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Bush Touts Tax Plan to Midwest as Senate Struggles to Pass Bill on Partisan Lines

Aired May 05, 2003 - 15:02   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.


JUDY WOODRUFF, CNN ANCHOR: Tax cuts and your money are the issue today. President Bush told an Arkansas audience this afternoon that his tax cut plan is the right medicine for a sluggish economy. The tax cuts remain stalled in the Senate, largely because several members of the president's own party think the tax cuts are too much, too soon.
For more on the debate and the political stalemate, we join CNN's Chris Burns in Little Rock where the president spoke a short time ago. Chris, the president in his remarks today seemed, as much as anything else, to be putting the pressure on the Senate to give him what he wants.

CHRIS BURNS, CNN WHITE HOUSE CORRESPONDENT: Absolutely, Judy. As the Senate and House appear to be tearing apart his tax plan president is going for the grass roots, trying to light a grass roots rebellion, saying repeatedly during the speech today in Little Rock, Arkansas that people should e-mail and call their representatives.

Standing in front of a banner that says jobs and growth, the name of his tax plan, more than a half trillion dollar tax cut he would like to see over the next decade that would create, he says, at least a million jobs by the end of next year. Keep in mind, by the end of next year that is the presidential election. Very important for him to see that through. The president singling out, among one group here in Arkansas, retirees.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There are 62,000 seniors in the state of Arkansas who pay taxes on dividend income. A lot of seniors rely upon their dividend income in order to live the out years, the remaining years. It's good public policy. It makes sense to let the seniors keep more of their own money by getting rid of the double taxation of dividends.

(END VIDEO CLIP)

BURNS: And that is the crux of the matter, what the president calls double taxation of dividend. After corporate taxes, people get their dividends and they have to pay taxes on that. That is the issue.

Now, the critics say that the main beneficiaries from this tax cut, scrapping that, would be rich investors. The president arguing that the small investors would benefit, although admittedly not as much. That is the crux of the matter, that is the main centerpiece of the tax cut he would like. The president trying to push that through.

Course there's also aspects of it like child tax credit, raising that by $400 to $1,000. Giving small business investors and small business greater tax breaks. That was especially geared toward those he was speaking to today. He met with some of them those today, also pushing that angle as well. But it does appear that his tax plan is in trouble and he's going for the grass roots right now -- Judy.

WOODRUFF: All right, Chris Burns, the president coming off the victory in the war in Iraq. Focusing on the economy. Thank you, Chris.

A little while ago, I talked about the president's proposed tax cuts with two senators on opposite sides of the issue. Republican Jon Kyl of Arizona backs the White House plan. Democrat Kent Conrad of North Dakota opposes the president. I started by asking Senator Conrad about the president's argument that the bigger tax cut and the elimination of the dividend taxes will create new jobs.

(BEGIN VIDEOTAPE)

SEN. KENT CONRAD (D), NORTH DAKOTA: We just fundamentally disagree. Look, I think a stimulus package that would be -- have larger effect this year does make sense, but a very small part of his package has effect this year, only 5 percent.

And yet, the cost of his plan approaches $2 trillion when you take the whole plan. This at a time we're already in record budget deficits and right on the eve of the retirement of the baby boom generation. As Chairman Greenspan has indicated, this policy, because it's not offset by spending cuts, will drive us deeper into deficit and it'll hurt long-term growth, will hurt job creation and I believe for that reason it's a mistake.

WOODRUFF: Well let me bring Senator Kyl in on that point about this stimulus doesn't kick in in the short-term. In other words, Senator Conrad and other's point is the it doesn't do enough to create jobs.

SEN. JON KYL (R), ARIZONA: Well first let me make the point that the fact that Congress won't restrain its spending appetite should not be a reason why Congress would not let American people keep more of their hard earned money. And it's not the president's party that's been on the profligate spending binge.

But secondly, under the plan that we're going to be presenting, most of the relief is in the early years. As a matter of fact, the program won't be $2 trillion. It'll be about $400 billion. It will be over about five years and most of that relief that will create jobs will occur in the first five years.

WOODRUFF: Well, we're talking -- it sounds like we're talking about two totally different things here. Senator Conrad, you just heard Senator Kyl say that it is going to be effective in the early years. And it's nearly as expensive as you say it is.

CONRAD: Well there's no question about the expense. This is what the Congressional Budget Office and the president's own office of management and budget acknowledge.

When the senator says -- suggests we've been on a spending binge, let's just set the record straight. It was Democrats in the '90s that brought spending down, that raised revenue that balanced budgets, that kicked off the longest economic expansion in our nation's history.

