|Editions | myCNN | Video | Audio | Headline News Brief | Feedback||
The Bush Tax Plan: Too Big, Too Small or Just Right?Aired February 8, 2001 - 7:30 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TUCKER CARLSON, CO-HOST: Democrats say it's too big. Some Republicans say it's too small. President Bush says it's just right. Tonight, the Bush tax cut. Will it live happily ever after?
ANNOUNCER: Live from Washington CROSSFIRE. On the left, Bill Press. On the right, Robert Novak. In the CROSSFIRE: Republican Congressman John Shadegg of Arizona and Democratic Congressman Robert Wexler from Florida.
CARLSON: Good evening, and welcome to CROSSFIRE. Washington is swimming in dollars. Some projections have the federal surplus swelling to $5.6 trillion over the next decade. The question is what to do with all the cash.
That's an easy one, says George W. Bush: Return the money to the public in the form of a $1.6 trillion tax cut, spread out over 10 years. Not so fast, say congressional Democrats. A tax cut that big is risky given the uncertain state of the economy. Worst, Democrats charge, the Bush tax cut would be unfair, with the bulk of it going to the dreaded wealthiest 1 percent of the population.
Now, a third voice has been raised in the tax fracas. A group of conservative Republicans is calling for bigger, faster tax cuts than the president has proposed. They produced their own $2 trillion plan that would be phased in more quickly.
One thing that everyone seems to agree on is that the economy hangs in the balance. One false move could spark a recession. Who's right? Is anyone? We'll find out. Joining us tonight on the left, former Energy Secretary Bill Richardson, now a professor at the John F. Kennedy School of Government at Harvard -- Bill.
BILL RICHARDSON, GUEST CO-HOST: Congressman Shadegg, your new initiative, 25 percent bigger tax cut than President Bush; $2 trillion over 10 years; capital gains; eliminating the alternative minimum tax. You've got a big problem with this, and I'm going to show you a clip.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: For those who want to increase the size of tax cut, it would be inadvisable. It's the right size.
(END VIDEO CLIP) RICHARDSON: Now, here is my question: Are you planning this initiative to end up in the middle. In the end, the Democrats want $800 billion, the president wants $1.6, you're two but aren't you also concerned that this is going to unleash a lot of loophole initiatives, a lot of pork in the tax project? That it's going to bring what Alan Greenspan calls some very unnecessary provisions into a good tax cut?
REP. JOHN SHADEGG (R), ARIZONA: Well, I'm glad to hear you say a good tax cut because I love to hear you describe the president's tax cut proposal, tax relief proposal as a good tax relief proposal. I think it is.
We genuinely believe that you can go beyond that, and we believe it for two solid reasons. Number, the surplus has exploded, as Tucker just indicated, since the president outlined his plan roughly a year ago. Indeed, it's up $900 billion just in the last six months. Since July, it's up $900 billion.
But second, when the president proposed this as a candidate, the economy was strong. We were all feeling good. Americans were very confident of the state of this economy. Now, that economy is soft at best, and in a recession by many indicators.
Both of those auger in favor of a larger, more rapid implementation of tax relief, and they argue for that because otherwise, we are in danger of seeing this economy go deeply south; seeing more and more people lose their jobs. We've already seen a number of job layoff announcements come forward, and the reality is as long as, and here's where the key is, as long as you can protect 100 percent of the Social Security surplus, which we do, and 100 percent of the Medicare surplus and allow for growth in government, including anticipated initiatives, then there is an additional surplus that needs to go home.
RICHARDSON: But congressmen, let me deal with this issue and first of all, I like the Democratic tax plan, which is a third for tax cuts, a third for urgent domestic spending and third for long-term debt, which you don't address.
SHADEGG: Actually, we do.
PRESS: Congressman, we're looking at budget surplus projections by the Congressional Budget Office. All of these budget projection surpluses, everyone admits they're uncertain. What we have is in the last five years of the 10 years in fact, you're going to see a lot of these debts coming in.
Now, my question to you is, what about some of spending that you consider important? Defense, Social Security, prescription drugs, education; you're blowing this whole budget surplus.
