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Is the Bush Tax Cut Made From Smoke and Mirrors?

Aired June 7, 2001 - 19:30   ET


TUCKER CARLSON, CO-HOST: President Bush signs his big tax cut into law. Could it lead this Republican to sign up with the Democrats?

Tonight: We Ask Senator Lincoln Chafee about his party plans, and we ask two members of Congress if the new tax law is anything to celebrate.

ANNOUNCER: Live from Washington, CROSSFIRE. On the left, Bill Press. On the right, Tucker Carlson.

In the CROSSFIRE: Republican Senator Lincoln Chafee of Rhode Island; and later Republican Congressman J.D. Hayworth from Arizona, member of the Ways and Means Committee, and in New York, ranking member of the Ways and Means Committee, Democratic Congressman Charles Rangel.

CARLSON: Good evening and welcome to CROSSFIRE.

It's April 15 in reverse. President Bush signed his long- promised tax bill today. The new law would cut taxes by $1.5 trillion over 10 years. It will eventually double the child tax credit, reduce the marriage penalty and repeal the estate tax. The first refund checks hit the mail next month.

Republicans are thrilled: Most of them, anyway. Two GOP senators, John McCain and Lincoln Chafee, voted against Bush's tax package. Perhaps not coincidentally, both were invited to the White House this week -- Chafee, late this afternoon. Maybe more than anything, the administration fears that another Republican senator will go the way of Jim Jeffords and leave the party.

Chafee is considered a particularly acute defection risk. We'll ask the man himself -- Bill.

BILL PRESS, CO-HOST: Senator Chafee, good to have you here this evening.

SEN. LINCOLN CHAFEE (R), RHODE ISLAND: Thank you for having me.

PRESS: I want to mention, before we get started with your plans, that your father, John Chafee, was one of our most frequent and favorite guests here on CROSSFIRE. All of us here miss him very, very much. CHAFEE: Thank you very much.

PRESS: I'm delighted to welcome you to the show. Senator, you had your meeting today with President Bush, a meeting that you asked for. If you had to describe it in just a word or two, would you say it was warm and fuzzy or icy?

CHAFEE: I would say that we established a relationship.

PRESS: Businesslike?

CHAFEE: Yes. Our families know each other, but I don't know him and he doesn't know me. The reason I called the White house to set up the meeting several weeks ago, is so we could get to know each other.

PRESS: Obviously, it's no secret that you are not particularly happy with his brand of Republicanism. So I know you didn't want to waste your time. When you went their today, what did you tell the president that he was doing wrong, as far as you were concerned?

CHAFEE: Well, I just expressed some concern about how we're going into the 2002 mid-term elections, in particularly in light of our losses in 2000, that put us at 50/50, and then some of the policies that have -- you might argue -- driven Jim Jeffords out of the party, and put us in the minority.

And so, we had some discussion about where we are going in 2002.

CARLSON: Speaking of Senator Jeffords, Senator Chafee, I want to read a little testimonial to you from him. This is Jim Jeffords on Lincoln Chafee. Here's what he said.

"I naturally have an affinity toward Linc. He thinks pretty much like I do. He's even further out than I am."

Meaning, apparently, you are even more liberal than Jim Jeffords. So I suppose my question to you: why in the world stay in the Republican Party? Why not follow Jim Jeffords and head to the other side?

CHAFEE: I think there's more of a recent phenomenon in the Republican Party in Congress, turning very, very conservative, and particularly since the 1994 Gingrich "Revolution," you might say. But before that, there are a broad swathe of moderate Republicans, Nancy Kassebaum, Mark Hatfield, Al Simpson, even conservative mountain states -- Al Simpson from Wyoming, Nancy Kassebaum from a prairie state, Kansas. And that number's shrunk now.

But I think there is still hope the Republican Party can express some moderate point of view. Look at the moderate Republican governors in the Northeast: Pataki, Rowland of Connecticut, Almond in my state of Rhode Island, Swift in Massachusetts -- what a Democratic state that is.

