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Should Americans Get a Rebate From the Government?

Aired March 28, 2001 - 7:30 p.m. ET


BILL PRESS, CO-HOST: Tonight: the great rebate debate. Democrats want to give you a $300 tax rebate. Is it a good idea, or a political ploy to keep President Bush from getting his big tax cut?

ANNOUNCER: Live, from Washington, CROSSFIRE.

On the left, Bill Press; on the right, Robert Novak.

In the Crossfire: Democratic Congressman Dennis Kucinich of Ohio, chairman of the progressive caucus, and Republican Congressman John Sununu from New Hampshire, vice chairman of the budget committee.

PRESS: Good evening. Welcome to CROSSFIRE. How much money? How fast? And who gets it? The big debate over tax cuts just got more complicated. Now Democrats have tossed their own proposal onto the table: An immediate $300 tax rebate to every man, woman and child in America. Goose the economy. Go out and buy a new TV or toaster, right now.

Senate Democratic leader Tom Daschle argues his plan is better, because it's 10 times bigger than bush's tax cut -- this year. But President Bush counters it's just a one-time fix. The economy needs more than a mere pick-me-up, he told business leaders in Kalamazoo, Michigan.

So, let the debate begin. Is the $300 tax rebate the answer to this year's economic blues, or is it just a gimmick to derail the president's plan -- Bob?

ROBERT NOVAK, CO-HOST: Congressman Kucinich, welcome. I would like you to hear what the Senator Majority Leader Trent Lott said on CNN's LATE EDITION over the weekend.


SEN. TRENT LOTT (R-MS), SENATE MAJORITY LEADER: Really what they are advocating was, "Well, let's just fly over the country and drop out, you know, $300 checks to everybody," regardless of what they paid or whether they paid taxes or not.


NOVAK: Now, Congressman Kucinich, when you were the boy mayor of Cleveland in 1977, President Carter, who knew less about economics than anybody who's ever been in that office, proposed a $50 rebate, and everybody laughed because they said what Trent Lott said.

He said, "You may as well take $50 and throw in it up in the air." Fifty dollars, in 1977, is the equivalent of about $150 today, just about half the size of this rebate. Don't you guys ever learn that that is just the silliest thing in the world, to throw this money around and think it's going to have any effect on the economy?

REP. DENNIS KUCINICH (D-OH), CHAIRMAN, PROGRESSIVE CAUCUS: Well, actually, I don't think that the American people would believe that it would be silly to get $300 in the mail for each person and their family. I think they'd believe that it's important, and right now with the Dow down 162 points today, Nasdaq down 118 points, there is a need for an immediate stimulus now.

And the fact of the matter is that the kind of money this would provide, this stimulus to the economy, would approximate the kind of money that's been taken out by the stock market decline. So we are saying, give the money now, and also have equitable distribution because, unfortunately, the administration's plan gives 43 percent to those in the top 1 percent bracket, and that's not fair.

NOVAK: Congressman Kucinich, you are listed as chairman of the Democratic -- as the chairman of the progressive caucus for left wingers in the House of Representatives. You're on the far left of your party, and what you are talking about is giving everybody $300, whether they pay any taxes at all, and you're saying we're going to have the only other cut in the brackets in the lowest bracket. So, what you're are doing, you lefties, is you're trying to make the tax system more progressive, redistribute the income from the productive people, to the people who don't do as well. Isn't that right?

KUCINICH: Actually, I throw right handed and I bat left to right. And with our plan we see to it that the money is equitably distributed, that everybody gets $300.

NOVAK: Whether pay taxes or not?

KUCINICH: Well, you know, every member of this country is part of the economy, every person in America should be able to share in a surplus, because we're talking about a surplus here. If there is, in fact, a surplus, it's only fair that all Americans benefit equally.

Because it isn't -- we are not in a country where people, just because they are on the lower end of the economic totem pole don't count -- they count. They count equally.

PRESS: Congressman Sununu, it's always good have a John Sununu on CROSSFIRE.