RICHARDSON: $100 million -- when the president had his retroactive initiative, in other words, to January 1st, that means that we have 400 -- $400 billion left in the last 10 years. Where are you going to get the money to pay for all these domestic priorities of the president that I mentioned? Your missile defense plan? Your prescription drug plan? Your education plan? Debt reduction? Where do these numbers come from?
SHADEGG: As we laid out in our press conference today, and as the material we released today and as our draft bill will show, we allow for all of that. We allow for the projected growth of government at its current rate and on top of that, over 10 years we provide for addition $1 trillion in spending that we have not allocated back to tax relief now.
There is both, in our plan, an assurance that we pay down or that cover all the Social Security surplus, all of the Medicare surplus, and then a margin on top of that. Indeed, some would say, well, gee, why don't you give that back to the American people as well, and we didn't because of the very issue you raised.
We think it's important for there to be resources there to cover issues that are key priorities of the American people and of this president. Those numbers are in the proposal we proffered today. I think it's good to get it out there and get it debated.
CARLSON: Congressman Wexler, first, welcome back.
REP. ROBERT WEXLER (D), FLORIDA: Thank you.
CARLSON: We'll get to the math in a minute, but I want, first, to put a human face on this discussion. I want you to take a look at some of the families who gathered around President Bush when he announced his tax plan. Now, these are some of the families who will get money back, real dollars back under the Bush tax-cut plan.
They're going to use that money to send their kids to camp, to pay their doctor bills, to rent a video, to buy shoes for their children, to pay high heating bills. Can you look at them and can you say to them, American families, no, you can't have that money because I, Robert Wexler of Florida, have better uses for it? I know what to do with that money. You don't. You can't have that. Tell that to the families.
WEXLER: Actually, Tucker, just the opposite. What I say and what Democrats are saying, if those people that joined President Bush are middle-income people, families with $45,000 dollars or $55,000 dollars, what I say is that they ought to be getting a bigger tax cut than say Bill Gates or multimillionaires.
The priorities are wrong with respect to President Bush's plan and with due respect to my colleague, John. Their priorities are wrong. Why? Because we don't give middle class people the lift they really need and two, we're not doing it in the most fiscally responsible way.
Why wouldn't we say, if we're so confident in this ballooning, you know, blossoming surplus, let's say if it really is there, give all these tax cuts. But if it's not, let's have safeguards where the tax cuts don't take effect in the out years. That would be fiscally responsible. That's what we Democrats are saying.
Let's not put ourselves into a deficit situation eight years from now. And doesn't it trouble you, Tucker, I know you don't -- we both have a fondness for Florida. This president and the Republican Party has this great energy for tax cuts. Where's the energy for prescription drugs for seniors on Medicare? Where's the energy for public schools?
CARLSON: The list of assertions we're going to have to tear down and deconstruct is growing so let must just start with the first one, now. Now you say, you evidence this real concern for middle-income families. Now, do you have a plan that would -- why not take the $1.6 trillion over 10 years that George W. Bush proposes to give back to the American people, and why don't you just dump it in the laps of middle-income families, those families you care so much about. I don't hear you coming forward with a plan.
WEXLER: Oh, I'll give you many plans. First of all, $1.6 trillion is too much because it'll endanger that family's Social Security...
CARLSON: Oh, too much money.
WEXLER: I'll tell what you could do. First of all, you take the bottom rate rather than the top rate and cut that the most or you want to stimulate the economy, send every American head of household $1,500 bucks two weeks before Christmas, just like David Broder said in "The Washington Post" to do. I'd go for that in a minute.
CARLSON: Or before election day. I bet that wouldn't be bad either.
WEXLER: No, let's do it whenever you want, real tax cuts. 1,500 bucks to every American. How about that, John?
SHADEGG: Robert, I think you didn't read the president's plan. Number one, you just said, well, let's give the lowest tax rate the biggest cut. The president's plan does exactly that. The current lowest tax rate is 15 percent. He cuts that to 10. That's a one- third cut.
Nobody anywhere else on the scale going on up gets a cut anywhere near that big.
