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American Morning
Minding Your Business: Deficit Doldrums
Aired July 15, 2003 - 07:49 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.
SOLEDAD O'BRIEN, CNN ANCHOR: We've got some gloomy economic news this morning. The budget deficit could be bigger than anybody thought. So, what does that mean for you?
Andy Serwer is "Minding Your Business."
Hey, good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you, Soledad.
We're going to talk a little cause and effect. The White House is releasing its projection for the 2003 budget deficit later today. "The Washington Post" reporting that it could be as much as $450 billion, much, much more than anyone had anticipated. It could be $50 billion more than what economists thought earlier this week, 50 percent more than what economists thought even five months ago.
Interestingly, it is a record. You go back to 1992. That was the previous record, a deficit of $290 billion. But it's not as big as it was in the Reagan years relative to the overall economy. So, that's sort of the good news.
Let's talk a little bit effect, though, in terms of how it will impact Americans. And what's happening is the states are having these huge budget crises because they're not getting the dollars from Washington. So, what's going on is they're starting to impose new taxes on their citizens, and especially for travelers, because it's a lot easier to do that.
Let's talk about some of these onerous new taxes, Soledad.
BILL HEMMER, CNN ANCHOR: Good word.
SERWER: They're being levied on travelers in particular. You can see what they're doing here. They don't want to put the taxes on their own citizen. It's when you come into their states. You see, that's how this is working. So, Alaska is putting a 10 percent surcharge on car rentals. Indiana -- this is hotel costs. In other words, when you get a bunch of hotel rooms, you say you get 100, you've got a high school trip and they'll give you five free rooms, a new tax on that. New Jersey, a 7 percent new tax on hotels -- that's in addition to the 6 percent they already have. That would be 13 percent.
Two pieces of advice: One, sleep in your car; two, don't go to New Jersey. OK, easy, Jack Cafferty says.
Rhode Island, a 1 percent tax on restaurants on top of a 7 percent tax -- that would be 8 percent.
So, you can see here we're going to be paying through the nose here.
O'BRIEN: Is the basic idea that the war has raised the budget deficit?
SERWER: Well, there are a couple of things going on. The war definitely. You've got to say the tax cuts have something to do with it. And then, of course, less economic activity means less money coming into Washington. You can't lay this all at the feet of the president. If you're a Democrat, sorry about that, because, of course, the economic cycle is so powerful here.
O'BRIEN: All right, Andy Serwer, thanks so much for that.
SERWER: OK, Soledad.
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 July 15, 2003 - 07:49 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: We've got some gloomy economic news this morning. The budget deficit could be bigger than anybody thought. So, what does that mean for you?
Andy Serwer is "Minding Your Business."
Hey, good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you, Soledad.
We're going to talk a little cause and effect. The White House is releasing its projection for the 2003 budget deficit later today. "The Washington Post" reporting that it could be as much as $450 billion, much, much more than anyone had anticipated. It could be $50 billion more than what economists thought earlier this week, 50 percent more than what economists thought even five months ago.
Interestingly, it is a record. You go back to 1992. That was the previous record, a deficit of $290 billion. But it's not as big as it was in the Reagan years relative to the overall economy. So, that's sort of the good news.
Let's talk a little bit effect, though, in terms of how it will impact Americans. And what's happening is the states are having these huge budget crises because they're not getting the dollars from Washington. So, what's going on is they're starting to impose new taxes on their citizens, and especially for travelers, because it's a lot easier to do that.
Let's talk about some of these onerous new taxes, Soledad.
BILL HEMMER, CNN ANCHOR: Good word.
SERWER: They're being levied on travelers in particular. You can see what they're doing here. They don't want to put the taxes on their own citizen. It's when you come into their states. You see, that's how this is working. So, Alaska is putting a 10 percent surcharge on car rentals. Indiana -- this is hotel costs. In other words, when you get a bunch of hotel rooms, you say you get 100, you've got a high school trip and they'll give you five free rooms, a new tax on that. New Jersey, a 7 percent new tax on hotels -- that's in addition to the 6 percent they already have. That would be 13 percent.
Two pieces of advice: One, sleep in your car; two, don't go to New Jersey. OK, easy, Jack Cafferty says.
Rhode Island, a 1 percent tax on restaurants on top of a 7 percent tax -- that would be 8 percent.
So, you can see here we're going to be paying through the nose here.
O'BRIEN: Is the basic idea that the war has raised the budget deficit?
SERWER: Well, there are a couple of things going on. The war definitely. You've got to say the tax cuts have something to do with it. And then, of course, less economic activity means less money coming into Washington. You can't lay this all at the feet of the president. If you're a Democrat, sorry about that, because, of course, the economic cycle is so powerful here.
O'BRIEN: All right, Andy Serwer, thanks so much for that.
SERWER: OK, Soledad.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
