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Will President Bush Be Able to Sell His Tax Cut?Aired February 27, 2001 - 7:30 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL PRESS, CO-HOST: Tonight: President Bush addresses Congress and the nation just 90 minutes from now. Will he be able to sell his $1.6 trillion tax cut?
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I really am looking forward to giving the speech. I hope you're looking forward to listening to it.
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ANNOUNCER: Live from Washington: CROSSFIRE.
On the left, Bill Press. On the right, Robert Novak. In the CROSSFIRE, Democratic Senator John Edwards from North Carolina and Republican Senator George Allen from Virginia.
TUCKER CARLSON, CO-HOST: Good evening, and welcome to CROSSFIRE.
In about 90 minutes, President George W. Bush will deliver a speech to a joint session of Congress in which he will outline his economic plan. CNN will carry that speech live as well as a response from Democratic leaders Dick Gephardt and Tom Daschle.
Tonight we're kicking off CNN's coverage of the debate over the president's proposed budget and its most controversial element: tax cuts.
There is something for everyone in the Bush economic plan: debt reduction, protection for entitlements, more money for education. But the heart of the plan is lower taxes.
Mr. Bush says he wants $1.6 trillion in across-the-board tax cuts spread out over the next decade. Democrats say that's far too much, and that too much of the money will go to the rich. Some Republicans, meanwhile, say it's too small, given the ballooning surplus.
Tonight, the president is expected to stick to his Goldilocks defense: the amount is just right. We'll spend the next half hour finding out if that defense holds up.
But first we go to CNN's John King at the White House, who's had a chance to look at parts of the speech.
John, what's the president going to say?
JOHN KING, CNN CORRESPONDENT: Well, the president's going to say look at this like your family budget, Tucker. He said himself today it won't be poetry, but it will be a little pointed. The president knows we're about to have a debate over the role of government. He knows right now he's short the votes for that tax cut.
His case to the American people will be: I'm going to spend 5 billion more on education, 3 billion more on medical research, pay down 2 billion of the debt, put a trillion aside for contingencies -- and guess what -- that still leaves a lot of money in Washington.
Mr. Bush will make the case, let's give 1.6 trillion back over 10 years. The price actually could go up a little bit in his view because he wants to make it retroactive. And Mr. Bush will make the case that if you leave that money in Washington, Democrats will spend it, and that runs the risk of deficit spending. That, a direct rebuttal to what we've heard from the Democrats in recent days who are saying that it is the Bush plan that runs the risk of deficit.
So, pretty pointed from the president tonight, although aides saying he's trying to be bipartisan.
PRESS: All right. John King, thanks so much for setting us up tonight. Not poetry but important speech tonight.
Let's go right to Senator George Allen who joins us from Capitol Hill tonight. Senator Allen, let me ask you, or just tell you, first of all -- About 6:00 this morning I staggered out of the house and pick up my "Washington Times," and almost -- in fact, I did -- laugh out loud when I saw the headline.
Here it is. "Bush Will Tell Americans They Can Have It All."
Now, senator, you've got to agree, anybody who believes that -- and that is the president's message -- has to believe in Santa Claus, the Easter Bunny, and the Tooth Fairy all at the same time.
There's no way, wouldn't you agree, that you can take care of Social Security, take care of Medicare, take care of education, take care of prescription drugs for seniors -- take care of whatever else, and give Americans a $1.6 trillion tax cut?
SEN. GEORGE ALLEN (R), VIRGINIA: Well, I think it's very optimistic and I think we, as Republicans, are optimistic. And, indeed, I think if you look at the blueprint that President Bush has outlined and will tonight, is that the first thing you do is have discipline on Social Security, and not spend a penny of it on anything other than Social Security as far as the taxes coming in. That discipline helps reduce the national debt.
Then, for the part of the surplus, the 3 trillion, you set priorities as would a business. The priorities are education, national defense, basic scientific research, as well as non prescription drugs.
But after you do that, even with an increase in spending of 4 percent, which that I think is very reasonable -- after that there is still a dividend for the shareholders and the taxpayers, and this is the time to reduce the tax burden on the American people.
