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Taxing Times for President Bush

Aired June 21, 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.
TUCKER CARLSON, CO-HOST: Tonight: taxing times for President Bush? Despite delivering on a $1.35 trillion tax cut, a new poll shows Bush's popularity going down. Will the soon-to-be-mailed tax rebate checks turn that around?

Plus, why are Democrats making such a fuss over an IRS letter telling you about your refund?

ANNOUNCER: Live from Washington, CROSSFIRE.

On the left, Bill Press. On the right, Tucker Carlson. In the CROSSFIRE: Democratic Congressman Jim McDermott from Washington state, member of the Ways and Means Committee, and Republican Congressman Asa Hutchinson of Arkansas.

CARLSON: Good evening and welcome to CROSSFIRE. George W. Bush's $1.3 trillion tax cut is now law, but that doesn't mean the president has stopped selling it. During a trip to the South today, Bush tried to remind voters why the tax cut matters.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: For the first time in a generation, we've got historic, across-the-board tax relief, because we understand how hard the people of Alabama and the people of America are working.

(END VIDEO CLIP)

CARLSON: You may hear more speeches like this over the next few weeks. A new poll shows Bush's approval rating dropping. Democrats, meanwhile, are accusing the White House of manipulating the IRS for political gain. Millions of voters will soon receive a letter alerting them to forthcoming refund checks. Democrats say it sounds like a Bush campaign mailing.

The tax cut has passed. The politics have not. Faithfully holding down the left tonight, Democratic strategist Kiki McLean -- Kiki.

KIKI MCLEAN, GUEST CO-HOST: Thanks for having me here, Tucker.

Congressman, let's just start with this letter to the IRS. Now, I think we would all have to agree that this letter is about to go out in the mail, and let's tell folks what it says. Let's show them what it says at the very top of this letter.

This letter reads: "We are pleased to inform you that the United States Congress passed and President George W. Bush signed into law the tax bill which provides long-term tax relief for all Americans who pay income tax."

It sounds to me like this may be the most expensive taxpayer- funded piece of direct mail in American history. This has a $22 million to $30 million price tag, to send out a notice to tell people they're going to see something again in another month or two. Would you support this kind of effort?

REP. ASA HUTCHINSON (R), ARKANSAS: Well, Congress, whenever we pass a tax law, had language in there that directed the IRS to provide this information. It seems unusual to me that anyone would complain about getting the taxpayers information, and I think they need to know exactly what is going to happen down the road, what they may or may not get, how it is calculated. If you go through the rest of that letter, it show how it is calculated. It shows it on the back. There is no party affiliation mentioned anywhere in that letter.

MCLEAN: This could not have been put in the envelope with the checks to explain to them when it arrives, so we could have saved all that postage?

HUTCHINSON: I think that we want to avoid the confusion that's out there it's only people who actually pay taxes...

MCLEAN: You want to avoid the confusion, of you want to...

HUTCHINSON: ... that would get the refund, and we don't want...

(CROSSTALK)

MCLEAN: You want to avoid confusion of you want to get George Bush a lot of credit? Admit it, this is much more like a campaign...

(CROSSTALK)

HUTCHINSON: ... information that is very important to get out to them. It's like -- complaining about it is like saying the picture of the president should not be in the post offices. Obviously, the president signed the bill, Congress passed it, and the public needs to know what they are going to get.

CARLSON: You know, congressman, there are almost 100 million of these checks being sent out to American taxpayers, most of whom get a ton of junk mail that looks just like it. They get Publisher's Clearing House awards, the big phony checks for $1 trillion, and it strikes me that an IRS letter alerting them, that gee, don't throw this away, don't rip it up, don't toss it, open it, get your money -- is the most sensible, possible thing to do. Unless, of course, you are against giving people their $600. Is that the real motive here? REP. JIM MCDERMOTT (D-WA), WAYS & MEANS COMMITTEE: Well, it sounds to me like they think the voters are stupid. Here they are, there are 40 million people who aren't going to get a penny, and these guys are going to send a letter to them and tell them: "We're sorry, you aren't going to get any tax cut"? I mean that is -- if that's a campaign piece, it's a stupid campaign piece.