PRESS: OK. Before we get to the numbers I want to talk about the timing, because I think I see big disconnect. I mean, the president keeps coming up with different reasons for his tax cut. The latest one is we need this to stimulate the economy, and yet, I think Senator Dick Durbin pointed out that, you know, there's something that doesn't fit here. Let's listen to Senator Durbin. You'll see what I mean.


SEN. RICHARD DURBIN (D), ILLINOIS: For over 90 years, the war cry in Wrigley field for the beleaguered cubs has been, "Wait till next year." Sadly, that is President George Bush's economic plan: Wait till next year.


PRESS: So that's the disconnect, Congressman. If we need the stimulus now, then we need tax cut now, ergo, Dennis's plan.

SUNUNU: Well, look, I think it's terrific that there are Democrats that recognize that we should cut taxes soon, we should cut taxes fast. We should do what we can to have a modest effect on the economy, but cutting taxes isn't the be all and end all. There's a lot more that goes into the economy than that.

It's your show, you can call it whatever you want, but let's be clear, this has nothing to with taxes. This doesn't have any relation to what you pay in incomes taxes, no relation to what you pay in payroll taxes. This is a spending program. This is a big federal spending program that will write checks, $300 apiece, to every man, woman and child in America.

From a redistribution of wealth perspective, it may be something that's very defensible, and Dennis is within his right to introduce the legislation. But it has nothing to do with tax policy. And ultimately, what tax relief should be about is creating a tax code that's more fair, that creates incentives to save and invest, that lowers marginal rates in order to encourage productivity, investment and job growth. And we should at least take some time to talk about what kind of a tax code is right for America.

PRESS: Well I'm not saying it solves all the problems of the tax code, Congressman, but certainly it has a relationship to taxes because it's only -- you only get this if you pay income or payroll taxes.


SUNUNU: You are wrong.

NOVAK: Wrong, wrong.

SUNUNU: This has nothing to do with how much you pay in payroll taxes or income taxes.

PRESS: No, I didn't say how much.

SUNUNU: It has nothing to do whether you pay income taxes or payroll taxes. This is $300 for every man, woman and child in America. Now if you want that discuss cutting taxes, cutting marginal rates or a true refundable tax credit that is based on your payment of payroll taxes we can talk about that, but that's not what this program is.

PRESS: And the other this program does, the bill does, that proposal for Lieberman, at any rate, is to also lower the lower income tax rate from 15 to 10 right away, instead of waiting for like five years for George Bush. But the...


SUNUNU: It's encouraging to remember that they remembered that the debate is about taxes...

PRESS: I'm just pointing out it does have something to do with taxes. But I also...


SUNUNU: ... the Lieberman proposal, but not Dennis's.

PRESS: But I also want to make this point is that it's...

KUCINICH: And Senator Daschle's proposal is the one that would base it on the people who are paying the takes. Our's...

PRESS: ... if I can, to follow-up, because you said Democrats. This is not just Democrats who like this. Arlen Specter said he's going to vote for this, and I want to read you something that the majority Republican leader of the house, Dick Armey, said and, of course, he thinks the George Bush tax cut is not big enough, but he also said about this, quote, in "The L.A. Times," "The rebate idea may have one very important virtue, however. It may turn out to be the only effective means of getting this year's massive surplus back into the hands of the taxpayers who produced it."

Dick Armey, your leader.

SUNUNU: Well, he's talking about taxpayers. He's talking bout a rebate that has a relation to what you are paying in income taxes or a rebate in relation to what your marginal rate is, or a rebate related to what the predicted effect of a marginal rate cut is, and therefore cut withholding in order to get that back in the pocket as soon as possible.

Dick Armey is not talking about an entitlement program that represents a $300 check for every man, woman and child in America.

KUCINICH: Let's face it, you know, there's a lot of senior citizens in this country...

NOVAK: I'm one.

KUCINICH: ... who have propped up -- see, I don't believe that. You are such young man -- and there is a lot of senior citizens in this economy who have helped the economy grow with their work for a lifetime. Why shouldn't they get part of a surplus? We are talking strictly about a surplus here, about returning money to the people. And the fact is, return it now, and the president's plan, however well intended it is, 85 percent of the benefit doesn't get to the people until after the year 2005.

