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American Morning

Bushonomics

Aired January 07, 2003 - 09:02   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.


BILL HEMMER, CNN ANCHOR: In only a few hours the president unveils his program to stimulate economy. It's a sweeping plan with an estimated price tag of $600 billion over 10 years.
Let's turn to John King, who's standing by at the White House now with more details of the economic stimulus package.

Good morning, John.

JOHN KING, CNN WHITE HOUSE CORRESPONDENT: Good morning again to you, Paula. The president leaving the White House for Chicago soon. He will unveil all of the details there, some $676 billion over 10 years mostly in tax cut that's White House says is critical to give the economy a long term boost. Mr. Bush will unveil details but administration also already very busy trying to sell this plan,

the Democrats back for new Congress, promising to aggressively challenge this president, so one of the challenges for the white house, getting this man and others, this is Commerce Secretary Don Evans, making the case this morning, Secretary Evans saying the Democrats have it wrong, the Democrats have a largely one year stimulus plan, price tag $136 billion.

Earlier today on this program, AMERICAN MORNING, Secretary Evans says the president's president's approach is right, 10 years of tax cuts to let families and businesses plan for the future.

(BEGIN VIDEO CLIP)

DON EVANS, COMMERCE SECY.: When you're trying to create the conditions for economic growth in a country, what you're thinking about is cutting taxes and controlling spending. That's exactly what the president's plan does, exactly opposite of what the Democrat plan does.

(END VIDEO CLIP)

KING: This will be the major policy and political debate in the weeks ahead as new Congress convenes, Mr. Bush saying his approach is right, more tax cuts to sustain economic growth. Democrats saying the plan favors the rich and would explode the federal budget deficit. Look for quite a contentious few weeks ahead but they're optimistic that the president has clout with Republicans in Congress to muscle this through. They do acknowledge that some compromises with Democrats necessary.

The White House hope is get action as soon as possible, one reason the president is putting out details today, not waiting for the State of the Union -- Paula.

ZAHN: John, stand by while we bring Andy Serwer into the discussion, who will try to cut through both the Democrat and Republican spin here.

Hello again,, Andy.

What do you think this means to the average taxpayer out there?

ANDY SERWER, "FORTUNE" MAGAZINE: I think, Paula, it means more money in people's pockets. This, of course, is assuming it is president's plan is going pass, let's just say that for right now.

ZAHN: Sure.

SERWER: OK, it's not going to be as direct as getting those checks in the mail from the rebate. It will mean that you get more money in terms of dividends. They won't be taxed at the end of next year. Already, people are talking about how it's going to change the complexion of investing and retirement. Previously, people had sort of ignored dividend paying stocks during the bull market 1990s. Tech stocks going up so much, who cared about dividends because your Microsoft was doubling and tripling every year.

Now we have a more tepid economy, dividends matter, and these cuts if they are past would mean that people would be attracted to stocks that paid them cash, so I think that could have a big impact in terms of how people save. It would take a while and the effect would not be immediate, I don't think.

ZAHN: Cut through the argument, the Republicans saying that the tax rebates the Democrats are offering are simply quick fixes, and then the Democrats counterargument, that they have front-loaded their plan because they don't think the bush plan does enough in the first year.

SERWER: Well, it's ironic to me the Republicans are criticizing the rebates, because they just did just a couple months ago, even. I mean, what you're really trying to do here is create sustainable jobs. I mean, It's very nice to hand out money, parcel out money to Americans, and that actually is supposed to spur the economy, which is a real net positive, but what you're really trying to do is create more jobs at Wal-Mart, create more jobs where people are manufacturing things that people buy. By jumpstarting the economy over short run, you are getting people over a hump. It's not clear to me how either plan will create sustainable jobs, though.

ZAHN: And, John, you were telling us this morning that Democrats are saying their plan might create some million jobs. Don Evans telling me earlier this year, he believes over a three-year period will create some 2.1 million jobs.

KING: That will be part of the debate coming in Congress, but I think Andy is touching on one of the key political argument. In the past, people looked at their unemployment rate as a gauge of the economy. This White House is making the calculation that people look more not at the unemployment rate, not at the level of what the federal budget deficit is, but at those 401(k) statements and other investment statements they get at the end of the year.

If you are looking now, you're not pleased with what has happened the least couple of years. This White House making the calculation that if you can encourage more investment, that by the time President Bush runs for re-election two years from now, Americans will be in a better mood about the economy, about their own retirement prospects, and that this president will be on the path to re-election.

ZAHN: John, what does the White House think it will end up with once this is thoroughly debated in Congress?

KING: They think they'll get most of what the president wants. They understand, they will have to make some come compromises, but I think this is very reminiscent of the first big tax cut big debate, everybody saying the president would get nowhere what he wanted in the that ten-year, trillion-dollar tax cut. In the end, the president did get most of what he wanted, largely because of the discipline of Republicans in the House of Representatives.

This is a challenge not only for the president, but for the new Senate majority leader Bill Frist, Republicans of Tennessee. Here at the White House, they say compromises yes, but they are confident the president, with loyalty from Republicans, and some key conservative Democrats will get most, not everything, but most of what he wants.

ZAHN: Thanks so much, John King and Andy Serwer for cutting through some of the complicated plans here for us this morning.