If you get one and you are not going to get a check, what does that mean? If you are going to get a check, if you are one of the 1 percent at the top who are going to get an average of $53,000, that's one thing. If you're at the bottom 20 percent, and you're going to get an average of $60, that's going to be an interesting letter, because they have been saying $500, $600 for everybody, and the people at the bottom, the lower 20 percent, are only going to get $60.

CARLSON: Congressman, I don't think anybody is going to get a check in the mail next month for $53,000. But look -- I mean, the IRS is finally doing something right. Chuck Schumer said today, this letter will tarnish the reputation of the IRS. That is -- I think you'll admit -- the single most ludicrous statement uttered by a senator this week. Tarnish the reputation of the IRS? Here's IRS, helping people!

MCDERMOTT: One of the real problems we're creating here -- and they started it in the last session -- these guys don't like the IRS, and they wanted to change it all.

CARLSON: Nobody likes the IRS!

MCDERMOTT: Nobody trusting it, and then what are you going to have for enforcement to collect the taxes? What you are setting up is what you get in Italy and what you get in France, where it's an indoor sport to cheat, and what we're doing is diminishing and turning it into a political machine.

CARLSON: By telling people not to throw the check away when it arrives, you're turning the IRS into a political machine? How does that work?

(CROSSTALK)

CARLSON: How many checks do you get that say: "Congressman McDermott, you have now won $4 million?"

MCDERMOTT: It says "U.S. Government" across the top of it. Everybody has gotten their IRS check back. They know what that looks like. This is going to be another one just like it.

(CROSSTALK)

MCLEAN: This sounds like it's absolutely direct mail. It ought to be coming out of the RNC and not the IRS. And I guess that if you want to give George W. Bush credit, then you ought to make sure that Republicans who are slashing budgets, like your own governor, Mike Huckabee, in the state of Arkansas, who slashed spending on libraries 73 percent -- there are now signs in public libraries in Arkansas that explain that the cuts are thanks to Mike Huckabee -- so I think it's important that taxpayers there know it, too.

HUTCHINSON: Well, of course, the whole issue there is that we are putting thousands of dollars each year as increase in teachers' pay, is what Governor Huckabee was doing.

MCLEAN: Well, they're also going to having a shrinking state budget. The National Governors' Association has put out a report that you're going to have a shrinking state budget because of the estate tax activity that's going on.

HUTCHINSON: Let's put this in context. What's important about putting money back in taxpayers' pocket is that we are going to boost the economy, people are going to control their own spending, they are going to be able to help cover some of those expensive fuel bills, which has really hurt Arkansas.

And if we boost the economy, then the state revenues will pick up. Ours is a sales-tax dependent state, and the economy is going to move on. What we don't want to have happen is to stagnate the economy, and I think this tax cut -- for one, it's the right thing to do, but also it will help our economy as it has done with the Kennedy tax cuts, the Reagan tax cuts and the Bush tax cuts.

MCLEAN: Well, let's talk about these tax cuts. I happen to believe that George Bush pushed this tax cut because of -- for political benefit, and not economic growth or strength. I think it looks like "The New York Times" actually says now that that's the case. His approval ratings are dropping.

And in fact, we know that governors are having a hard time with it. And let's take a look at what his own brother said in a letter to legislators in his own state and what it was going to do to his budget in the state: "While I support the eventual repeal of the estate tax, shifting the burden merely allows Washington to spend more while requiring us to spend less."

In other words, these governors across the country -- their budgets are going to shrink because for George Bush's tax plan. They are taking money away from the states! I mean, they're just taking the burden on themselves in the states to pay for this bill, and now his poll numbers are going through the floor, basically.

HUTCHINSON: Well, first of all, it's important to remember that George W. Bush campaigned on a $1.6 trillion tax cut. He is simply doing what the people elected him to do.

MCLEAN: But now it's 1.8. Now we know it's 1.8, saying that in their report today.

HUTCHINSON: It's 1.35 that was over the nine-year period. And then secondly, the states -- the estate tax that they collect is -- they can still have that if they want to. It's about 1.3 percent of their entire budget. We are simply repealing the federal estate tax, as Governor Bush says we should do.

MCLEAN: But congressman, when states lose money, people like Governor Jeb Bush and people like Governor Huckabee in your state are going to have to take money out of social spending, things people care about. Social Security -- not Social Security, but social spending in schools, health care at the state level. That's a problem, isn't it?

HUTCHINSON: State revenues have been growing over 2 percent a year...