So there is a lot of talk about how the Republican Party is going right. But there is still a broad swathe of moderate Republicans... CARLSON: But -- as you obviously know, you came after the Republican revolution of 1994, and however the Republican Party has changed, the fact is you are deeply out of step with it. I mean, disagree with the president and most Republicans on health care, abortion, taxes, energy, the environment. It's hard to imagine -- what exactly do you agree with Bush on?

CHAFEE: I think what is important is what the people of America want. And don't forget that we lost four seats to get to 50/50, and then we lost Jim Jeffords. Why did we lose Spencer Abraham and Michigan? Why did we lose Slade Gordon in 2000 elections in Washington state? Why did John Ashcroft have a close race in Missouri before the unfortunate passing of his opponent. And I'd argue that some of the conservative policies, and we lost those races.

So, my message is, we have to appeal to the broad number of Americans to build our party.

PRESS: Senator, presently, in this Republican caucus, in this Republican -- these Republican senators presently in the Senate, you go into your caucus. You are like the skunk at the lawn party. I mean, they disagree with you on all the issues, you are always swimming upstream. You come from a state that's heavily Democratic. Wouldn't -- couldn't you get a lot more done for Rhode Island as a Democrat? And have a better time and friendlier time in the U.S. Senate?

CHAFEE: No, I'm a good, loyal Republican. My first name is Lincoln, named after the first Republican president. So I have a loyalty to the party, and I want to see us be successful. And I do get up in Republican caucuses and talk about where we are going and how we can be successful and why we lost those seats.

And when we're looking ahead to 2002, what we can do to get back in the majority, and don't forget, those Republican governors in those Northeast states, they are successful in these Democrat states, because they are moderate on some issues. And we want to make sure they stay Republican. It's not just Lincoln Chafee.

PRESS: In terms of fighting the fight, just some of the resistance that you meet, Senator Trent Lott, after you first expressed your satisfaction and unwillingness to vote for the president's budget resolution, he told your hometown paper, the "Providence Journal Bulletin":

"I'm disappointed in his conduct and his votes."

Are you willing to tell us tonight that you are disappointed in Senator Trent Lott's leadership?

CHAFEE: Well, we have gone -- we have lost numbers, and that always brings some kind of scrutiny. We have gone from 54, down to 50 and now to 49. But he won the election that we had the last (UNINTELLIGIBLE) leadership, it actually wasn't even challenged, so I respect that. He is the leader and I follow his guidance. He's very open to discussion. He's always open to hear what other people have to say. And don't forget -- he's always challenged within our caucus from even more conservative members than you might argue he is, so he has the most difficult position that I can imagine.

CARLSON: Senator, I was interested in that you couldn't think when I asked you of a single issue on which you and the president agree, so I'm still not clear why you are a Republican. Let me run my theory by you. As a liberal Republican, you at this point have more power than virtually anybody in the Senate, because the White House fears you will bolt to the Democratic Party.

You notice Jesse Helms didn't have a meeting with the president this week. You and John McCain did and you did because they are afraid you will leave. So aren't you staying in the Republican Party because you have more leverage now than ever?

CHAFEE: No. There are issues that we do agree on. I'm a free trader, and the president and I agree on that. Particularly, with the South American Free Trade to the Americans, and that's an area we will work together on. As far as bolting the party, I don't think there's much potential of that happening.

CARLSON: Wouldn't you have less power as a Democrat than you do as a Republican?

CHAFEE: No. I mean, you can argue that every vote is just 1/100 of the Senate and that's all the power I have. And I get along with both sides of the aisle, and I think that's where I have the most advantage from my state and country, I would hope.

PRESS: Senator Chafee, you keep it interesting, and we will be keeping our eye on you. Thanks for joining us on CROSSFIRE.

CHAFEE: Thank you.

PRESS: When we come back, we will talk about the new tax bill that the president signed into law this year.



GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We recognize loud and clear the surplus is not the government's money. The surplus is the people's money and we ought to trust them with their own money.