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 January 7, 2003 - 09:02   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: In only a few hours the president unveils his program to stimulate economy. It's a sweeping plan with an estimated price tag of $600 billion over 10 years.
Let's turn to John King, who's standing by at the White House now with more details of the economic stimulus package.

Good morning, John.

JOHN KING, CNN WHITE HOUSE CORRESPONDENT: Good morning again to you, Paula. The president leaving the White House for Chicago soon. He will unveil all of the details there, some $676 billion over 10 years mostly in tax cut that's White House says is critical to give the economy a long term boost. Mr. Bush will unveil details but administration also already very busy trying to sell this plan,

the Democrats back for new Congress, promising to aggressively challenge this president, so one of the challenges for the white house, getting this man and others, this is Commerce Secretary Don Evans, making the case this morning, Secretary Evans saying the Democrats have it wrong, the Democrats have a largely one year stimulus plan, price tag $136 billion.

Earlier today on this program, AMERICAN MORNING, Secretary Evans says the president's president's approach is right, 10 years of tax cuts to let families and businesses plan for the future.

(BEGIN VIDEO CLIP)

DON EVANS, COMMERCE SECY.: When you're trying to create the conditions for economic growth in a country, what you're thinking about is cutting taxes and controlling spending. That's exactly what the president's plan does, exactly opposite of what the Democrat plan does.

(END VIDEO CLIP)

KING: This will be the major policy and political debate in the weeks ahead as new Congress convenes, Mr. Bush saying his approach is right, more tax cuts to sustain economic growth. Democrats saying the plan favors the rich and would explode the federal budget deficit. Look for quite a contentious few weeks ahead but they're optimistic that the president has clout with Republicans in Congress to muscle this through. They do acknowledge that some compromises with Democrats necessary.

The White House hope is get action as soon as possible, one reason the president is putting out details today, not waiting for the State of the Union -- Paula.

ZAHN: John, stand by while we bring Andy Serwer into the discussion, who will try to cut through both the Democrat and Republican spin here.

Hello again,, Andy.

What do you think this means to the average taxpayer out there?

ANDY SERWER, "FORTUNE" MAGAZINE: I think, Paula, it means more money in people's pockets. This, of course, is assuming it is president's plan is going pass, let's just say that for right now.

ZAHN: Sure.

SERWER: OK, it's not going to be as direct as getting those checks in the mail from the rebate. It will mean that you get more money in terms of dividends. They won't be taxed at the end of next year. Already, people are talking about how it's going to change the complexion of investing and retirement. Previously, people had sort of ignored dividend paying stocks during the bull market 1990s. Tech stocks going up so much, who cared about dividends because your Microsoft was doubling and tripling every year.

Now we have a more tepid economy, dividends matter, and these cuts if they are past would mean that people would be attracted to stocks that paid them cash, so I think that could have a big impact in terms of how people save. It would take a while and the effect would not be immediate, I don't think.

ZAHN: Cut through the argument, the Republicans saying that the tax rebates the Democrats are offering are simply quick fixes, and then the Democrats counterargument, that they have front-loaded their plan because they don't think the bush plan does enough in the first year.

SERWER: Well, it's ironic to me the Republicans are criticizing the rebates, because they just did just a couple months ago, even. I mean, what you're really trying to do here is create sustainable jobs. I mean, It's very nice to hand out money, parcel out money to Americans, and that actually is supposed to spur the economy, which is a real net positive, but what you're really trying to do is create more jobs at Wal-Mart, create more jobs where people are manufacturing things that people buy. By jumpstarting the economy over short run, you are getting people over a hump. It's not clear to me how either plan will create sustainable jobs, though.

ZAHN: And, John, you were telling us this morning that Democrats are saying their plan might create some million jobs. Don Evans telling me earlier this year, he believes over a three-year period will create some 2.1 million jobs.

KING: That will be part of the debate coming in Congress, but I think Andy is touching on one of the key political argument. In the past, people looked at their unemployment rate as a gauge of the economy. This White House is making the calculation that people look more not at the unemployment rate, not at the level of what the federal budget deficit is, but at those 401(k) statements and other investment statements they get at the end of the year.

If you are looking now, you're not pleased with what has happened the least couple of years. This White House making the calculation that if you can encourage more investment, that by the time President Bush runs for re-election two years from now, Americans will be in a better mood about the economy, about their own retirement prospects, and that this president will be on the path to re-election.

ZAHN: John, what does the White House think it will end up with once this is thoroughly debated in Congress?

KING: They think they'll get most of what the president wants. They understand, they will have to make some come compromises, but I think this is very reminiscent of the first big tax cut big debate, everybody saying the president would get nowhere what he wanted in the that ten-year, trillion-dollar tax cut. In the end, the president did get most of what he wanted, largely because of the discipline of Republicans in the House of Representatives.

This is a challenge not only for the president, but for the new Senate majority leader Bill Frist, Republicans of Tennessee. Here at the White House, they say compromises yes, but they are confident the president, with loyalty from Republicans, and some key conservative Democrats will get most, not everything, but most of what he wants.

ZAHN: Thanks so much, John King and Andy Serwer for cutting through some of the complicated plans here for us this morning.

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