NOVAK: Congressman Kucinich, there's no question, I hope my colleague will understand that this goes to every single person in the country, man, woman or child, whether or not you pay taxes. Now, I want to move on, and I want to take another point that President Bush made in his speech on the economy in Kalamazoo on yesterday, and let's listen to the president.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Immediate tax relief is good news. But tax relief that gets yanked away next year is not such good news. Lower rates do not stimulate much economic activity unless people can rely on them for years down the road.


NOVAK: And this is the problem, is it not? The bad economy under President Ford, let's forget about the Carter fiasco, the bad economy under a Republican president, Ford, was because he had a rebate that actually passed. You have to give the people some promise down the road. This is a one-year doozey, isn't it?

KUCINICH: Actually, no. Every year there's a surplus people get money back. That's the point.

SUNUNU: Dennis extended the program for 10 years. That's a $900 billion spending program over a 10 year period.


NOVAK: But the thing that most of the people are talking about is a one-year program.

KUCINICH: The president's plan would give back $2.9 trillion back over 10 years, 43 percent if we have the money.


SUNUNU: The president's tax cut is not that large. In our budget, we just passed the budget on the house today...

KUCINICH: Give me a figure, give me a number.

SUNUNU: It's 1.6 trillion, it allows for budget reconciliation, a tax bill up to 1.6 trillion over the 10 year period.

KUCINICH: OK, let's say, let's say 1.6 over 10 years: 43 percent of that goes to people in the top 1 percent. And what we're saying with our plan is that all Americans should benefit, and we're talking about the stimulus. We need money...

SUNUNU: Dennis, Dennis... (CROSSTALK)

KUCINICH: ... the economy now. Why wait?

SUNUNU: Dennis, the top 10 percent of wage earners pay 63 percent of the taxes. They get about 45 percent of the...

KUCINICH: If that's true...


NOVAK: They get less than that if you don't count the...

SUNUNU: If you take out the estate taxes even, it's even less.

NOVAK: And dead -- dead people don't get tax benefits. I don't think you understand that.

KUCINICH: John, let me ask you this: Why, if you want to stimulate the economy, would you support a plan where 85 percent of the benefit doesn't become available until after the year 2005?

SUNUNU: I think that's a good point, and that has to do with tax policy. Should we make this effective January 1st? Absolutely. Should we cut marginal rates as quickly as possible? Absolutely.

KUCINICH: Why support a plan -- why support a plan where 43 percent of the benefit goes to the top 1 percent?

NOVAK: Can I explain? It isn't 42 percent, because dead men don't pay -- don't get tax benefits. And you're putting in the estate tax. It's really -- it's really about 26 percent.

But let me ask you this: You know, somebody gets 300 bucks and he goes out -- he may do it -- he may do it -- he may spend it at the bar, which is good for the beer industry, or he might buy a toaster, as Bill said, or a TV. Well, you can't buy a TV for that.

But what -- but what -- let's say that if you give a tax cut to somebody in the top 1 percent, what do you think he does with that money? Do you know what he does with it, Mr. Kucinich? What do you think?

KUCINICH: Well, it all depends on the economy, doesn't it? Because...

NOVAK: He invests it.

KUCINICH: Well, if he invested it...

NOVAK: A person -- a person making over $100,000 a year gets a tax cut he invests it, because he's spending -- he's got everything he wants any way.

KUCINICH: Well, you're proving my point actually, and that is that... NOVAK: How am I proving your point?

KUCINICH: If the money is reinvested, that doesn't necessarily mean that the money is going to go into immediate productive activity in the economy. We're talking about spending. Spending is what primes the pump.

NOVAK: But then you don't understand anything about politics. If you don't think investment is the key to the economy...

KUCINICH: I'm not saying that. I'm saying -- no, I didn't say that. I didn't say that, Bob.

What I said is that we're talking about a surplus, we're talking about the need for stimulus. And the best way to provide a stimulus is to give the money back to the people now.

SUNUNU: The best way to provide...


... a stimulus is to create a tax code that actually rewards people who take risks, who make investments. Cut the capital gains tax. Cut marginal rates.