PRESS: Welcome back to "CROSSFIRE." No wonder he's smiling. That oft repeated campaign promise became a reality today as President Bush signed into law a $1.3 trillion tax cut. First refunds to be mailed this summer. But critics of both parties point out it's less than a perfect bill, so how good is it? How big is it really, and who benefits? Turning to the tax bill now with Republican Congressman J.D. Hayworth of Arizona, Democratic Congressman Charles Rangel of New York -- Tucker.

CARLSON: Congressman Rangel, the president took a victory lap of sorts today. I would like to torture you with it if you could just watch President Bush here.


BUSH: A year ago tax relief was said to be a political impossibility. Six months ago it was supposed to be a political liability. Today it becomes reality.


CARLSON: So Congressman, everything the president said is objectively true. This is my question: He has been in politics seven years. You have been in politics for decades, he gets this achieved in five months. It strikes me that he's completely outfoxed you and other Democrats with far more political experience. Isn't that true?

REP. CHARLES RANGEL (D), NEW YORK: Well, it shouldn't take a profile in courage to give people a $1.3 trillion dollar tax cut, even if you have to round around the country trying to sell it to people. It was bad campaign promise, and it was worse that he kept the promise.

And truth of the matter is, someone said it not a perfect bill, there are so many flaws in this bill, that there are hardly anybody in the House that knew what was in the bill on the day that it came to the floor. They deliberately kept the bill away from us and J.D. will tell you, on the morning of Saturday, when we voted on the bill, there was no written bill on the floor.

And the fact that this bill is really designed, like they said, to keep the money out of Washington. The truth of the matter is, the money is not in Washington. We are spending a surplus we don't have and we're doing it at the expense of Social Security, Medicare and those Democratic promises that Mr. Bush made when he ran for president.

CARLSON: But wait a second though, Congressman, you are telling me that the 28 Democrats who voted for this bill including such right- wingers as Neil Abercrombie, who just cut his pony tail, from Hawaii, Lois Capps, Ellen Tauscher, that these 28 Democrats voted for this bill and they had no idea what was in it when they voted for it. I think you essentially implied this was a cowardly move, their vote. Why would these Democrats do that?

RANGEL: I didn't say cowardly and you don't have to describe it that way. But let me explain this to you simply: When Clinton came into office and we had this tremendous deficit, the only way to get out of a deficit is by cutting spending and raising taxes. Fifty-two Democrats and not one Republican raised taxes in order to reduce the deficit. Guess what? We lost 52 Democrats for doing just that. So the fact that people are voting for tax cuts believe me, that's not the most courageous thing a member of Congress can do.

PRESS: Congressman Hayworth let me ask you about this tax bill and Congressman Rangel mentioned some flaws in it. If you get "TIME" magazine this week they've got big spread and the headline is stupid tax tricks, a take off on the David Letterman stupid pet tricks. They point out number one -- let's talk about some of these flaws -- this is a ten year plan, most of the relief in the plan comes at end of the ten years and then in the 11th year -- poof -- it all disappears and the tax law goes back to the way it is today. So this is a big con game, isn't it? Now you see it, not you don't.

REP. J.D. HAYWORTH (R), ARIZONA: Oh, no, not at all, not at all. you know, it's interesting when we talk...

PRESS: But it is true isn't it? Those facts are true.

HAYWORTH: In terms of our current way of book keeping without real budget reform, without the scoring that accurately reflects what happens with tax cuts, yeah, you have this situation. But I think the key is to keep a common sense majority in the Congress that will make these reductions permanent as soon as we possibly can.

It doesn't really surprise me that "TIME" or my friend Charlie or a variety of naysayers here on the Hill absolutely believe that Washington needs money more than the American people do. Because all we are talking about is giving the American people back a nickel out of every dollar. It's a very modest bill, but it will have real results and I'll tell you, Bill, what I'm hearing at airport, what I'm hearing in the grocery store, what I'm hearing from folks is when do I get my check?

And in fact going to the break, what did you do? You put up the schedule of when people get their money back. This is real relief for the American people.

