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CNN Live Sunday
Bush, Congressional Democrats Debate Tax Cut
Aired January 06, 2002 - 17:18 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.
CAROL LIN, CNN ANCHOR: The battle lines are being drawn between the White House and congressional Democrats when it comes to last year's tax cut. CNN's White House correspondent Kelly Wallace has the latest.
(BEGIN VIDEOTAPE)
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT (voice-over): One day after President Bush threw down this gauntlet.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Not over the my dead body will they raise your taxes!
WALLACE: His economic team took that message to the airwaves, vowing to block any changes to last year's tax cut, equating such moves with tax hikes.
PAUL O'NEILL, TREASURY SECRETARY: We don't believe raising people's taxes during an economic slowdown is an intelligent thing to do.
WALLACE: But while some Democrats say they are not supporting a tax increase, they do say everything to be on the table in these uncertain times, including a possible delay of the tax cut.
SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: It's like having a doctor, you know, that you go to because you are sick, say, well, there is two things I can do to help you, but one I'm definitely not going to do. That's just not smart.
WALLACE: Democrats, however, are clearly divided. Twelve Senate Democrats voted for the tax cut.
SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Over $1 trillion of that tax cut has yet not gone into effect. My view is that we ought to stay the course.
WALLACE: On the other side, Democrats who say the tax cut is the main reason the government, which has been enjoying surpluses, will return to deficits over the next several years, leaving less money to fund homeland security and other priorities.
ROBERT RUBIN, FORMER TREASURY SECRETARY: It's made a major contribution to the fiscal deterioration, which has occurred. WALLACE: The administration's strategy: Let the Democrats appear divided while Mr. Bush travels around the country touting his economic plan, trying to prevent his sky-high popularity from dwindling away, like his father's did, due to the economy.
But Mr. Bush has now invited comparisons with his father and his pledge more than a decade ago.
(BEGIN VIDEO CLIP, 1988)
GEORGE H.W. BUSH, PRESIDENT OF THE UNITED STATES: Read my lips, no new taxes!
(END VIDEO CLIP)
WALLACE: A pledge that proved politically costly when he had to break it two years later.
(on camera): The same could hold true if the president is forced to break his, but both parties doubt that will be the case, and believe this line in the sand is mainly about Mr. Bush playing hardball to get his agenda passed and to help his party in the November elections.
Kelly Wallace, CNN, Crawford, Texas.
(END VIDEOTAPE)
LIN: So, where does that leave us? The taxpayer, the consumer, maybe even the guy or gal out of work? Joining us to talk about that is Beth Belton. She's the online news editor for "Business Week" magazine. Hi, Beth.
BETH BELTON, "BUSINESS WEEK": Hello, how are you doing.
LIN: I'm doing just fine. Do you think this tax cut is going to bite the dust?
BELTON: Yeah, I do. I don't think that they are going to be able to come to terms in time for it really to have much impact on this particular recession.
LIN: Really? Why is that? I mean, more money in consumers' pockets, taxpayers' pockets -- in theory, we are going to go out and spend it?
BELTON: You know, there is just too much divisiveness among the Democrats and between the Democrats and the White House right now to come to any quick agreement. There is going to be a lot of talk about it, but I think in the end you are not really going to see anymore of the tax cut, although I'm not convinced either that you are going to see the -- the tax cut reversed.
LIN: But isn't there enough signs out there that this recession is bottoming out and that already, reflected in the stock market so far this year, that things might be improving? BELTON: I think that's part of the reason why you won't see an additional tax cut. There is a lot of evidence in the numbers that we have seen from December that the economy has bottomed, and that consumer confidence is rebounding. And with the progress that's been made on the Afghanistan front, consumers are going to keep spending. They don't feel as scared as they did a few months ago, and the unemployment rate appears to have stabilized.
We are going to see more layoffs, but they are not going to continue at the pace that they did in the past few months, and that's going to help keep confidence strong.
LIN: All right. Let's take this conversation to the street, Beth. How bad is it out there, really? What are you hearing and what are you feeling and seeing?
BELTON: You know, I don't think it is that bad. When at the end of the day this is going to turn out to have been a relatively mild recession, especially when you consider what happened with the bursting of the dot-com bubble and you also consider that we had the worst terrorist attack in the country's history, this is going to be a relatively short and shallow recession.
LIN: Is it going to be -- I'm sorry, Beth -- is it going to be a short and shallow recession for the people who have lost their jobs this year and are trying to figure out whether they are going to have to make a dramatic shift in their careers?
BELTON: Obviously, if you are one of the people who's unemployed, it doesn't feel short or shallow to you. But there are jobs being created. Interest rates are very, very low. Prices are being cut on a lot of goods, and I think these people are going to find new jobs, probably more quickly than they were able to in previous recessions, and the economy is going to get back on track.
LIN: So where are the jobs being created? What fields?
BELTON: There are still jobs being created in the technology field, there are different kinds of jobs. There is obviously a lot of jobs being created in the security field. And there are ongoing jobs, new businesses are being created, a lot of them are small businesses that cater to consumers in small towns, but they need people to work for them.
LIN: You bet. All right. Beth Belton, we will end on that high note. Thank you very much, Beth Belton with "Business Week."
BELTON: Thanks.
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