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CNN Live Saturday
Congress Passes $1.35 Trillion Tax Package
Aired May 26, 2001 - 17:00 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.
STEPHEN FRAZIER, CNN ANCHOR: After months of partisan debate, Congress today approved the nation's biggest tax break in a decade. In a rare weekend session, both houses of Congress passed a $1.35 trillion compromise bill. The 10-year plan provides a refund to taxpayer, it drops every tax bracket, eliminates the estate tax, reduces the marriage penalty and doubles the child tax credit.
Mr. Bush praised today's vote. Tax relief had been a cornerstone of his campaign. Details now from CNN's Kelly Wallace at the White House -- Kelly.
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Stephen, well, the president didn't get everything he wanted. As you know, he was pushing a $1.6 trillion proposal, and the House and Senate voted on a $1.35 trillion plan. Still, the president hailing this as a victory for the American people. This, his first major legislative accomplishment, and it also comes after his administration suffered a definite setback with Senator Jim Jeffords of Vermont deciding to leave the Republican Party, and that Democrats will now take control of the Senate.
And that is why Mr. Bush seemed to be putting forward another message today, and that is this tax cut should serve as an example of how Republicans and Democrats can work together to get things done. Now, Mr. Bush interrupted his Memorial Day weekend at Camp David, the presidential retreat at Camp David to come back to the White House. He appeared in the East Room, just about hours ago, joined by a so- called tax family, the Petersons of Richmond, Virginia. Mr. Bush often highlighting middle class families to show how his plan would help them.
The president is saying tax relief is the right thing to do for the American people and the responsible thing to do for the economy. And then, he hailed this as an historic day.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNTIED STATES: Today, for the first time since the landmark tax relief championed 20 years ago by President Ronald Reagan and 40 years ago by President John F. Kennedy, an American president has the wonderful honor of letting the American people know significant tax relief on the way.
(END VIDEO CLIP) WALLACE: The president then congratulated the Democratic and Republican lawmakers who he said helped make this day possible, even naming a few. He also saluted the soon-to-be majority leader of the Senate, Senator Tom Daschle, saying that Senator Daschle allowed the majority of the Senate, the will of the majority of the Senate, to go forward even though Senator Daschle disagreed with this tax cut.
Senator Daschle has a bit of a different perspective. He says that this administration didn't engage in bipartisanship, that it basically just tried to peel away some Democrats to get its plan through. So, while the president's message today is that he has been listening and working with Democrats, Democrats say he better listen and work with them a bit more, or else he won't enjoy the success he is feeling today -- Stephen.
FRAZIER: Kelly, you mentioned the president didn't get everything he wanted, you mentioned the numbers there, the size of the tax cut, what else had he originally proposed that he didn't get finally?
WALLACE: One other key aspect. The president wanted to see the highest income tax bracket reduced from 39.6 percent down to 33 percent. The version in the House and Senate that passed today basically reduces that highest income tax bracket down to 35, instead of the 33 the president put forward.
Also, the administration certainly wanted to see some of these tax cuts phased in sooner, a lot sooner. For example, the death tax, or the so-called tax on estates, won't be fully phased in until 2010. Still though, Stephen, the administration looking at this as pretty much almost everything the president wanted, and certainly the administration wanted to see refund checks going out in the mail, and taxpayers will get checks as early as August and September, this summer.
FRAZIER: It's a complex package. Kelly, thank you for walking us through it. At the White House, Kelly Wallace.
That compromise package was hammered out during a late night session Friday between House and Senate committees. Some in Congress say the bill's passage is proof positive bipartisanship is alive and well on Capitol Hill.
(BEGIN VIDEO CLIP)
SEN. CHARLES GRASSLEY (R-IA), FINANCE CHAIRMAN: This is a bill that Republicans can be proud of, Democrats can be proud of. It's a victory for the president.
(END VIDEO CLIP)
FRAZIER: But as CNN's Jonathan Karl reports now, tax relief became a reality only thanks in part to one key group, moderate Democrats.
(BEGIN VIDEOTAPE) JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Republicans and their moderate Democratic allies were ecstatic about their victory, the largest tax cut in 20 years, and one that will send rebate checks to approximately 95 million taxpayers this year.
SEN. TRENT LOTT (R-MS), MAJORITY LEADER: This is high noon on a Saturday, Memorial Day weekend, we're here. And we're just completing a vote. We've been doing our work, and I'm very proud of the Senate.
KARL: The Treasury Department has prepared to start sending the checks out this summer, $300 for individuals, $500 for single parents, $600 for married couples. The bill also reduces income taxes for all taxpayers, slashing the lowest rate from 15 percent to the 10 percent for the first $6,000 dollars of an individual's income, effective this year, and reducing the top rate from 39.6 to 35 percent for the highest income taxpayers by the year 2006.
The tax cut will also eliminate the estate tax, but not completely until the year 2010. It will reduce the so-called marriage penalty starting in 2005, and doubles the child tax credit by the year 2010, making it refundable for low-income people who do not pay incomes taxes.
Democratic leaders said the true cost of all those tax cuts is much greater than the 10-year, $1.35 trillion price tag on the bill.
SEN. KENT CONRAD (D), NORTH CAROLINA: What they have done is graduated to a whole new level of accounting gimmickery to disguise the full cost of this tax bill. Over the 11 years covered by what we have done today, the true cost is $1.7 trillion.
KARL: All told, 28 Democrats in the House and 12 Democrats in the Senate voted for the bill, but most Democrats agree with the assessment offered by Joe Biden as he left Capitol Hill after the vote.
SEN. JOE BIDEN (D), DELAWARE: It went the wrong way from my perspective. We just passed a gigantic tax cut, which will make it hard to spend money on education for him.
KARL: For their part, Republicans said the tax cut would take money away from Democratic lawmakers they say are addicted to spending.
REP. DICK ARMEY (R), MAJORITY LEADER: The addicts are going to have to take the cure. We're no longer going to get stoned on other people's money.
KARL (on camera): Republicans relished their tax cut victory with an apprehensive look to the future. They know full well when Congress returns from its Memorial Day recess, Jim Jeffords will officially leave the Republican Party and turn over control of the Senate to the Democrats.
Jonathan Karl, CNN, Capitol Hill.
(END VIDEOTAPE)
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