When you have these surpluses it's the time to do it. If we can't do it now, when will we be able to allow people to keep more of what they earn so they make the priorities in spending rather than the government.
PRESS: Well, you know, Senator, the problem is it sounds so familiar, and it is. We've been there. We've done that. Ronald Reagan came in with the same message. We can have it all! And what did we end up with? We ended up with almost $300 billion deficits.
Here's how Senator John Kerry, one of your colleagues, put it today. Just please take a listen.
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SEN. JOHN KERRY (D), MASSACHUSETTS: This is a case of here we go again, back to 1981 with Ronald Reagan. The American people have a clear choice. We can go back to Reaganomics, where you cut much more than you can, give a big tax, mostly to the wealthy, at the expense of a lot of people at the lower end.
(END VIDEO CLIP)
PRESS: That, of course, was Sunday.
But it didn't work then. You want to go back to the days of the big deficit, Senator?
ALLEN: Compared to Ronald Reagan's tax cut, this is very measly. This is one-third of the tax cut that Ronald Reagan presented. I think the American people would like to go back to the days of Ronald Reagan as opposed to Clintonomics, and I think George Bush is taking the proper approach in this regard.
And so there are tax cuts but they are tax cuts that I think are very reasonable. We ought to get rid of death taxes. Why should the death of an individual be an occasion for the government to tax an asset? The asset ought to be taxed as a capital gain when it is sold, not because your mother or father or grandparents died.
A man and woman should not have higher taxes just because they're married. Families are important in our society. And there are a variety of other taxes that I think that ought to be reduced so that families can invest and spend that money as they see fit.
The question is: Who spends part of this surplus? Part is determined by the government, taking care of priorities. Another part of the surplus ought to go to the people, and they make the decision. CARLSON: OK, Senator. We want to get to the other senator here. Now, Senator, you heard John Kerry. He was making the argument that a lot of Democrats are making, which isn't really an argument on the tax cut, it's an attack on the rich, the most vulgar kind of class warfare. The rich will use this money to buy new Bentleys, the poor will get bus tokens. Now, Al Gore ran an entire presidential campaign on this notion and it didn't work. The Democrats have focus groups that show that the American people are more resentful and envious than they were. I mean, why do you expect this is going to work?
SEN. JOHN EDWARDS (D), NORTH CAROLINA: Well, I think what'll work, Tucker, is to talk about what makes common sense to American families. Every American family has to make decisions about what matters to them, what their priorities are. They can't get everything. They know they can't get everything, so it's absolutely truthful of us, as nation, that we can't have everything.
We have decisions to make. Very important decisions that are going to say a lot about what we stand for as a country and where we're headed over the next 10 years. And if you ask: Should we have a tax cut? Absolutely.
If you ask: Should we have a tax cut of this magnitude, compared with a more moderate tax cut? And at the same time do what we need to do to make every school in America a quality school, making sure that every senior citizen has access to prescription drugs, making sure that every man and woman in our military has adequate housing and adequate health care.
I mean, those are the kind of -- paying down the debt, which is critically important, particularly given the fact that we have some sluggishness in the economy. These are decisions. We don't get everything. We have to make choices.
The president, by proposing this tax cut, has made a choice. He has made a choice that this is his top priority. It's more important to him than these other things. And I think -- I think it's very important, Tucker, that we be honest with people.
CARLSON: But that's only part of what democrats are saying. On the other side, again, as you just heard Senator Kerry say, democrats are saying that the rich are getting a lot and you're getting nothing. And in fact, that's not true, is it? Because George W. Bush is proposing the exact same rate reduction for everybody, rich and poor.
Now, the -- you know, the rich are American citizens -- or, Marc Rich isn't...
CARLSON: ... but most wealthy people are American citizens in this country. Why shouldn't they get exactly the same rate cut as everybody else?
EDWARDS: Well, I think what John -- Senator Kerry was saying was the vast majority of benefits associated with President Bush's tax cut end up going to the richest people in America.
Now, let me give you example, Tucker. The estate tax. I, conceptually, don't like the idea that estate taxes exist in this country, but we have decisions to make, important decisions.
