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What Goals Each Tax Plan Has

Aired May 06, 2003 - 15:10   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: President Bush is demanding aggressive action to cut taxes and he says he wants that action now. Speaking today to a U.S. Chamber of Commerce meeting in Washington, Mr. Bush said that his tax cut plan would create a million new jobs by the end of next year. Key Congressional committees are working this week on details of the plan, after senators voted to cut its price tag in half.
(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The definition of the right amount is not some theory that's based upon theory. It's based upon the practical application of tax cuts and ought to be based in human terms. The right answer for how big the tax cut ought to be is a million new jobs. That's the right answer and that's the package I submitted to the United States Congress.

(END VIDEO CLIP)

WOODRUFF: Democrats say Mr. Bush's plan will make an already bleak deficit forecast even worse.

There are stark differences among the plans that are floating around right now on Capitol Hill. For instance, the Senate Democratic plan is a 10-year proposal that would cost $152 billion. It includes a $300 tax credit for every working American, plus it calls for $40 billion in direct aid to the states.

The Senate Republican plan, though, would cost $350 billion, and that compares to a price tag of $550 billion for the House Republican plan. Our senior political analyst Bill Schneider joins us now. All right, Bill, what are the issues that distinguish these different plans from one another?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Judy, first and foremost, who gets the tax breaks? The larger plans give more tax breaks to the rich, mostly by eliminating or reducing taxes on dividends. Those plans also include tax cuts for ordinary Americans like a higher child tax credit and elimination of the marriage penalty and that's why they are so expensive. Now the Democratic plan targets the tax breaks to low and middle income taxpayers.

Republicans defend their plans by arguing rich people pay most of the taxes so it's only fair they get bigger tax cuts. Democrats announced -- denounce the GOP plans as "tax cuts for the rich." And that's why we have this odd spectacle of a popular president trying to sell tax cuts to a skeptical public.

WOODRUFF: Bill, what about the price tag at these plans? Is affordability an issue here?

SCHNEIDER: Well you know the price tags as you indicated range from $726 billion over 10 years for President Bush's original plan, to $152 billion for the Senate Democrats plan that they released today. Now that the government has gone back into deficits, big time, cost is an issue. Our polling shows that the worst shape people think the economy is in, the less likely they are to support a big tax cut because they don't think we can afford it.

WOODRUFF: Bill, what about the views on whether or not these tax cuts are going to stimulate the economy and create jobs?

SCHNEIDER: That is the $64 question. Or maybe the $64 billion question. Republicans say cutting dividend taxes will create a stock market boom. With so many Americans now invested in the market, people will feel wealthier and spend more.

But in the end, it all comes down to a four-letter word: jobs. All the tax cut plans are being offered as short-term economic stimulus plans. Which was not their original purpose. Both the White House and the Democrats claim their plans will produce at least 1 million new jobs by the end of 2004, significant year.

But will they? Nobody knows. It depends on several things, like whether giving rich people money to invest or poor people money to spend will have a bigger economic punch. And whether people will actually spend the money or use it to pay off debts.

Right now the economy's growing but so is unemployment. It's a jobless recovery. How can that happen? Because productivity is increasing. If new technologies enabled every worker to produce more, the economy can grow with the same number of jobs. Business cares about productivity. But you know, voters don't really. What voters care about is jobs.

WOODRUFF: One thing we know, Bill, is both sides are pretty passionate about their views. Or I should say the sides are passionate about their views. Bill Schneider, thanks very much.

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






Aired May 6, 2003 - 15:10   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JUDY WOODRUFF, CNN ANCHOR: President Bush is demanding aggressive action to cut taxes and he says he wants that action now. Speaking today to a U.S. Chamber of Commerce meeting in Washington, Mr. Bush said that his tax cut plan would create a million new jobs by the end of next year. Key Congressional committees are working this week on details of the plan, after senators voted to cut its price tag in half.
(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The definition of the right amount is not some theory that's based upon theory. It's based upon the practical application of tax cuts and ought to be based in human terms. The right answer for how big the tax cut ought to be is a million new jobs. That's the right answer and that's the package I submitted to the United States Congress.

(END VIDEO CLIP)

WOODRUFF: Democrats say Mr. Bush's plan will make an already bleak deficit forecast even worse.

There are stark differences among the plans that are floating around right now on Capitol Hill. For instance, the Senate Democratic plan is a 10-year proposal that would cost $152 billion. It includes a $300 tax credit for every working American, plus it calls for $40 billion in direct aid to the states.

The Senate Republican plan, though, would cost $350 billion, and that compares to a price tag of $550 billion for the House Republican plan. Our senior political analyst Bill Schneider joins us now. All right, Bill, what are the issues that distinguish these different plans from one another?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Judy, first and foremost, who gets the tax breaks? The larger plans give more tax breaks to the rich, mostly by eliminating or reducing taxes on dividends. Those plans also include tax cuts for ordinary Americans like a higher child tax credit and elimination of the marriage penalty and that's why they are so expensive. Now the Democratic plan targets the tax breaks to low and middle income taxpayers.

Republicans defend their plans by arguing rich people pay most of the taxes so it's only fair they get bigger tax cuts. Democrats announced -- denounce the GOP plans as "tax cuts for the rich." And that's why we have this odd spectacle of a popular president trying to sell tax cuts to a skeptical public.

WOODRUFF: Bill, what about the price tag at these plans? Is affordability an issue here?

SCHNEIDER: Well you know the price tags as you indicated range from $726 billion over 10 years for President Bush's original plan, to $152 billion for the Senate Democrats plan that they released today. Now that the government has gone back into deficits, big time, cost is an issue. Our polling shows that the worst shape people think the economy is in, the less likely they are to support a big tax cut because they don't think we can afford it.

WOODRUFF: Bill, what about the views on whether or not these tax cuts are going to stimulate the economy and create jobs?

SCHNEIDER: That is the $64 question. Or maybe the $64 billion question. Republicans say cutting dividend taxes will create a stock market boom. With so many Americans now invested in the market, people will feel wealthier and spend more.

But in the end, it all comes down to a four-letter word: jobs. All the tax cut plans are being offered as short-term economic stimulus plans. Which was not their original purpose. Both the White House and the Democrats claim their plans will produce at least 1 million new jobs by the end of 2004, significant year.

But will they? Nobody knows. It depends on several things, like whether giving rich people money to invest or poor people money to spend will have a bigger economic punch. And whether people will actually spend the money or use it to pay off debts.

Right now the economy's growing but so is unemployment. It's a jobless recovery. How can that happen? Because productivity is increasing. If new technologies enabled every worker to produce more, the economy can grow with the same number of jobs. Business cares about productivity. But you know, voters don't really. What voters care about is jobs.

WOODRUFF: One thing we know, Bill, is both sides are pretty passionate about their views. Or I should say the sides are passionate about their views. Bill Schneider, thanks very much.

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