quit the politics of envy.

WELLSTONE: J.D., do you know that the $225 billion in education that Tom Harkin and I have over 10 years is one-third of the tax cuts that go to the top 1 percent under President Bush's plan? What do you think most people in the country are for?

And second of all, we do have earned income tax credit. That's one of the best things that Clinton administration did. In fact, Ronald Reagan originally supported it.

But that's not the point. What I said, unfortunately, is irrefutable, which is right now, in the president tax cuts, not one dime goes to one-third of the children in America. Not one dime goes to 50 percent of African-American children. Not one dime goes to 57 percent of Hispanic children. If you want to help children, you would have a refundable child credit. That's just a fact!

HAYWORTH: The politics of division. The politics of division...

WELLSTONE: That's just a fact!

HAYWORTH: ... and class envy, playing that card very well, Paul. You ought to be ashamed...

WELLSTONE: See, see, people in the country and people in Minnesota...

HAYWORTH: The fact is, people understand very simple notion, keeping more of their hard-earned money. People who work hard and pay taxes deserve to pay less and need a real relief...

WELLSTONE: J.D. wants the people in Minnesota -- especially Minnesotans, the people in the country -- my good friend J.D., whom I like, he calls it the politics of division, because I challenged these priorities.

But J.D., listen: you know, I don't represent pharmaceuticals companies, and oil companies, and tobacco companies. They got representation. I try to represent the rest of the people in the country, and the vast majority of the people in the country are interested in fair taxation, and they are interested in investing in education and kids. That's a fact.

PRESS: I want to move on from the tax cut to how we will pay for it, Congressman, and it was a big mystery until this week, when we see the budget first time. Julia's got a copy of it over there, and low and behold a lot of the cuts to pay for this tax cut, come from the Department Of Health and Human Services.

Where? Health care for kids and health care for the uninsured. I want to show you just a list of the cuts. Among the cuts at HHS include: Money for child care -- big cuts -- training doctors in children's hospitals, money to prevent child abuse, money for the early learning fund, health care access for the uninsured.

I mean, I thought, Congressman, this was the administration that was going to leave no child behind. They are paying for this tax cut, on the backs of the kids of this country.

HAYWORTH: No they are not.

PRESS: Right there.

HAYWORTH: Bill -- no they're not. You notice you didn't quantify with any amounts what you are talking about. PRESS: I can.

HAYWORTH: In Washington lexicon a cut is a decrease in perceived increases in spending. And woe be to anyone who holds the line on a freeze and a flexible freeze with responsible spending. When you talk about those programs, you are talking about a bloated bureaucracy that doesn't get the services.

We can serve people better and more effectively, and just as the best social program in the world is a job, the best help for every American family is tax relief, Bill, not a centralized Washington bureaucracy deciding to take your time and your treasure and redistribute it.

(CROSSTALK)

PRESS: But you know, Congressman, with all do respect...

WELLSTONE: J.D., Bill, Bill you'll want to know this. J.D., your colleagues in the Senate, Senate Republicans, joined Senator Dodd and I and restored funding for all those programs today on the floor of the Senate. Good for them. They showed compassion.

HAYWORTH: Oh, and of course the implication is you can't be compassionate unless you spend vast amounts of money. That's an interesting thought, Paul.

(CROSSTALK)

PRESS: Well, look, Congressman, I've got to come back to you on this. There's one program, it's not just cut a little bit, it's eliminated. There's a program called this early learning for children, for preschoolers to get them ready for kindergarten. Do you know who sponsored it? Senator Ted Stevens, Republican from Alaska. When Bill Clinton signed the bill he said, "I'm looking forward to Laura Bush being a big advocate of early childhood education."

I guess she is, but George isn't, is that the story? Eliminate the programs.

HAYWORTH: Just to understand how much duplication we have, isn't there a program still, called Head Start that we continue to substantially fund? There's duplication, it makes a great point in feigned outrage, but the fact is you have a program that's worked for years called Head Start that President Bush is putting more money in, to make sure no child is left behind. The difference is you worry more about federal programs in Washington than real people out in the rest of the country.

PRESS: Senator Ted Stevens sponsored the legislation, Congressman, I did not, he's a Republican.

HAYWORTH: And I bet he will be happy rework it within the framework of Head Start with more money going there.

WELLSTONE: But that program today, Bill, you'll want to know, that the Republicans, Senate Republicans, restored that program -- good for them -- and on Head Start, J.D., early Head Start, ages one and two, very critical, is funded at a 3 percent level today. Head Start four and five year olds -- three and four year-olds, excuse me, is funded below 50 percent.

HAYWORTH: One and two-year-olds can't be with their parents. That's very insightful, very insightful, Paul.

PRESS: And that's got to be the last word. Congressman and Senator, we got the two houses together in a good lively debate. We thank you both Senator Wellstone and Congressman J.D. Hayworth.

Well, Julia Reed and I will just juggle up the numbers, we'll come up with a budget that makes sense in our closing comments. We will be right back.

(COMMERCIAL BREAK)

REED: Bill, Congressman Hayworth is right. The Senate -- these guys in the Senate are just playing games, they're fiddling around trying to embarrass Bush, trying to shoot him down when the economy going down the tubes. They already wasted two weeks on that homage to John McCain, the campaign finance bill is going to struck down in the courts in the first place. They need to get on with it. The American people are waiting to be able to spend their money. And not just the rich ones.

PRESS: No, no, no. You have two houses. You've got one of them is just like puppy dogs, anything W wants, they'll go right away and endorse it. And you have the Senate, even Republicans, that are stepping back, they're saying take a look at this...

REED: Hurry.

PRESS: When they look at it they say -- that's all we need baby -- When you look at it they say this thing does not make sense.

You know what, Julia, this tax is dead, this tax cut is dead.

REED: It is so not dead, that miracle is going to come through any minute now.

PRESS: Don't hold your breath. All right, from the left I'm Bill Press. Good night for CROSSFIRE. I will see you later in "THE SPIN ROOM."

REED: And from the right, I'm Julia Reed. Please join us again tomorrow night for another edition of CROSSFIRE.

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