First of all, we should make sure that every farmer in America is protected against estate taxes. We should make sure that every small businessman who wants to pass on a business that's been in the family for generations has the ability to do that without being taxed.
But then we get to a third question, which is: Should we allow estates of, for example, $100 million or more to be completely protected from estate taxes? Some of the wealthiest people in the country. Now...
ALLEN: Now, just so you understand on this one issue, it's not exempting any estates from -- it's exempting them from death taxes. An estate, whatever the asset is, would be taxed at the capital gains rate, so they'd be taxed at, say, 20, 25 percent as opposed to 55 percent.
EDWARDS: But we get to the question -- George, I think we get to the question of whether in our list of priorities, if we're protecting farmers and we're protecting small businessmen, where on the list does it fall, these very large estates?
And, at least from my perspective, if we're trying to invest in schools, trying to do prescription drugs, trying to do all these other things -- I think it's just dishonest to suggest to people that we can have everything.
We're also very optimistic. I mean, there are enormous opportunities available to us as country. But those opportunities depend on us making the right decisions.
PRESS: Senator Allen, let me come back to you, because you just said -- your last answer about how eager the American people are for all these tax cuts. I mean, I like to remind you -- I hate to remind you, but, you know, George Bush sold this during the campaign and Al Gore got over 500,000 more votes than he did, but let --
Let me show our viewers what "The Washington Post" showed this morning in terms of their nationwide survey of what the American people think about this.
"Washington Post," ABC News. First question: What's the top priority for surplus money? Domestic programs, 35 percent. Social Security, 25. Taxes come down to third on the list, 22 percent.
Next question: What kind of a tax cut do you think we ought to have? As Senator Edwards said, we're going to have one. Across the board: Bush's plan, 43 percent. A smaller, targeted tax cut, the Democratic plan, 53 percent.
You keep puffing about all this support. Where is it? The people don't like this plan.
ALLEN: Well, I'll tell you what people won't like is if you keep all the money in Washington, and when you think of the amount of money that is projected to come in the next 10 years, this tax cut is only about 6 percent of all the funds that'll come in.
You talk about Ronald Reagan. This tax cut's smaller than the tax cut that John F. Kennedy put into place. Yes, we'll have to make priorities, and I agree with John. Education is vitally important and the federal government can help and support local and state efforts in education. National defense is a priority -- prescription drug coverage, also of course research into diseases and medical improvements.
But we also ought to allow the people to keep more of what they earn. So if you say, "Gosh, the government can't turn back 6 percent," a measly 6 percent, what can we turn back? Is it 5 percent?
Now when you get into the details, Bill, of marriage penalty taxes, health insurance being fully deductible for individuals and the self-employed, I think we'll probably have good mix and match and great argument. But nevertheless, the bottom line is, is I think we can turn back just 6 percent of the funds that are coming into Washington for the next 10 years.
PRESS: Well, I guess the question again is, I guess, what is the priority? And I think question is, if you do this 1.6 trillion tax cut, is there anything left for what those priorities are?
Let me give you -- tell you...
ALLEN: Well, Bill, it's a 4 percent increase in spending generally, across the board. There are some areas that are going to get a higher increase in spending, such as education.
PRESS: Let me mention another bellwether. Congressman Charles Stenholm, "Blue Dog" Democrat from Texas, good buddy of George Bush's -- in fact Bush was even -- I mean, there were rumors that he was going to get a job in the Bush administration. He was a big, big supporter of the Reagan tax cut. He said now it's the biggest mistake he ever made.
And here's what he said just the other day about George Bush's plan.
I quote Congressman Stenholm -- from Texas. Quote: "Everybody's talking" -- "taking photo-ops as being public policy. At some point, we have to fit that within the budget. My constituents are telling me 2-1 to pay down the debt, fix Social Security and Medicare first, don't have a tax cut first."
You're not getting the message, senator.
ALLEN: No, Bill, you're missing the message. The message is, is that in the last several years the Congress has spent more -- they spent the entire surplus, and then some. Now, the reality is having a discipline in keeping Social Security taxes for only Social Security, that is a discipline that pays down the debt.