The increased spending that has occurred has been entirely bipartisan in the last two years. Virtually all of it, 96 percent, has been through increased defense spending and increased spending for Homeland Security and all of us agreed on those priorities.

WOODRUFF: Senator Kyl, let me just move to the other point here. And "The Wall Street Journal" editorial page pointed this out today. It's not just the Democrats, but it's key moderate Republicans, Senator Voinovich, Senator Snowe, Senator Charles Grassley, the chairman of your Senate Finance Committee who is saying at this point they're not planning to even put the dividend tax elimination into the tax plan.

I mean, so the problem is within your own party as well, isn't it?

KYL: No. If 49 of the 50 votes that we need are on the Democratic side here and they're all saying no, with one possible exception, and only two Republicans are saying no, I would say that the bulk...

WOODRUFF: But the Republicans are in the majority, Senator.

KYL: That's right, by a vote of 51 to 49, as you well know. And if only two Republicans are not willing to go along with the president's plan -- and Chairman Grassley, by the way, is supportive of the president's plan.

So if there are only two Republicans and there are 49 Democrats, then I think it's fair to say that the bulk of the opposition to the president's plan is coming from the Democratic side.

But it is true, as "The Wall Street Journal" said, that 49 Democrats plus two Republicans means you don't have a majority. And that's why Chairman Grassley is trying to find that last vote or two that are needed in order to get as much of the president's program into law as soon as possible.

WOODRUFF: Senator Conrad, it's pretty clear that if the president doesn't get the tax cut he wants he's going to say it's the Democrats who are blame for this weak economy. Aren't you worried at all about that?

CONRAD: Sure. I mean, he has the bully pulpit. He can say whatever he wants and it gets amplified and magnified through the media. But look, I think we've got to be very serious about the economic future of our country. That's a common responsibility. It's not just Democrats, not just Republicans. The hard reality is we're going to run a record budget deficit this year. For the entire rest of the decade under the president's plan, we run massive budget deficits right on the eve of the retirement of baby boom generation.

And the president proposes, in that context, cutting revenue by almost $2 trillion and increasing spending. Look that can only drive us deeper into the hole. That's why Chairman Greenspan says wait a minute, let's think about this, let's not magnify the deficits and the debt. That will hurt economic growth.

(END VIDEOTAPE)

WOODRUFF: And we had to leave it there. Senator Kent Conrad, Senator Jon Kyl talking to me just a few moments ago.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com





Bill on Partisan Lines>


Aired May 5, 2003 - 15:02   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JUDY WOODRUFF, CNN ANCHOR: Tax cuts and your money are the issue today. President Bush told an Arkansas audience this afternoon that his tax cut plan is the right medicine for a sluggish economy. The tax cuts remain stalled in the Senate, largely because several members of the president's own party think the tax cuts are too much, too soon.
For more on the debate and the political stalemate, we join CNN's Chris Burns in Little Rock where the president spoke a short time ago. Chris, the president in his remarks today seemed, as much as anything else, to be putting the pressure on the Senate to give him what he wants.

CHRIS BURNS, CNN WHITE HOUSE CORRESPONDENT: Absolutely, Judy. As the Senate and House appear to be tearing apart his tax plan president is going for the grass roots, trying to light a grass roots rebellion, saying repeatedly during the speech today in Little Rock, Arkansas that people should e-mail and call their representatives.

Standing in front of a banner that says jobs and growth, the name of his tax plan, more than a half trillion dollar tax cut he would like to see over the next decade that would create, he says, at least a million jobs by the end of next year. Keep in mind, by the end of next year that is the presidential election. Very important for him to see that through. The president singling out, among one group here in Arkansas, retirees.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There are 62,000 seniors in the state of Arkansas who pay taxes on dividend income. A lot of seniors rely upon their dividend income in order to live the out years, the remaining years. It's good public policy. It makes sense to let the seniors keep more of their own money by getting rid of the double taxation of dividends.

(END VIDEO CLIP)

BURNS: And that is the crux of the matter, what the president calls double taxation of dividend. After corporate taxes, people get their dividends and they have to pay taxes on that. That is the issue.

Now, the critics say that the main beneficiaries from this tax cut, scrapping that, would be rich investors. The president arguing that the small investors would benefit, although admittedly not as much. That is the crux of the matter, that is the main centerpiece of the tax cut he would like. The president trying to push that through.

Course there's also aspects of it like child tax credit, raising that by $400 to $1,000. Giving small business investors and small business greater tax breaks. That was especially geared toward those he was speaking to today. He met with some of them those today, also pushing that angle as well. But it does appear that his tax plan is in trouble and he's going for the grass roots right now -- Judy.