SHADEGG: Second -- wait, wait, wait. You said this poor, middle-class family that $45,000 to $55,000, they don't get help. That's dead wrong. The numbers show that a family of four with an income of $50,000, pick the median of what you talked about, gets a $1,600 reduction in their tax bill. That's serious reduction.
WEXLER: That's right, and somebody making $300,000 will get $1,600 a week.
RICHARDSON: There's an answer to that. Forty-three percent of the Bush tax cut benefits those that make over $319,000 per year. That's the top 1 percent that in the last 20 years, their incomes have shot up 115 percent. Now, doesn't it make sense, as the congressman has said, to have a tax cut for working families. You know...
SHADEGG: This is tax cut for working families.
RICHARDSON: But congressman, if you look...
SHADEGG: That's precisely what the president is offering.
RICHARDSON: Congressman, just wait a second. That waitress in the Bush address on Saturday that made $25,000 a year, the president said this is going to benefit her. Today, the Center for Budget Priorities said that waitress in the Bush tax cut will make $100.
Now, Donald Trump will make a huge tax dividend, but I think the Democratic plan, which is more responsible than the compassionate conservative plan that saves money for debt reduction, for potential defense cost and prescription drugs.
SHADEGG: Are you going to let me in here at some point or are you going to walk through the whole thing? Let's start out with the first shot, oh, this is terrible because it gives more tax relief to the wealthiest Americans than to everybody else.
You have to begin with the understanding, and I hope you saw it in the last week's "Wall Street Journal," 95.2 percent of all income taxes in America, all income tax revenues are paid by the top half of income earners. Only 4.8 percent of all income taxes are paid by those in the bottom half.
The reality is we are very close to a point where in America, if you're in the bottom half of the income bracket, you won't pay a dime. Virtually all of it is paid for by the people at the top. If you're going to give any tax relief at all, you're going to have to give tax relief to people that are in the upper bracket because they're the only ones paying taxes.
WEXLER: That's not true.
SHADEGG: That's absolutely true, Robert.
WEXLER: If want to reduce payroll taxes, we actually can help...
WEXLER: We could help working people. SHADEGG: Then put a plan on the table to reduce payroll taxes. You guys haven't done that. The Democrats' offer on tax relief is we'll talk about it, but we won't do it.
CARLSON: We're going to cut you off right here. Congressmen, we will be back in just a moment, Congressmen Wexler and Shadegg. To find out what the Bush tax plan means for you, you can log on to cnn.com/crossfire and use our handy tax calculator to tabulate where you fall. We'll be right back.
RICHARDSON: Welcome back to CROSSFIRE. I'm Bill Richardson, unemployed former secretary of energy, sitting in for Bill Press. Tonight, the Bush tax plan: Will it blow the deficit or will it stimulate the economy. Joining us, Republican Congressman John Shadegg of Arizona; Democratic Congressman Robert Wexler of Florida -- Tucker.
CARLSON: Mr. Wexler, I know the from the very beginning was to position Bush as the right-wing wacko because that's, of course, always the plan with Democrats. But he outfoxed you.
WEXLER: No, no, no. He did appoint John Ashcroft, didn't he? Did somebody else do that?
CARLSON: Well, that's an entirely different CROSSFIRE.
WEXLER: Oh, OK.
CARLSON: But in this case, you've been outmaneuvered because people like Mr. Shadegg have decided that not $1.6 trillion, but $2 trillion ought to be the tax cut. So all of a sudden, George W. Bush becomes the moderate and you become the tax-and-spend liberal, the Mike Dukakis of the new millennium.
CARLSON: This plan that Bush has offered up is moderate, certainly relatively moderate. How can you characterize it as radical?
WEXLER: It's irresponsible to say that we're going to count on these trillions of dollars of surplus when every estimate says it may happen or it may not happen. What we're saying in the Democratic Party is give a substantial tax cut, prioritize people in the middle- income strata, but say in the tax cut if big these surpluses don't really materialize, then cut the tax cut back.
CARLSON: Well, then, let's get specific here.
WEXLER: What's wrong with being fiscally responsible.