Debt has been paid down because of this lockbox approach for the last few years, by about $360 billion. Now, in the first two years of George Bush's plan, they'll be more -- that'll be matched more than double in the first two years, and indeed over the next 10 years, the debt will be down to the lowest level since it was back in 1920. So there'll be a pay-down of the debt with this discipline.
PRESS: All right, senators, take a break there. We're going to take a break. And Senator Allen was just talking about the national debt. But if the economy goes down, will that surplus that we're spending even be there to spend?
We'll be right back.
PRESS: Welcome back to CROSSFIRE.
Big test for President Bush tonight. His first speech to Congress, which members of Congress, the media and the American people will all be watching closely, not only to hear his proposals, but to see how well he does. Can he sell his tax cut? Will he look presidential?
We take an advance look tonight with two key senators: Republican George Allen of Virginia, joining us from the nation's capitol, and Democrat John Edwards of North Carolina -- Tucker Carlson.
CARLSON: Senator, let's just talk numbers really quick. Now when George W. Bush first proposed this tax plan last year, the federal budget surplus was estimated over the next 10 years to rise to about 3 trillion. Those numbers are now up to 6 trillion, some economists estimate 8 trillion over the next decade.
The tax plan hasn't changed. It hasn't gotten any bigger. It's still pretty small. You're still against it. Specifically, how huge would the surplus have to get before you could support this tiny tax cut?
EDWARDS: Well, I may be wrong, but are we already spending this surplus that doesn't exist? I mean, I think that...
CARLSON: No, you know, we have to go with estimates, they're the best we have.
EDWARDS: Yes, but think about how many -- how many corporations in America would give a dividend based upon a projection of what's going to happen eight years from now. Not a single one.
And the whole problem with this is look back five years, look back 10 years at the projections that were being made. They turned out to be dead-wrong. The odds are these estimates are going to be dead-wrong.
What we know, in terms of being responsible...
CARLSON: Well, wait, wait. How can we plan for anything then? If we're saying all CBO numbers are bunk, then, I mean, why even have them? Why even make estimates of any kind? I mean, you couldn't run the government without using estimates.
EDWARDS: Because what we need to do, Tucker, is act more responsibly in the shorter term. What we know is in the out years these estimates become unreliable. In the short term, they're relatively reliable, and there are ways of dealing with this.
For example, there's been some discussion in the Senate about having a trigger mechanism, seeing if in fact we're paying down the debt, seeing if in fact we're developing these surpluses before the tax cuts kick in. That's one idea that's worth talking about.
But we need to be very responsible, and always recognize that there are very serious questions about these projections. And the further out we get, the less reliable they get. And to suggest that, you know, eight, 10 years from now we know surpluses are going to be is absolute nonsense. Of course we don't.
PRESS: Senator Allen, I want to ask you about another part of the speech. The president tonight is going to announce, we're told, a -- create a new commission to study Social Security reform. I mean, we've had commissions, after commissions after commissions studying Social Security, senator. Isn't it true that when a politician doesn't know what to do, he or she just creates a commission?
ALLEN: That'll happen from time to time, I'll grant you that, Bill.
PRESS: You're an honest man.
ALLEN: However, on this wonderful briar patch of an issue, I think that what we need to do is give the people of America some confidence that we're not going to raid Social Security trust funds. And I think that if that's done for several years in a bipartisan manner -- and it has to be bipartisan, because you're almost going back to back through the doorway on an issue like this -- if there are some ideas that will be able to increase people's -- their security and retirement benefits, hopefully we can derive it, and it's going to need to be done in a bipartisan way.
And you have to cautious. This is a politically sensitive issue. Let's be realistic.
PRESS: Well, you know why he's doing it really, first of all...
ALLEN: He's trying to build consensus and try to get Republicans actually convinced about it as well as Democrats. PRESS: You're right. He's trying to get people behind his plan of privatizing Social Security. So I want to ask you this question: Let's say I privatize my Social Security fund and I bought Priceline. It was up about $90 and now it's selling for less than $3. I would be out of luck and I'd be back to you for a handout, right, senator? Isn't that the problem? It's a bogus plan.
