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CNN Live At Daybreak

Bush Makes Strong Declaration on Taxes

Aired January 07, 2002 - 06:41   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 COSTELLO, CNN ANCHOR: In other news this morning, President Bush wraps up his holiday vacation and heads back to Washington today. Back at the White House the first order of business is the economy. Over the weekend, Mr. Bush had a stern warning for Democrats when it comes to taxes. CNN White House Correspondent Kelly Wallace reports.

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KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT (voice-over): One day after President Bush through down this gauntlet --

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PRESIDENT GEORGE W. BUSH: Not over my dead body will they raise your taxes.

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WALLACE: -- his economic team took that message to the airways, vowing to block any changes to last year's tax cut. Equating such moves with tax hikes.

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PAUL O'NEILL, TREASURY SECRETARY: We don't believe raising people's taxes during an economic slowdown is an intelligent thing to do.

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WALLACE: But while some Democrats say they're not supporting a tax increase, they do say everything should be on the table in these uncertain times, including a possible delay of the tax cut.

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SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: It's like having a doctor, you know, that you go to because you're sick say, "Well, there's two things I could do to help you, but one I'm definitely not going to do." That's just not smart.

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WALLACE: Democrats, however, are clearly divided. Twelve Senate Democrats voted for the tax cut.

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SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Over a trillion dollars of that tax cut has yet not gone into effect. My view is that we ought to stay the course.

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WALLACE: On the other side, Democrats who say the tax cut is the main reason the government - which has been enjoying surpluses - will return to deficits over the next several years, leaving less money to fund homeland security and other priorities.

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UNIDENTIFIED MALE: It has made a major contribution to the fiscal deterioration which has occurred.

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WALLACE: The administration's strategy: Let the Democrats appear divided, while Mr. Bush travels around the country touting his economic plan, trying to prevent his sky-high popularity from dwindling away like his father's did due to the economy. But Mr. Bush has now invited comparisons with his father and his pledge more than a decade ago.

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GEORGE BUSH, FORMER PRESIDENT OF THE UNITED STATES: Read my lips, no new taxes.

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WALLACE: A pledge that proved politically costly when he had to break it two years later.

(on camera): The same could hold true if the president is forced to break his, but both parties doubt that will be the case and believe this line in the sand is mainly about Mr. Bush playing hardball to get his agenda passed and to help his party in the November elections.

Kelly Wallace, CNN, Crawford, Texas.

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