PRESS: I think you are hearing those comments because they don't know yet how bad it is. You just admitted that the thing self destructs in ten years. Now lets talk about you guys are making all these promises about getting rid of the marriage penalty. The fact is, the marriage doesn't start getting cut back until 2005. It kicks in, in 2009 and then in 2010 it disappears. So I say, again, it's now you see it, now you don't. You are conning people with this bill.


PRESS: But the facts are correct.

HAYWORTH: What the great con is, Bill, is this: that you can argue all sides of the issue. What you are saying what you are suggesting by all your criticism is that you join us in getting rid of the marriage penalty. If anything, we could have had bipartisan cooperation.

PRESS: I'm just saying don't lie to people.

HAYWORTH: Well then what you're saying is and I think my friend Charlie joins you, the highest and best use of the people's money is here in Washington D.C. Congratulations, you're entitled to that point of view.

But the fact is the fact is the American people understand better. They know the money doesn't belong to the Washington bureaucrats. It's their money. They are due a refund, they're getting one, now the next step is budget reform to bring the budget process into the 21st century to more accurately reflect what we need to be doing with tax relief.

CARLSON: Congressman Rangel, I have no doubt you read the business section of "The New York Times" this morning. And when you did, you doubtless noticed this full page ad -- I think we can put it up on the screen -- it's from Fidelity Investments. This ad thanks Mr. President and members of Congress, it thanks them effusively for the tax cut because the people at Fidelity investments, economists, are certain that it's going to help the economy and perhaps keep the country out of recession.

Now these are people who do well when the economy does well. What possible motive would the economists at Fidelity Investment have for thanking the president for this tax cut?

RANGEL: Holy mackerel -- do you really have to ask that question?

CARLSON: Yeah, that's an honest question and give me an honest answer, Congressman Rangel.

RANGEL: The honest answer is that any economist will tell you that 40 percent of this tax cut goes to the top 1 percent of the income makers, and I tell you, the people in J.D.'s district are asking about when is the check coming in the mail, the check is not in the mail for 70 percent of the people that work hard every day that pay payroll taxes and they're not going to get a nickel. The truth of the matter is -- let me finish, I'll end it...

HAYWORTH: Don't filibuster.

RANGEL: I hope you answer Bill's question. How do you promise all of this relief for a surplus you haven't got and then at the 10th year it just sunsets, it stops and then taxes go back up. And you are saying when Bush is gone, can't be there, another Congress, this is what you're leaving at a time that you have 40 million people becoming ineligible for Social Security and Medicare. It's not fair what you are doing, J.D..

HAYWORTH: Oh, it is very fair to let the American people...

RANGEL: It's wrong.

HAYWORTH: ... hang on to their money. And you know, I represent a swing state and a swing district, Charlie, and the people in my district, it's going to meet a lot to the printer in Payson, Arizona with four kids to see that child tax credit expanded, to get that check for $600. It means a lot to his bottom line.

I know it doesn't mean much to the big spenders here, and we can play this game of process and inside baseball, but the American people get it. And more importantly, they'll get it in the mail in just a few weeks.

CARLSON: Now, congressman...

RANGEL: What you're betting on is that the people are not concerned about the solvency of Social Security, Medicare...

HAYWORTH: That's not true, Charlie.

RANGEL: ... prescription drugs, education, and...

HAYWORTH: You know, I don't know what...

RANGEL: I'm telling you...

HAYWORTH: That's not true. Time out.

RANGEL: ... the money that you're talking about is expected to come...

HAYWORTH: A nickel out of every dollar.

RANGEL: You're depending...

HAYWORTH: A nickel out of every dollar.

RANGEL: You're depending on the campaign -- on the congressional budget figures.


RANGEL: You are. And they say that 90 percent of them in a 10- year period will be wrong, and that's where you expect the money to come from to pay for the tax cut.

HAYWORTH: Never stopped you from spending, did it, Charlie? The fact is...

RANGEL: But you're spending the Social Security.

HAYWORTH: Wait. Now, let me have my turn, Charlie.


HAYWORTH: The fact is you know, you know very well that we moved to wall off Social Security. We listened to our constituents, Republicans and Democrats. We're not touching that nor Medicare money.