CARLSON: We're talking -- the CBO numbers, as far as I know, is $5.6 trillion over 10 years, the projected surplus. How big would -- hold on, how big would that have to be specifically for you to endorse the Bush plan? Ten trillion? Twenty trillion? A hundred trillion? Let's get specific. How big is big enough? Is enough in the bank to go forward with the tax cut?
WEXLER: We should...
CARLSON: It's never enough.
WEXLER: No, we should do one now, make it $800 billion, target it to middle-income people or also at the same time, which would be nice, let's do some election reform. Let's do prescription drugs under Medicare. Why does it only have to be tax cut...
CARLSON: And why not get ice cream? Absolutely.
WEXLER: What about the poor couples...
RICHARDSON: Here's my question, I'm going to give you time to answer this.
SHADEGG: Thank you.
RICHARDSON: This is key. Ninety-six percent of the Bush tax-cut plan goes to tax cuts. Four percent, $100 million -- you didn't answer my question. Now with this new projection that president wants to make the tax cut retroactive, how are we going to pay for defense, missile defense? How are we going to pay for prescription drug? For education? How are we going to pay for Social Security reform and Medicare reform?
Now, a lot of economists are saying that your plan, your plan in the last five years where the CBO numbers get very uncertain, is going to be to raid the Medicare and the Social Security Trust Fund. That's the only way that you're going to be able to pay for it. Answer that.
SHADEGG: I love it. Former Secretary Richardson from the Clinton administration, you lived by those numbers and defended them all along.
RICHARDSON: And the economy...
SHADEGG: When I got here in 1994...
RICHARDSON: We had a booming economy, congressman.
SHADEGG: Those were bad numbers that got better over time, but we just can't rely on numbers now.
RICHARDSON: We eliminated the deficit, congressman.
(CROSSTALK) SHADEGG: There are a couple of key points here that get dropped. Number one, you're right. The numbers may not be correct, precisely correct, but you know what, they keep, for now almost two solid years, getting bigger and bigger and bigger.
Not a single time in the last two to three years, that I know of, has the projected surplus gotten smaller. It's up $900 or $800 billion from just last July. When would you guys ever say it's enough. The answer is the Democrat tax plan is, well, we'll talk about it, but we'll never do it.
RICHARDSON: Congressman, aren't the Democrats the...
SHADEGG: We couldn't even get the telephone...
RICHARDSON: Aren't the Democrats here being the fiscally responsible party by saying...
SHADEGG: We couldn't get the Spanish-American War telephone tax repealed under you guys. The reality is you don't -- I want that talk about the Wexler plan.
WEXLER: John, can we agree on one thing here?
WEXLER: Let's agree on one thing, in fairness.
CARLSON: One at a time please. Wait, wait, wait, wait.
WEXLER: Let's agree on one thing. You support a $2 trillion tax cut. I support an $800 billion tax cut. You say give the $2 trillion back no matter what happens in the economy. I say do $800 billion, but if in the years in the future those surpluses go away, then you've got to cut it back.
SHADEGG: You just hit the point I want to talk about. The reality is what you guys want to do is you want to jerk the rug or the football out from under -- have Lucy jerk it out when Peanuts goes to kick it because in reality, you don't want it to happen. Let me explain it.
WEXLER: I want $800 billion enacted this year.
SHADEGG: No, you don't. You just said make it contingent on some of that in the future.
SHADEGG: You said can we agree on one thing. I let you talk. WEXLER: But you've changed what I said.
SHADEGG: What you have said is make it contingent on the future. That totally misunderstands the American family, the American economy and the situation we're in. Wait a minute, people in businesses need to plan on future tax relief. Right now, they don't believe you'll cut taxes. They don't believe I'll. They don't believe they're getting. But you will make...
WEXLER: What are you going to do, John?
SHADEGG: The average family and the average business will not do what needs to be done for this economy. They will not spend it.
WEXLER: Let's say the unimaginable happens.
RICHARDSON: You know this sounds like? The Democrat is being the compassionate conservative because what you have is Congressman Wexler saying let's be careful about how we spend this budget surplus, that in the last five year may be uncertain. The CBO is saying this. Everybody is saying this, Congressman.
