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American Morning

A Third Wave of IRS Checks Pours Into Mail

Aired August 03, 2001 - 10:30   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: A third wave of IRS checks pours into the mail to begin winding toward 8 million taxpayers. That brings the total to more than $10 billion transferred from public coffers to private billfolds. Supporters of the tax cut say this infusion of money will bolster the nation's sagging economy.

New unemployment figures released just about 90 minutes ago show the nation's jobless rate in July as holding steady at 4.5 percent. That comes as a pleasant surprise to many economists. They had expected a little worse than.

For a closer look at the bottom line of the tax checks, let's turn now to CNN's Brooks Jackson, who's checking in from Washington this morning.

Hi, Brooks.

BROOKS JACKSON, CNN CORRESPONDENT: Hello, Leon.

That's right, checks are going out. But you know, there's a lot of confusion. Politicians and journalists keep calling these checks refunds or rebates. That applies to a lot of people coming back from taxes paid last year, but that's not the case, and, in fact, they are not tax rebates. So what are they? The IRS says these are -- quote -- advance payment of a 2001 tax credit. Now what's that mean? In short, it means taxpayers are getting now some of the money they would have realized next April. That's a good thing, most any taxpayer would rather have the money now than later. But anyone getting say, a $300 check now, next April, their refund will be that much less, or they'll owe that much more.

HARRIS: Have the checks actually arrived? Do we know that yet? And if they haven't, then what?

JACKSON: Well, some checks should have arrived. They've been sending them for two weeks now. As you reported at the top, a third wave is going out now. They'll continue to go out in weekly waves until the end of September. By that time, all $38 billion should have been paid out. If they haven't arrived, well first of all, taxpayers should have received a notice saying when their check is going to arrive, and they should refer to that to see when it ought to arrive. If it hasn't, contact the IRS, and good luck on that, they are swamped with inquiries right now. HARRIS: Ask you this, since you are the network's reality checker, there's been so much talk on both sides that the affect the tax rebate is going to have on the budget. The Democrats have been saying that it will bust the budget, but what's the general thinking in your view?

JACKSON: Well, if you do the arithmetic, the -- originally, the surplus for this year was projected to be $280 billion, which is a lot of money. The economy has softened a little bit, corporate tax payments are coming in less, because there is less corporate profits. There is 38 billion that is being paid to taxpayers that is not originally in the budget. Congress has decided to do that, not originally proposed by the president. And Congress also did an accounting gimmick. They moved some money from this year to next year, some tax collection at the end of the year. Now come in October 1st, the start of the next fiscal year.

All in all, we expect the federal surplus will probably be reduced on the order of $100 billion, but -- all the bean counters are estimating that now. Will this cause them to dip into Medicare and Social Security? Probably not. But it's getting close enough that you're seeing political debate over that.

HARRIS: There's always time for a political debate about things like that.

JACKSON: Always.

HARRIS: Brooks Jackson, thanks much.

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