WOODRUFF: All right, Chris Burns, the president coming off the victory in the war in Iraq. Focusing on the economy. Thank you, Chris.

A little while ago, I talked about the president's proposed tax cuts with two senators on opposite sides of the issue. Republican Jon Kyl of Arizona backs the White House plan. Democrat Kent Conrad of North Dakota opposes the president. I started by asking Senator Conrad about the president's argument that the bigger tax cut and the elimination of the dividend taxes will create new jobs.

(BEGIN VIDEOTAPE)

SEN. KENT CONRAD (D), NORTH DAKOTA: We just fundamentally disagree. Look, I think a stimulus package that would be -- have larger effect this year does make sense, but a very small part of his package has effect this year, only 5 percent.

And yet, the cost of his plan approaches $2 trillion when you take the whole plan. This at a time we're already in record budget deficits and right on the eve of the retirement of the baby boom generation. As Chairman Greenspan has indicated, this policy, because it's not offset by spending cuts, will drive us deeper into deficit and it'll hurt long-term growth, will hurt job creation and I believe for that reason it's a mistake.

WOODRUFF: Well let me bring Senator Kyl in on that point about this stimulus doesn't kick in in the short-term. In other words, Senator Conrad and other's point is the it doesn't do enough to create jobs.

SEN. JON KYL (R), ARIZONA: Well first let me make the point that the fact that Congress won't restrain its spending appetite should not be a reason why Congress would not let American people keep more of their hard earned money. And it's not the president's party that's been on the profligate spending binge.

But secondly, under the plan that we're going to be presenting, most of the relief is in the early years. As a matter of fact, the program won't be $2 trillion. It'll be about $400 billion. It will be over about five years and most of that relief that will create jobs will occur in the first five years.

WOODRUFF: Well, we're talking -- it sounds like we're talking about two totally different things here. Senator Conrad, you just heard Senator Kyl say that it is going to be effective in the early years. And it's nearly as expensive as you say it is.

CONRAD: Well there's no question about the expense. This is what the Congressional Budget Office and the president's own office of management and budget acknowledge.

When the senator says -- suggests we've been on a spending binge, let's just set the record straight. It was Democrats in the '90s that brought spending down, that raised revenue that balanced budgets, that kicked off the longest economic expansion in our nation's history.

The increased spending that has occurred has been entirely bipartisan in the last two years. Virtually all of it, 96 percent, has been through increased defense spending and increased spending for Homeland Security and all of us agreed on those priorities.

WOODRUFF: Senator Kyl, let me just move to the other point here. And "The Wall Street Journal" editorial page pointed this out today. It's not just the Democrats, but it's key moderate Republicans, Senator Voinovich, Senator Snowe, Senator Charles Grassley, the chairman of your Senate Finance Committee who is saying at this point they're not planning to even put the dividend tax elimination into the tax plan.

I mean, so the problem is within your own party as well, isn't it?

KYL: No. If 49 of the 50 votes that we need are on the Democratic side here and they're all saying no, with one possible exception, and only two Republicans are saying no, I would say that the bulk...

WOODRUFF: But the Republicans are in the majority, Senator.

KYL: That's right, by a vote of 51 to 49, as you well know. And if only two Republicans are not willing to go along with the president's plan -- and Chairman Grassley, by the way, is supportive of the president's plan.

So if there are only two Republicans and there are 49 Democrats, then I think it's fair to say that the bulk of the opposition to the president's plan is coming from the Democratic side.

But it is true, as "The Wall Street Journal" said, that 49 Democrats plus two Republicans means you don't have a majority. And that's why Chairman Grassley is trying to find that last vote or two that are needed in order to get as much of the president's program into law as soon as possible.

WOODRUFF: Senator Conrad, it's pretty clear that if the president doesn't get the tax cut he wants he's going to say it's the Democrats who are blame for this weak economy. Aren't you worried at all about that?

CONRAD: Sure. I mean, he has the bully pulpit. He can say whatever he wants and it gets amplified and magnified through the media. But look, I think we've got to be very serious about the economic future of our country. That's a common responsibility. It's not just Democrats, not just Republicans. The hard reality is we're going to run a record budget deficit this year. For the entire rest of the decade under the president's plan, we run massive budget deficits right on the eve of the retirement of baby boom generation.

And the president proposes, in that context, cutting revenue by almost $2 trillion and increasing spending. Look that can only drive us deeper into the hole. That's why Chairman Greenspan says wait a minute, let's think about this, let's not magnify the deficits and the debt. That will hurt economic growth.

(END VIDEOTAPE)

WOODRUFF: And we had to leave it there. Senator Kent Conrad, Senator Jon Kyl talking to me just a few moments ago.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com





Bill on Partisan Lines>