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American Morning

Treasury Secretary O'Neill Discuss Tax Cuts With Business Leaders

Aired May 07, 2001 - 09:09   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.
LEON HARRIS, CNN ANCHOR: Small business owners will get a glimpse today at how President Bush's tax relief plan may benefit them. Treasury Secretary Paul O'Neill holds a roundtable discussion with business leaders in about an hour.

We get more on that now from CNN White House correspondent Major Garrett, who checks in for the first time this morning.

Major, good to see you.

Can you tell us how this event today is going to tie into the White House tax cut strategy?

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Absolutely, Leon. Good morning to you.

One of the central criticism of the Bush tax cut is that it benefits the wealthy far more than it benefits the middle and lower classes. The number one way the Bush administration has tried to deal with that criticism is to highlight small businesses.

As the president and his economic advisers like to point out, many small businesses in this country do not file corporate income tax returns. They file individual income tax returns, and as a result, they're subject to the highest income tax rate in the country: 39.6 percent.

The president would like to knock down to 33 percent. As he argued here at the White House, in various events, and as he has argued on the road as he's tried to sell this tax cut, if you cut that high income tax rate for small businesses, they will add more people to their payrolls.

The 25 million small businesses in this country account for half of all workers who are hired. Last month alone, they added 150,000 workers to the payroll, while unemployment in the corporate world shot up.

What the White House wants to do is say, yes, you can criticize this tax cut as a sop to the rich, but you're also taking a tax cut away from somebody and some other kinds of businesses that can generate economic growth when the country most needs it -- Leon.

HARRIS: Any less obvious political angles here in play?

GARRETT: There is one that's a little bit less obvious: Any Republican president knows he comes into office with some voters assuming that he is for corporate fat cats, and this president has received more than his fair share of criticism on this front. What this White House wants to do is say, look, it's not just about corporations; as a matter of fact, the Bush tax plan does nothing directly for corporations, even though they asked for some tax subsidies in the original plan.

What the White House wants to do at that more subtle political level is to say we're also for the little guy; the little guy operates in your neighborhood and may, in the future, hire your son or daughter for that entry-level job -- Leon.

HARRIS: Thanks much, Major Garrett, reporting live from the White House. We will see you later on this morning.

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