And I'm sorry you can't celebrate with the American people the fact that folks are going to get their money back to save, spend and invest as they sit fit.

PRESS: Well, I want to -- I want to ask you about that. You keep talking about getting their money back. And I was under the impression until I started doing the research for this show that everybody was going to get this $300 check. Again, not true. There are 34 million American taxpayers, if they're married and couples, and they're getting -- they're making as couples between 27,000 and 44,000 dollars a year, they get no check. But anybody who makes over 50 gets a check.

Now, J.D., why, again, do you just give this money to the people who don't need it? And these people who are really middle-income Americans get nothing!

HAYWORTH: Well, let's talk about that for just a second...

PRESS: Thirty-four million.

HAYWORTH: Do the letters EITC mean anything to you? It's something called the Earned Income Tax Credit.

PRESS: They're above that. No, they're above that, J.D..

HAYWORTH: The fact is -- go back and check your source. I believe we're going to give tax relief to 95 million American households. That's real money for real people.

PRESS: Ain't going to happen. How about the -- how about the estate tax? The estate tax is another one. Kicks out -- kicks out 2010 and kicks back in at 2011. So if I'm -- if I'm a wealthy kid and I want -- I want to don't have to pay any taxes, I'd bump off my parents in 2010. Is that what you do?

CARLSON: So it's an incitement to murder is what Bill Press is asking.

HAYWORTH: Well, it's amazing...

CARLSON: Will people die because of this, J.D. Hayworth?

PRESS: Well, obviously Bill's talking about that. No, I think people are going to thrive because of this, and the reason they're going to thrive is once we get this done I don't believe Congress is going to come back and say, you know, let's be courageous and reinstate this tax.

Now, maybe in the vision of Bill Press and Charlie Rangel they do it. But I think the American people are going to understand what it means to get rid of this death tax.

CARLSON: Well, we will see.

RANGEL: You have no idea what the economy is going to be in 10 years and you're already telling that Congress...

HAYWORTH: But you have the answer, don't you, Charlie? RANGEL: ... that they have to cut it.

HAYWORTH: Spend more money, take more money.

RANGEL: It's so unfair...

HAYWORTH: Take more money from the people.

RANGEL: If you had a tax cut...

HAYWORTH: That's your solution.

RANGEL: The Democratic tax cut was for five years. By that time, we'll take a look at what the economy is, what Social Security deficits are, and you can plan. But to do a cut for 10 years and then to cut it off and repeal it...

HAYWORTH: Poor Charlie.

RANGEL: ... is so unfair.

HAYWORTH: So (UNINTELLIGIBLE), can't celebrate the tax cut. Sorry, Charlie.

CARLSON: Well, I'm afraid we don't have more time, because doubtless if we did we could get to the bottom of these issues...

HAYWORTH: That's right.

CARLSON: ... and solve them right here on CROSSFIRE. We'll have to wait for our closing comments. Congressman Rangel, Congressman Hayworth, thank you very much for joining us. Bill Press and I will return in just a moment, as I just said, to wrap up the tax cut and get a final verdict on it. We'll be right back.


CARLSON: Bill, I love the argument that you and Charlie Rangel are making, which is the tax cut is bad, it'll destroy America, and it's only temporary and that's bad, too.

PRESS: No, you didn't hear me say that.

CARLSON: That totally contradictory argument.

PRESS: What I said is -- you know, what I said is it is a phony promise. And you know, I met one person today...

CARLSON: But isn't that a good thing?

PRESS: ... I talked to one person today, Tucker, who's happy with this tax bill, my tax accountant. This is a tax accountant's full employment act of 2001.

CARLSON: Because he understands economics unlike a lot of other people who don't understand... PRESS: No, no, because it's so complicated he'll have more work than ever.

CARLSON: Pretty clever. I don't believe you talked.

PRESS: From the left -- yes, I did -- good night for CROSSFIRE. Bill Press here.

CARLSON: And on the right, I'm Tucker Carlson. Join us again tomorrow night for another edition of CROSSFIRE.



4:30pm ET, 4/16

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