MCLEAN: So, nobody is going to have to shrink their budget?

HUTCHINSON: ... and this is a 1.3 percent reduction that they would have to have in the states, because if they lost all of the inheritance tax -- and so, it's a less of a loss than their percent growth in state revenues. The states can, if they want to, enact their own inheritance tax. We are not stopping them from doing that. They have to make their decision. We're aggressive...

(CROSSTALK)

MCLEAN: So, George Bush says that Republican governors have to increase taxes. Way to go!

CARLSON: Now, Congressman McDermott, for eight years Democrats virtually deified Alan Greenspan. He was pointed to as the architect of the Clinton economic miracle, so it's striking -- testimony he gave yesterday, he was asked by Senator Chuck Schumer of New York: "Are you concerned about the tax cuts and the effect they'll have on the economy?"

And he said -- I'm quoting now: "I'm not worried." Do you fell better knowing that Alan Greenspan is sleeping soundly, even though the tax cut is now law?

MCDERMOTT: Alan Greenspan is looking after himself. He's not looking at the bottom of the society.

CARLSON: Turning your back on a god of the Democratic Party!

MCDERMOTT: He was never my god. You might have worshipped him, but the fact is that this tax cut is going to have all kinds of ramifications.

They said it was $1.3 trillion, now the Joint Tax Committee -- that's not Democrats, it's not Republicans, it's both -- say it's 1.8. That money is going to come out of the Social Security money and it's going to come out of the Medicare money. These guys say, "we put the lockbox in there, we protected these things," and now it turns there is a big hole in the bottom of the lockbox.

CARLSON: Is it -- if I can insert facts here quickly: the Joint Committee said over 10 years...

MCDERMOTT: Yes.

CARLSON: ... that was their estimate. But as you know, this package is for nine years, so they are assuming -- hold on -- they're assuming that the tax cuts are going to be re-upped, but they haven't been. They are adding a year on! That's not math. That's magic.

MCLEAN: The president promoted this as 10-year plan, didn't he, Congressman?

CARLSON: But the fact is, it's not.

HUTCHINSON: Congress passed it as a nine-year plan.

(CROSSTALK)

MCLEAN: ... and, Congressman, told the American people that this was a 10-year plan, and in fact we know the price tag gets bigger and bigger. And you know what, maybe that's why "The New York Times" poll says that the American people are becoming less trusting.

CARLSON: I want to see Congressman McDermott here explain how the nine year should be counted as a ten-year plan.

MCDERMOTT: You know what, the polls say that Mr. Bush is falling. The American people have figured out the chicanery of all this light bulb snatching from here and from there and running a tax for five years and stopping it, and starting another one, and the estate tax never gets repealed.

All this talk about it and it isn't until 10 years from now it goes down. So all that stuff, public has looked through it now and they've figured out that this is baloney.

CARLSON: Let me just see if I have this correct, Congressman. I asked you how is it that we can be making estimates on a nine-year tax cut by using ten years, and you say, the polls say people are losing confidence in the president.

MCDERMOTT: The people recognize they played games to get thing through. They had six pounds of taxes they wanted to get into a four pound bag. And so they played all kinds of games with something running a while and stopping, and other things starting, and some things going back into effect and all of that, the people have now figured it out. They say, hey, I'm going to get 60 bucks.

I make under $20,000 and I'm going to get 60 bucks out of this and they are telling me, great, that this is a great thing. I'm supposed to take my 60 bucks out and start the economy. Now 60 bucks is a buck a week. What can buy for a buck a week?

CARLSON: Most taxpayers, as you are fully aware, Congressman, are getting more than 60 bucks. But we will get into the nitty- gritty, the actual numbers when we return in CROSSFIRE in just a moment.

(COMMERCIAL BREAK)

MCLEAN: Welcome back to CROSSFIRE. I'm Kiki McLean, sitting in for Bill Press. We're talking about President George W. Bush's political stall, a growing tax bill, and shrinking approval ratings. With us are Republican Congressman Asa Hutchinson of Arkansas, and Democratic Congressman Jim McDermott of Washington -- Tucker.

CARLSON: Now, Congressman, President Bush is sinking like a stone, you just explained to us in the previous segment, and yet there was another story in the news that didn't get quite as much attention, perhaps, as the page one "The New York Times" poll today, and that is Virginia Four -- the fourth congressional district in Virginia.