So what we have is a Democratic tax plan that says let's put a third, $800 billion, away for a tax cut. Everybody believes that is needed for stimulating the economy. Urgent domestic needs, the American public, Congressman, wants -- over tax cuts, they want education. They want health care. They want election reform. They want possibly missile defense. Now, 95 percent of the budget surplus is going to you tax cut.
SHADEGG: How many times -- not all of it. How many times do I have to say it? There is ample cushion in our plan figure it's at versus the president's at $1.6. There is ample room in both of those plans for the growth of government. But since we've had a surplus, we've been growing government at three times the rate of inflation.
No family that I know is seeing their livable income go up by three times the rate of inflation. But government is spending at a profligate rate. We need to get that money out of town or this government will spend it.
CARLSON: Now, let's just bring it back to families here really quick. Now, Robert Wexler, you're a Democrat. Obviously, you see your job as being sort of an instrument of the people's will. Take a look at a poll that was taken, some exit poll actually taken this election day, this November and it indicates that 51 percent, that would be most, Americans favor an across-the-board tax cut. This is what the people want and I'm wondering how can you in good conscience, stand in the way, throw yourself in the road, blocking the will of the people.
WEXLER: Tucker, if you want to redebate the election...
CARLSON: This is not about the election, this is a question about the people wanting tax cuts.
WEXLER: There is no mandate for George Bush's tax cut. Al Gore, first of all, supported tax cuts. Al Gore won the popular vote. Did we forget that? More people voted for Al Gore than did George Bush.
SHADEGG: There's no mandate for tax relief but Gore won on tax relief?
WEXLER: There's no mandate for George Bush's tax cut. There's no mandate for an antichoice program. There's no mandate for vouchers to strip the public schools for money. There's no mandate for much of what...
CARLSON: So basically, I ought to just retire, it sounds like.
SHADEGG: The average American family needs tax relief, but more important to...
SHADEGG: All right, good.
WEXLER: All right, so let's give it to them.
SHADEGG: Only, you don't want to just argue over the amount, you want to make it contingent on ...
WEXLER: Does Bill Gates need tax relief as much as that school teacher?
SHADEGG: Precisely why the Bush plan aimed the greatest relief, a one-third cut, to those at the bottom end of the income bracket. He does the most for them and it's still not good enough for you.
CARLSON: I think we've reached a point of consensus, agreement. Maybe a new first on CROSSFIRE. Congressman Wexler, Congressman Shadegg, thank you very much.
SHADEGG: Thank you.
CARLSON: And we'll be right back with our closing comments on CROSSFIRE.
CARLSON: I was struck Bill, asking Congressman Wexler how big would the surplus have to be after, you know, it's $5.6 trillion, how big would it have to be before you support this for a tax cut, he couldn't answer it. He is just against tax cuts.
PRESS: Well, I don't think so, Tucker. I think what the Democrats need to do is they've got to come out with their tax plan. I think this concept of one-third for tax cuts, one-third for urgent domestic spending, for long-term debt, I mean, here the Democrats can position themselves as the conservatives, as the fiscally disciplined party, and they need to do that, Tucker.
They haven't done that because now you've got this conservative Republican plan of $2 trillion, and you've got the president looking like a moderate $1.6 over 10 years and the Democrats hopefully with plan soon. So, I think it's positioning right now. Just positions.
CARLSON: The Democrats with the steady hand on the tiller and the Republicans the wild-eyed, profligate spendthrifts.
RICHARDSON: Well, that's how it's looking like to me.
CARLSON: But at a certain point, if you have $5.6 trillion estimated extra, you become like Petty Green (ph). You're a miser.
PRESS: Tucker, everybody agrees the CBO projections could be very uncertain. The worst thing that could happen is in the last five years that that money doesn't come in for unforeseen reasons, economic reasons.
CARLSON: Well, it depends whether you're a middle-class family facing $800 a month fuel bills. I guess the worst thing that could happen is not being able to pay them.
RICHARDSON: From the left, I'll Bill Richardson. Good night from CROSSFIRE.
CARLSON: And from the right, I'm Tucker Carlson. Join us again tomorrow night for another edition of CROSSFIRE.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
|Back to the top|