Think about how many businesses out -- are out there that are sole proprietorships. They're being taxed at a 40 percent while IBM is only being taxed at a 35 percent rate. That's outrageous.

Cut the top marginal rate so the small entrepreneur, the self- employed person, someone with two or three or four or five employees that's being creamed at that 40 percent has the incentive they deserve.

KUCINICH: You know, I'm with you on trying to take care of those people, but at the same time, let's not pretend we're not in the middle of an economic slowdown that needs to be addressed with the surplus.

SUNUNU: Well, I'm glad to have you on the record for cutting the top marginal rate.

NOVAK: All right. We're going -- we're going to take a break, and we're going to find out what in the world this kind of tax cutting is going to do to the size of the government.


NOVAK: Welcome back to CROSSFIRE. The Republican-controlled House today approved President Bush's budget in a vote largely along party lines. But the budget faces a tougher test Monday morning in the evenly divided Senate. Democratic senators don't like the Bush budget's 10 years of tax cuts. They're now pushing a one-time tax rebate instead.

We're talking to Democratic Congressman Dennis Kucinich of Ohio, chairman of the Progressive Caucus, and Republican Congressman John Sununu of New Hampshire, vice chairman of the House Budget Committee -- Bill Press.

PRESS: Congressman Sununu, we've all been using this $300 figure. In fact, it's more, because if you look at the money that people would get from the lower tax rate, it's about another $150 that's been estimated. And the total cost, $60 billion back right now this year.

The total cost under George Bush's plan in money that would get back this year is a measly $5.5 billion, over 10 times the Democrats would pump into the economy right now.

John Sununu, why not?

SUNUNU: If the goal is to increase the size of the tax cut in year one, I think that's a great debate to have. I think it should be based on tax policy. It should be based on repealing the marriage tax penalty, cutting marginal rates, doing something on capital gains, increasing the per-child credit.

All of those deal with the tax code, make our tax code better, more fair and would do the same thing, would get money into the economy soon.

I think the way to get money into the economy isn't to create a new $60 billion spending program that has nothing to do with the tax cut.

PRESS: I hear that, but I think the real thing is you guys just may have been trumped, because somebody came up with a better idea.

Let's listen to Tom Daschle yesterday. I think he put his finger right on why you guys don't like this idea.


SEN. TOM DASCHLE (D-SD), SOUTH DAKOTA: Is it possible that Republicans have just met the first tax cut they don't like? Or is it that tax relief for everyone is being held hostage by their commitment to a massive tax cut to the very few?


PRESS: You've just been outmaneuvered, haven't you? That's what it is.

SUNUNU: One, this isn't tax relief for everyone, because it's not tax relief. It's a spending program, a spending program for everyone I suppose, but a spending program nonetheless.

Second, you opened the show to talk about timing. Look, this is Washington: This is about politics, this is about timing.

The Democrats in the Senate have no interest the president's tax relief proposal. They really at this point have no interest in even negotiating, because they know the president's probably willing to work with them if they want a 1.4, 1.5 trillion dollar tax cut. There's probably some negotiation to be had. The Senate's going to work its will on the tax bill anyways.

And instead, their single-minded goal is to destroy any opportunity for tax relief legislation this year.

Senate's going to take up the budget bill next week. Look, this is just a fly in the ointment for them because they know that there are two or three Democrats that have already signaled their willingness to vote for the president's entire package. And when we get a budget resolution through the Senate that allows for a broad tax package, that cuts rates, does something on marriage penalty and death taxes, that's it. The president has a victory.

NOVAK: Congressman Kucinich, I'm going to give you a chance to redeem yourself tonight. Senator Joe Lieberman, who has come up with the same 60 -- but I don't -- these guys all must have met in the same basement.

SUNUNU: Oh, no, it's just a coincidence.

NOVAK: But Senator Lieberman can't be as demagogic as this. And while putting out this Marxist share the wealth proposal, Senator Lieberman also came up with something that would aid the economy, and something that President Bush hasn't proposed. That's a cut in the capital gains tax.

