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CNN Live Saturday

Congress Approves Tax Cut Bill

Aired May 26, 2001 - 13:00   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.
DONNA KELLEY, CNN ANCHOR: It is all over but the signing: The Senate has cast the $1.35 trillion tax cut that was approved earlier today by the House. The final tally in the Senate was 58-33. Now, once it's signed into law, rebate checks should be coming in the next several months. Individual taxpayers would get $300 dollars, single parents, $500, and married couples, $600.

For more, let's go to CNN's Jonathan Karl on Capitol Hill.

Hi, Jon.

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Hey Donna.

And, you know, every single tax rate will go down; everybody who pays taxes will see their income tax rate reduced. The top rate, which had been at 39.6 percent, will eventually get all the way down to 35 percent and, effectively, be even closer to 33 percent because, in this tax bill, there were also things done to personal exemptions for people in the upper end of the income scale to make their tax rates effectively lower. The lowest tax bracket will go from 15 percent to 10 percent.

Now, many of these tax reductions -- although you will get that rebate check this year, many of the reductions will take many years to phase in. There's also an elimination of the estate tax, but that elimination actually does not happen for a full 10 years.

Nevertheless, Republicans consider this a major victory -- a tax cut almost as large as the tax cut proposed by the president. And they were certainly happy about it when it passed just a short while ago.

(BEGIN VIDEO CLIP)

SEN. TRENT LOTT (R-MS), MAJORITY LEADER: We held the line, and we got this job done. I'm very proud that the Senate has acted in this way. And let me say this, too: No matter who the personalities may be in various and sundry positions, we can do this again and again.

SEN. CHARLES GRASSLEY (R), IOWA: Today the message to taxpayers is this: Substantial tax relief is on the way; the government will ease its grip on your wallet; and, most importantly, the people of this country that make this country the greatest country in the world, you all deserve it.

(END VIDEO CLIP)

KARL: All but two Republicans voted in favor of the tax cut. The two that voted against it were John McCain of Arizona and Lincoln Chafee of Rhode Island. But there were a dozen Democrats that joined with the majority of Republicans to vote in favor of this tax cut.

But despite the fact there were a dozen Democrats doing that, the democratic leadership came out adamantly opposed to this tax cut from the beginning, and warning of dire consequences for the future.

(BEGIN VIDEO CLIP)

SEN. KENT CONRAD (D) NORTH DAKOTA: You remember several years ago the Republicans tried to add a 13th month to the calendar to disguise the cost of a tax bill they proposed then. What they have done is graduated to a whole new level of accounting gimmickry to disguise the full cost of this tax bill.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: This was confrontational politics. This was an effort on the part of the administration to peel off Democrats. I don't think that is the model of bipartisanship we really want.

(END VIDEO CLIP)

KARL: Now, this was, certainly, a victory for Republicans. But they looked at that victory with some apprehension about the future because when Congress returns from its Memorial Day recess next week -- the week after next, Jim Jeffords of Vermont will leave the Republican Party, become an independent, turn over control of the United States Senate to the Democratic Party. Republicans know that this could be one of their last victories unless they can really get over and get some democratic support. Democrats will be able to have much more power as -- using their control of the Senate to thwart the Republican agenda.

So they're looking at that apprehensively. And I also talked to Tom Daschle just a short while ago about how he assessed this week. I said to him, Look, you had a situation where you lost on the tax cut, but how would you assess the week overall? He laughed, knowing the Jim Jeffords story. He said, look, you win some, you lose some.

In this case what the Republicans won this week was a major tax victory; but what the Democrats won was control, ultimately, of the United States Senate -- Donna.

KELLEY: Jonathan Karl on the Hill, thanks very much.

And for the view from the White House, let's go to our Kelly Wallace there -- Kelly.

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Well, Donna, no surprise: the White House hailing this, really, as a major victory for the American people. The president putting a $1.6 trillion tax cut as the centerpiece of his presidential campaign and saying it was going to be one of his top priorities in the White House.

Of course, the president not getting everything he wants; having to settle for $1.35 trillion. But this White House believing the president getting much, much more than anyone even predicted, probably as many as -- as much as just about a year ago.

Now, there's a lot of activity at the White House; that is because the president is coming back here. He will be leaving Camp David and coming here to the White House to make a statement about two hours from now. We are told the president will want to talk about what he views as significant tax relief for the American people. He will also want to, aides say, congratulate the democratic and Republican lawmakers who helped make this possible.

The president has been on the phone talking to a number of lawmakers this morning. He reached out to senators Baucus and Lott and Grassley. Also, he spoke with House Speaker Dennis Hastert, and we understand he was trying to reach out to Congressman Bill Thomas, the chair of the House Ways and Means Committee. One aide saying this is a shared success, and a lot of people deserve credit for this.

Last night the president did have a statement that was released by the White House after the House and Senate lawmakers reached a compromise. In that statement the president said this tax cut would give a boost to the economy. The president saying, quote, "As a result of this landmark tax relief agreement, the American taxpayers will have more money in their pockets to save and invest and the economy will receive a much needed shot in the arm."

The president continuing: "I commend the members of the House and Senate, Republican and democratic alike, who made this happen. Tax relief is a centerpiece of our American agenda, and I look forward to signing it into law."

Now, the president will not be signing it into law today. He had asked House and Senate lawmakers to get a bill to him by Memorial Day, but, the White House saying the president will likely sign this the week of June 5 to have democratic and Republican lawmakers with him -- those lawmakers heading off for the Memorial Day recess.

And then, Donna, one final point: There is a bite of irony here, because this victory for the White House also may have, in some way, contributed to what Republicans view, definitely, as a major disappointment, and that is the defection of Senator Jim Jeffords from the Republican Party. Senator Jeffords citing, in part, the president's push for his budget and his $1.6 trillion tax cut plan as indications that his moderate views were out of sync with this White House and with the Republican Party.

And, of course, as Jonathan just noted, with the senator's defection, Democrats now control the Senate and, obviously, the president will have to work much, much more with Democrats in the Senate in order to get his agenda passed -- Donna.

KELLEY: Talking about that and how the agenda and the power changes now, what is the strategy, Kelly? Even some of the Senate Democrats are saying, now, on this energy policy that they want to work on, saying that that needs a lot of work before it will get passed.

WALLACE: Well that is definitely one area that will need a lot more work, according to those Democratic lawmakers.

Interestingly, the White House saying its strategy really isn't changing. They're saying the president's agenda will not change. The president will keep fighting for that agenda; and that includes the president's energy plan that was sent up to Capitol Hill about a week ago.

The White House saying publicly and privately that it will continue doing what it has been doing: reaching out to Democrats as well as Republicans. But this White House definitely knowing Democrats now hold the cards in the Senate when it comes to what legislation actually gets to the Senate floor and when.

And so this White House will have to be doing much more reaching out. The president did talk with Senator Daschle two days ago, I believe, and they are likely to meet when the Senate returns from its recess.

So, again, the message is the agenda won't change, but the White House will have to do more reaching out to Democrats -- Donna.

KELLEY: Kelly, thank you; Kelly Wallace at the White House.

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