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CNN Live At Daybreak
House Budget Committee Meets Today
Aired September 11, 2001 - 07:20 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.
CAROL LIN, CNN ANCHOR: In other matters today, the House Budget Committee meets in about two hours, trying to keep one step ahead of a faltering economy and a president criticized for dealing with it inadequately.
Congressional Republicans are putting together spending cuts in case they're needed to show support for Social Security.
With more on President Bush's priorities in the current battle of the budget, we go to CNN's John King.
(BEGIN VIDEOTAPE)
JOHN KING, CNN CORRESPONDENT (voice-over): The president's strategy for now is to watch and listen.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm going to Florida today.
KING: Mr. Bush had hoped the economy would get a jolt from his big tax cut and the Federal Reserve's interest rate cuts. But many nervous Republicans in Congress say it is time to do more.
TRENT LOTT (R-MI), MAJORITY LEADER: He'll have to look at these other options and I think it's important that he hear from others what we recommend in the process.
KING: One idea gaining steam is a temporary cut in Social Security payroll taxes. That would put more money in workers' pockets immediately, but also mean less money in the Social Security Trust Fund down the road.
ROBERT REISCHAUER, URBAN INSTITUTE: It would undermine one of the long run objectives of policy right now, which is to strengthen the Social Security system so that it can pay benefits to the baby boomers when they retire.
KING: Cutting capital gains taxes is another idea.
LOTT: It will clearly cause a growth in the economy, it always does. And as an aside, it brings in more revenue to the government.
KING: But Democrats say cutting capital gains taxes would, for the most part, benefit businesses and wealthy investors who would love the chance to argue that the president's first instinct in a tough economy was to help the rich.
SEN. HARRY REID (D), NEVADA: We want there to be a formula to get us out of this mess. Any one thing is not going to do it. It's not, you know, we can cut spending. That's not going to do it. We can lower taxes. That's not going to do it.
KING: One urgent Bush priority is keeping a promise not to tap the Social Security Trust Fund to pay the government's bills.
(on camera): Spending cuts likely will be necessary to keep that from happening in the current fiscal year, which ends September 30, and the administration is in negotiations with key members of Congress. There's also talk about a budget rule that would automatically force spending cuts next year, if necessary, to keep that Social Security money off limits.
John King, CNN, the White House.
(END VIDEOTAPE)
LIN: With more on President Bush's priorities in the current battle of the budget and on the state of the economy, we're joined by his secretary of commerce, Don Evans, this morning.
Good morning Mr. Secretary.
DON EVANS, COMMERCE SECRETARY: Good morning, Carol. How are you?
LIN: Very well. Thanks for joining us this morning.
EVANS: You bet.
LIN: Let's start with the very beginning. The tax cut has been passed, the checks are still going out. What other ammunition does President Bush have right now to stimulate this economy?
EVANS: Well, the national energy plan that he presented to Congress this last spring, Carol, needs to be passed. I mean the president, when he took office in January of 2001, he talked about tax cuts first. He talked about a national energy plan. You pass a national energy plan, that will bring down energy prices. That will stimulate the economy. That will put more dollars, more disposable income in the hands of the American people.
Also trade promotion authority, which gives the president authority to negotiate trade agreements all around the world. When I talk to American businesses across America, they tell me how important it is that we open up markets for them around the world. There are 130 free trade agreements in the world today. America is only party to two of those.
So those are two initiatives, the national energy plan as well as trade promotion authority, that are still in Congress that needs to be passed. LIN: Mr. Secretary, for all intents and purposes that is a long and winding road for many Americans who are sitting down to breakfast and watching themselves lose their jobs and watching their portfolios go down. In terms of immediate relief, would you recommend, for example, a cut in the capital gains tax?
EVANS: Carol, we'll continue to watch these numbers very closely. The president is very concerned about the economy. He's very concerned about the rising unemployment rate. He will continue to listen to his economic advisers. They will continue to present options to him, ideas to him as to ways to further stimulate this economy.
As you've mentioned, the tax cut rebates are still going out. And so are those rebates helping the economy? You bet they are. How much? It's hard to tell. But once it...
LIN: But Mr. Secretary, I'm really trying to pin you down on some specific ideas that Republicans on the Hill are talking about, for example, a cut in the capital gains tax. Right now it's, if you sell a stock and you make a profit and you're in the highest tax bracket, that's a 20 percent tax that you pay to the federal government.
By lowering that the theory is that you get people to unload some of their stocks, take some profits, stimulate the economy and the federal government gets some money to boot.
EVANS: Carol, the president will remain open-minded to these ideas. The president is a good listener. He'll continue to listen. He's an extraordinary leader. He'll lead this economy back to recovery. He'll lead this economy back to the growth rates that are acceptable to him, which are in the 3 1/2 percent range.
We're not there now. The rates we're seeing now are unacceptable. But the specifics, it's just he hasn't made a decision yet.
LIN: What about reducing taxes on payroll?
EVANS: Again, he'll be open-minded. I mean, you know, there's a whole array of ideas, I'm sure, that will be presented to him. Those are a couple of them. There will be others. He'll consider those. He'll talk to and listen to not only his advisers, he'll talk to the leadership on the Hill, make decisions on down the road based on how the economy looks at the time. We have more important data that will come out this Friday. More data will continue to come out on the economy in the weeks and months ahead and he'll make decisions at the appropriate time.
LIN: Are you concerned that Alan Greenspan is listening as well? Should he have moved more quickly in interest rate cuts and should he move quickly again?
EVANS: Well, the chairman has done a terrific job. I mean interest rates have come down some 300 basis points over the last seven or eight months...
LIN: But to little effect.
EVANS: ... moved from 6 1/2 percent to 3 1/2 percent. You know, the -- I'm going to -- you know, the chairman has a good sense of this economy and I'll leave it to him to decide where interest rates should be.
LIN: Donald Evans, it sounds like a lot of decisions still to be made by this administration.
Thanks so much for joining us this morning.
EVANS: Thank you, Carol.
LIN: Don Evans, secretary of Commerce Department.
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