Would you buy Joe Lieberman marrying this giveaway rate rebate with a cut in the capital gains tax?

KUCINICH: That's not what I'm here to propose.

NOVAK: No, would you buy that?

KUCINICH: I'm not here to propose that. Absolutely not. I'm here to propose...

NOVAK: You failed the test.

KUCINICH: Well, hold on a minute. Would a cut in the capital gains tax do anything to help the 230,000 manufacturing employees who are out right now?

NOVAK: Yeah. Sure.

KUCINICH: That's debatable. I doubt it.

SUNUNU: More private capital into those firms, money to invest in resources, innovation, technology, capital equipment, productivity improvement.

KUCINICH: And you know why this is happening? Because the market is down, and you're telling me that just because you give a tax cut that takes effect after 2005, it's going to help the market now?

SUNUNU: Well, not if it takes place in 2001. Not if it's effective January 1, 2001.

NOVAK: Mr. Kucinich, you're a skilled politician. You were mayor of Cleveland when you were only 31 years old. You're a big winner in your Congressional districts. Now, let's talk a little politics. What has happened here is that you people, the Democrats, were caught high and dry.

The people, all the polls show that the American people do want a tax cut. They think a tax cut is necessary to help the economy. And so you were caught in this untenable position, and you come up with a handout to the people. Isn't that essentially correct?

KUCINICH: It's not correct at all. We begin this by talking about a surplus. And since we all recognize that there might be a surplus, then the question is: should we give the money back to the people? And the answer is yes. The people should get money back.

The next point is: who should get the money back? I say, everyone should get money back. Not just 43 percent to the top 1 percent.

The next question is: when should they get it back? And the answer is now. And that's what our proposal does. It gives people the money back now.

SUNUNU: The purpose of our federal government, and we are, as elected representatives, stewards of that, is not to create a revenue system, collect taxes -- gas taxes, payroll taxes, income taxes, estate taxes -- collect those taxes and then just take all that money into the Treasury and write checks to individuals and redistribute the wealth.

The whole concept of public ownership of the means of production has been pretty thoroughly discredited by this point in the 21st century. That's simply not the role of the federal government.

KUCINICH: Neither is it the role of the federal government to accelerate the wealth up to the top, so that only those who are the wealthiest in the country can get the benefits that are available in the country. That is not a democracy.

SUNUNU: But what about a system where only the top 30 or 40 percent of wage earners pay any income taxes at all?

PRESS: That question's just going to have to hang out there, because we're out of time.

Members of Congress John Sununu, Dennis Kucinich, thank you very much for coming in.

When we come back, Bob Sununu and I -- Bob Sununu...


PRESS: Bob Novak! Bob Novak and I are going to tell you how we're going to spend our $300 in closing comments. (COMMERCIAL BREAK)

NOVAK: Bill press, the demagogues of the world, starting with the Roman emperors, used to give out bread in service to the masses. And try to improve their power, increase their power by giving out handouts to the people, and that's what the Democrats are proposing on this $300 giveaway. But, please, Bill, please don't call it a tax cut. As John Sununu said -- John E. Sununu said, it doesn't have anything to do with taxes.

PRESS: Bob, you know what you're problem is? You don't like this because it's too fast and it's too fair, Bob. Yeah, you want tax cuts, but you only want it to go to the Plutocrats of this country. The thing about this is it's 300 bucks to every American man, woman, and child. It's egalitarian, Bob.

NOVAK: Can I ask you a question?

PRESS: It's Democratic. It's American.

NOVAK: Explain to me -- explain to me how you call it a tax cut if it goes to a person who pays zilch -- nada -- taxes. Explain that to me.

PRESS: I'll explain it. The Lieberman proposal gives $300 to every taxpayer.

NOVAK: I'm talking about Kucinich. We got Kucinich, here.

PRESS: Either one, Bob. It's $300 to every American. I love it.

NOVAK: Why don't you go back to Russia?

PRESS: From the left, I'm Bill Press. Good night for CROSSFIRE. I'll see you later in THE SPIN ROOM.

NOVAK: On the right, I'm Robert Novak. Join us again next time for another edition of CROSSFIRE.



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