Randy Forbes, the Republican, wins by more than 5,000 votes in a historically Democratic district served by a Democrat for 19 years, a district that was won by Clinton twice, in which two Republicans senatorial candidates lost in '98 and 2000. This was a referendum on President Bush and Bush won, didn't he?

MCDERMOTT: If Mr. Bush wants to believe that he is safe because he won Virginia Four, God bless him. He is in trouble all over the country. He can't come to the west coast because of the West he's made of energy.

CARLSON: He was just on the west coast.

MCDERMOTT: He couldn't get a crowd that was friendly anyplace unless they stacked it with Republican operatives. He has made such a mess of our power on the West Coast and it's going to spread across the country. Their refusal to put price caps on energy, all these things are getting him in trouble and he's tearing up the environment.

CARLSON: It's hard to even know where to begin with that statement. First of all, he's been president six months. Your power problems on the west coast have been going on lot longer.

MCDERMOTT: But he could act on them.

CARLSON: Let's get back to Virginia Four. This was a race run on essentially, what the president was running on, Social Security and the budget. And Randy Forbes, the Republican, wins. This race revolved around the president's performance, and the voters, mostly Democrats said, we agree with it, we're electing a Republican.

MCDERMOTT: You know how he won? He lied at the end by saying that the Senator, Ms. Tucker, was on the ballot and she shouldn't be because she voted against requiring people to take the pledge of allegiance to the United States of America. Now there's a Supreme Court that says that's illegal, but they used an illegal ad against her at the end. That's how they did it.

CARLSON: The opponent was not named Ms. Tucker, it was Ms. Lucas, as I remember.

MCDERMOTT: Lucas, excuse me -- Lucas.

MCLEAN: Let's also point out that the man who won this race outspent her two to one on television. Never in the history of Virginia has an African-American woman been elected.

I want to talk about some other politics across the country. We have a huge number of governors' races next year, Congressman: 36 of them to be precise. Twenty-three of them represent seats currently held by Republicans. Now we just spent a part of this show talking about what's happening to governor's budgets as a result of this ridiculous tax plan of George Bush's, the fact that they're going to have to cut spending.

Now, if we know the tax plan wasn't really for middle class families, and clearly now we know it's not for Republican governors or Republican gubernatorial candidates, who's is it for? Who did George Bush do this for? He's going to leave these Republican governors running for reelection and new Republican candidates just hung out to dry in these gubernatorial races next year.

HUTCHINSON: If you remember the tax families that the president had beside him whenever he was talking about this, middle class, they benefit from this, the people of Arkansas, it's certainly not a wealthy state. They are going to benefit from this.

MCLEAN: Like those people going to the libraries right now.

HUTCHINSON: Now you are mixing state politics with our national policy here on our taxes.

MCLEAN: But, Congressman, the governors are saying that state budgets are effected by this federal tax cut.

HUTCHINSON: Well, sure it is. And the most important thing that we can do set good economic policy that spurs our economy on and that creates growth in this country. And the governors know that and the governors will benefit from that.

MCLEAN: Do you think the Republican governors are OK with this right now. none of them are upset with this White House?

HUTCHINSON: There's always going to be, I mean there are some legitimate points about the estate tax, because they don't like to have go back and lose 1.3 percent of their revenue because they might not have the estate tax. But if it's good policy, and I think the Republican governors believe that repealing estate tax is good policy, they will be able to figure that out whenever they have good growth in their state revenues anyway.

What is it important is that we keep this economy going. We talk about poll numbers and I think the president will ultimately have good politics if he adopts good policy. He campaigned on this. If he did not get this through you all would you be talking about how a devastating first six months he's had. He has had success and it's going to pay off.

MCLEAN: Let me ask you a question. In this "The New York Times" poll today, when asked about this tax cut and did they think that's how the money should be spent, over 60 percent of Americans thought it should have gone to things like Social Security and Medicare and not to a tax cut.

Tax cut -- I think roughly 24 if not 28 percent. I mean it seems to me that the positions that George Bush is taking and the actions he's taking do not reflect what the American public want. And maybe that's why his approval number are dropping.

HUTCHINSON: I mean, I read that question, and implicit in the question is that this money should go in, or there's a problem that has to immediately be fixed with Medicare and Social Security. And I think that affected the answers that came in. The fact is, it wasn't told in the question, but that Congress did set aside the Social Security revenues. The Medicare trust funds are not be touched because of this tax relief package going through.

