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CNN Saturday Morning News

Interview with Jane Novack

Aired May 24, 2003 - 07:14   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.


ANDREA KOPPEL, CNN ANCHOR: A new $350 billion tax bill wait, wait, awaits President Bush's pen next week. The measure includes $20 billion in aid to cash-strapped states. Sounds good on the surface, but let's get to the nuts and bolts of the bill with Jane Novack, who is the Washington bureau chief for "Forbes" magazine.
What I'd like to start by asking, Ms. Novack, is, who stands to benefit, and what are the short-term gains for the economy?

JANE NOVACK, WASHINGTON BUREAU CHIEF, "FORBES" MAGAZINE: Well, who stands to benefit are families with children, wealthy individuals, and investors who hold their stock outside their 401(K)s. So, for example, the average tax cut is going to be about $700, but half the families are going to get $100 or less.

Families with children are going to start receiving checks this summer. That should have an immediate stimulative effect on the economy. We -- so we are looking for short-term stimulus. The big debate is over the long-term effect.

KOPPEL: Well, you say that families with children are going to start getting money. But isn't there a cap on the income, so we are talking about anybody who is earning $110,000 or more, and their children have to be below the age of 17, is going to start losing some of that benefit as the salary -- as their salaries go up, right?

NOVACK: That's right. The child tax credit phases out between $110,000 and $150,000 in income. So they won't get the full effect of that, nor will people who don't earn enough to pay a lot of taxes. They get some of the child credit, but not all of it. And an increase in the child credit for the poor was not part of this bill. It was in the Senate bill, it didn't come out of conference.

KOPPEL: So the middle class will be getting checks.

You mentioned the wealthy and that they also stand to gain from this. One very wealthy man, Warren Buffett, the CEO of Berkshire Hathaway, had this to say in an editorial that he wrote in "The Washington Post." He said, basically, If I get a break, someone else pays. So who is it that's going to pay?

NOVACK: Well, the question is, will these tax breaks stimulate the economy enough that we can grow our way out of the deficit? Or will we have to raise taxes in the future? In other words, in the short term, no one is paying. Their taxes are not being raised. In the long term, if the deficit climbs and we don't grow our way out of it, someone is going to have to pay, and that will be a huge political fight.

KOPPEL: Well, in fact, the Senate right now is facing the possibility of raising the debt ceiling to a trillion dollars. So does that answer the question? Are we all as taxpayers going to be paying for this in the short term?

NOVACK: We are going to pay for it in the long term. Right now, we're going to run a deficit, perhaps $400 billion this year. In the long term, if we don't grow as much as the Bush administration hopes we grow, then Congress is going to have to come back and fix this problem, and there are going to be big fights over who pays.

KOPPEL: Janet Novack, Washington bureau chief for "Forbes" magazine, I thank you for coming in and joining us so early this morning. Thank you.

NOVACK: Thank you.

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 24, 2003 - 07:14   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDREA KOPPEL, CNN ANCHOR: A new $350 billion tax bill wait, wait, awaits President Bush's pen next week. The measure includes $20 billion in aid to cash-strapped states. Sounds good on the surface, but let's get to the nuts and bolts of the bill with Jane Novack, who is the Washington bureau chief for "Forbes" magazine.
What I'd like to start by asking, Ms. Novack, is, who stands to benefit, and what are the short-term gains for the economy?

JANE NOVACK, WASHINGTON BUREAU CHIEF, "FORBES" MAGAZINE: Well, who stands to benefit are families with children, wealthy individuals, and investors who hold their stock outside their 401(K)s. So, for example, the average tax cut is going to be about $700, but half the families are going to get $100 or less.

Families with children are going to start receiving checks this summer. That should have an immediate stimulative effect on the economy. We -- so we are looking for short-term stimulus. The big debate is over the long-term effect.

KOPPEL: Well, you say that families with children are going to start getting money. But isn't there a cap on the income, so we are talking about anybody who is earning $110,000 or more, and their children have to be below the age of 17, is going to start losing some of that benefit as the salary -- as their salaries go up, right?

NOVACK: That's right. The child tax credit phases out between $110,000 and $150,000 in income. So they won't get the full effect of that, nor will people who don't earn enough to pay a lot of taxes. They get some of the child credit, but not all of it. And an increase in the child credit for the poor was not part of this bill. It was in the Senate bill, it didn't come out of conference.

KOPPEL: So the middle class will be getting checks.

You mentioned the wealthy and that they also stand to gain from this. One very wealthy man, Warren Buffett, the CEO of Berkshire Hathaway, had this to say in an editorial that he wrote in "The Washington Post." He said, basically, If I get a break, someone else pays. So who is it that's going to pay?

NOVACK: Well, the question is, will these tax breaks stimulate the economy enough that we can grow our way out of the deficit? Or will we have to raise taxes in the future? In other words, in the short term, no one is paying. Their taxes are not being raised. In the long term, if the deficit climbs and we don't grow our way out of it, someone is going to have to pay, and that will be a huge political fight.

KOPPEL: Well, in fact, the Senate right now is facing the possibility of raising the debt ceiling to a trillion dollars. So does that answer the question? Are we all as taxpayers going to be paying for this in the short term?

NOVACK: We are going to pay for it in the long term. Right now, we're going to run a deficit, perhaps $400 billion this year. In the long term, if we don't grow as much as the Bush administration hopes we grow, then Congress is going to have to come back and fix this problem, and there are going to be big fights over who pays.

KOPPEL: Janet Novack, Washington bureau chief for "Forbes" magazine, I thank you for coming in and joining us so early this morning. Thank you.

NOVACK: Thank you.

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