ALLEN: But if you put all your eggs in that basket, it probably wouldn't be very prudent, and I'm not sure that that's what you would do. You're a smart fellow, Bill. I hope -- hopefully, you didn't. But...
PRESS: You have more confidence in me than I have in myself.
ALLEN: But Bill, these are types of issues and concerns that ought to be addressed. I'm not an advocate of it. My main advocacy is make sure you keep your paws as politicians off of the Social Security trust fund and save it for Social Security and don't use it for other government programs. And that's -- that's the point of it all.
CARLSON: Now Governor Edwards, the Democratic response...
EDWARDS: Senator Edwards.
CARLSON: I beg your -- I'm jumping -- I'm planning your future for you. OK.
PRESS: You're spending his surplus.
CARLSON: I know I am.
Now, the Democratic response in this speech is so canned that CNN actually even has a copy of it. Yes, it's true. And a lot of what Tom Daschle is going to say tonight, he's going to say, look, the Reagan cut account of '81 was a complete disaster. I could read you part of it, but it's just too tiresome. I won't.
But the bottom line is America -- America fell apart after the Reagan tax cut.
Am I misremembering? I mean, there were no bread in the '80s, there were no Hoovervilles. It wasn't a Great Depression. Democrats called it the decade of greed. And now all of the sudden, they're calling the '80s as a time of poverty in America. What's going on?
EDWARDS: But Tucker, we did have extraordinary -- developed extraordinary deficits, which we spent most of the '90s trying to dig out of. And the question is, are we going to leave this kind of deficit, this kind of debt long-term to our children? The one thing we know -- we talked a few minutes ago about the projections and the fact that they're inherently unreliable. No economist believes you can project out eight, 10 years. But what we do know is 10, 12 years from now the baby boomers are going to start to retire. And one thing that's not being discussed very much, at least not publicly in this debate, is not just the next 10 years, but what's going to happen over the next 20, 30 years, because over that period of time, there aren't surpluses, there are deficits. And there are very serious problems. And we're not leaving ourselves any room to protect against that.
I mean, would most American families leave themselves some protection? Would they act in a fiscally responsible way, or would they spend every dollar they have? And I think that's what -- that's what we're talking about.
PRESS: Senator Edwards...
CARLSON: Senator George Allen of Virginia. Thank you both.
ALLEN: Thank you.
CARLSON: Bill Press and I will be back in just a moment to offer our projections for the next decade and decades to come in our closing comments. We'll be right back.
PRESS: Tucker, you and I both from California. You may remember the Paul Gann (ph) initiative. It said give the surplus back to the people. They did this in the late '80s in California. Do you know what the California people said? What are you giving us these checks for? Use them to fix the schools, don't just give them a measly little check in our pocket.
CARLSON: Is that what the California people said? You must know different...
PRESS: They did. No, they did, Tucker.
CARLSON: ... California people than I do.
PRESS: The Republicans underestimate the American people.
CARLSON: Is that true? Well, I think -- I think the Democrats overestimate the envy of the American people. Every single critique of this tax plan is all about "The rich people are getting things you're not going, down with the rich." I mean, it's so vulgar, and I think it's ineffective in the end.
PRESS: I do think, Tucker, that it is hard to make an argument that you and I need or deserve a tax cut when there are people who can't put their kids through college, who can't pay their bills...
CARLSON: But we're all getting a tax (UNINTELLIGIBLE) under this plan.
PRESS: But the...
CARLSON: And we're getting an even, equal, fair one.
PRESS: No, we're not.
CARLSON: Of course we are.
PRESS: Sixty percent of the benefits in the Bush plan go to the top 2 percent of Americans.
CARLSON: That's because they make more money, Bill. This is like economics 101.
PRESS: They -- help the people who need -- need it the most, Tucker.
CARLSON: Well, they're getting help...
PRESS: I thought you were a compassionate conservative.
CARLSON: We're in this together, Bill, all Americans, rich and poor.
PRESS: From the left, I'm Bill Press. You'll hear more on the president's speech coming up in just an hour, and hear more from Tucker and me in "THE SPIN ROOM" at 10:30.
CARLSON: With Charlie Rangel. I'm Tucker Carlson from the right. Good night for CROSSFIRE.
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