MCLEAN: Then wouldn't you think that -- on all the issues, on the environment, on foreign policy, on energy, barely on the economy, he can't -- he can't break through half of the American public. I mean, there's a ton of numbers.

(CROSSTALK)

HUTCHINSON: Overall, it's 53 percent. It's very similar to where President Clinton was at this time.

MCLEAN: And President Clinton had a much rougher ride for the first six months.

CARLSON: Of his own making, Kiki.

Now, tell me, Congressman, you were going on about how unpopular the president is in the west. But it turns out that the tax bill, in its final version, was voted on by many Democrats, including many from the west, Dianne Feinstein, Max Baucus in the Senate. Lois Capps and Neil Abercrombie, the noted right-winger from Hawaii voted for it. If Bush is so unpopular in the west and this tax bill was such a terrible idea, then why did Democrats from your region vote for it?

MCDERMOTT: I think some of them are going to rue the day, frankly, because the fact is that we had -- we've been through this once before, with Reagan. From '80 to '86, they whacked the taxes, and the Democrats spent from '86 to '94 digging us out of it. And now we're back, doing the same thing again, making tax cuts. And we're going to take control and have to dig ourselves out of it. These guys don't expect to be in. That's why he's probably left the House of Representatives, because he didn't want to be here to have to dig their way out of what happens in two years or four years.

HUTCHINSON: Randy Forbes won, the Republican...

MCLEAN: I think Randy Forbes won because he (UNINTELLIGIBLE).

(CROSSTALK)

CARLSON: But you're making two contrary arguments. You're saying, essentially, that it's bad politics but people did it anyway.

MCDERMOTT: Yes.

CARLSON: So if it -- but it's also bad economics, so what possible motivation would Neil Abercrombie, the ponytailed Democrat from Hawaii, have for voting for this? Just self-destruction? MCDERMOTT: I can't answer for anybody else, but I can tell you that we are going to have real problems, and the newspapers are telling you and the polls are telling you. The people see it. They know that some of these people...

CARLSON: The majority of Americans support the president.

MCLEAN: Tucker, the reality is, you also have the Republican...

(CROSSTALK)

CARLSON: I know what the reality is.

MCLEAN: You had the Republican machine out there, threatening ads in some members' districts, some ads went up, and so there was political pressure.

CARLSON: The old conspiracy. OK, well, on that -- on that dark and stormy note, we'll have to leave it.

Congressman McDermott and Congressman Hutchinson, thank you both very much. Kiki and I will return in just a moment to wrap it up in our closing comments. We'll see you in just a moment.

(COMMERCIAL BREAK)

CARLSON: Tax cuts work, Kiki. They work for the economy and they work politically, which is why so many Democrats voted for them. And that's why Alan Greenspan, the god of the Democratic Party, now supports the tax cut.

MCLEAN: You're the one who worships. The man does a job, and he does a good job. The reality is...

CARLSON: He does a good job? Then why is he in favor of the tax cut?

MCLEAN: You believe tax cuts work, until Republican governors are slashing budgets for things that people want in their states, and they are losing races next year.

The reality is...

CARLSON: Nobody has lost anywhere. The only guy -- there's been one race since this has happened, and it was Randy Forbes, was the victor. He's a Republican who supported the tax cut.

MCLEAN: Yeah, who outspent a women candidate two to one who would have been the first African-American woman ever elected in the history of Virginia. So let's talk about the fact that...

CARLSON: Well, none of the things she had going for her worked in the end, because the people in that district, Democrats, supported the tax cut, which is why they voted for Randy Forbes.

(CROSSTALK) CARLSON: That's the poll that matters.

MCLEAN: I think the other person who's got some problems, because even Republicans would say that that is not a bellwether for George W. Bush, and I think "The New York Times" poll today showed that he's got significant problems across the board.

CARLSON: There already was a poll, it was taken in southern Virginia. George W. Bush's tax cuts won that poll.

MCLEAN: Oh, so that's your test for next year -- so Republicans are not going to seats, all right. Well, I think it's a flawed theory on your part. From the left, I'm Kiki McLean. Good night from CROSSFIRE.

CARLSON: And from the right, I'm Tucker Carlson. Join us again tomorrow night for another edition of CROSSFIRE.

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