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Special Event

President Clinton Vetoes Estate Tax

Aired August 31, 2000 - 2:39 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU WATERS, CNN ANCHOR: That event at the White House, which we have been telling you about, has been moved inside to the East Room. President Clinton is speaking in advance of his veto of a Republican attempt to repeal the estate tax.

Let's listen to what president has to stay.

(JOINED IN PROGRESS)

WILLIAM J. CLINTON, PRESIDENT OF THE UNITED STATES: ... state and local personnel engaged in the effort to fight the wildfires, including four full military battalions...

Today, I'm releasing another $90 million to ensure that the federal firefighters have the resources they need. Now a total of $590 million has been spent on emergency funding to combat these fires.

I want you to remember that. One point I want to make later in my remarks: These things happen.

There will be no shortage of human effort. Tomorrow we are dispatching a new Marine battalion from Camp Lejeune, North Carolina, to help fight the Clear Creek fire in Idaho's Salmon Challis National Forest.

Last night, we issued a disaster declaration for Montana and are expediting a similar request from Idaho. There is a lot to be done out there. Those people are working hard.

The Departments of Agriculture and the Interior have begun to move 2,000 federal supervisors into the field to assist the firefighters and to get adequate compensation for people that are working long and very stressful hours.

Our nation owes a great debt of gratitude to the firefighters, the managers, and their loved ones who are making extraordinary sacrifices. Many of them are literally risking their lives today in service to their neighbors and their country.

Our losses this year in wildfires have been much, much, much greater than the 10-year average. And I was out in Idaho recently. And I wish every American could see what they try to do with those fires and how fast they can move, and how they can go from being a foot high to 100 feet high in no time at all.

So we may have to do more out there, but they're doing their best to protect as much land and to protect the houses and lives of the people as possible.

Now to the matter at hand. As Secretary Mineta said, seven and a half years ago we charted a course for a new economy, a new course focused on giving the American people the tools they needed to make the most of the information age and creating the conditions which would make sure that the hard work of our people would be rewarded.

And we all know that since then we've had the longest economic expansion in history, that we have the lowest unemployment rate in 30 years, the lowest welfare rolls in 32 years, we learned last week the lowest violent crime rate in 28 years, and the highest home ownership in history. We also had these horrible deficits and a debt which had quadrupled in the 12 years I took office -- over the previous 200 years, and we've begun to pay it down at a record rate.

This has effectively worked as a tax cut. Why? Because all the economic analyses show that when we went from record deficits to record surpluses and started paying the debt down it's kept interest rates lower over these last eight years, much lower than they otherwise would have been.

What has that been worth in tax cuts? Well, the Council of Economic Advisers says that, on average, it's worth $2,000 in lower home mortgages a year for the average home, $200 a year in lower car payments, $200 a year in lower student loan payments.

We have also supported tax cuts within the context of paying the debt down.

For example, in the Balanced Budget Act, we had the HOPE Scholarship tax credit and life-long learning tax credits. The HOPE Scholarship for the first two years of college, $1,500; and the life- long learning credits for the junior and senior year and lifetime education, which can be even greater. Ten million families are taking advantage of that to pay for a college education this year.

The Earned Income Tax Credit, which we doubled, which goes to lower-income working people, will help 15 million families, this year, work their way into the middle-class. The $500 Child Tax Credit, which was a part of the Balanced Budget Act, will now go to 25 million families. We gave upper-income people tax credits to invest in poor areas in America in the Empowerment Zones, and it's worked to generate thousands of jobs in some of the most distressed areas of the country.

In 1997, we also reduced the burden of the estate tax for small business owners and family farmers by raising the threshold at which it applies.

The typical American family today is paying a lower share of its income in federal income taxes than any time during the last 35 years. That is a pretty good thing to be able to say. And, yet, we're healthy financially, because we have preceded in a balanced and disciplined way.

Now, everybody knows there's a lot more hard work to be done, and there are differences of opinion about what we ought to do and how we ought to do it.

That's why we're having another election this year. And that's up to the American people to decide.

But I believe that prosperity imposes its own difficult choices, because there are so many temptations to do things that seem easy, that will have adverse consequences. And I believe it is our job to maximize the chance that America can make the most of a truly unique moment in our history to meet the big challenges that are out there: giving all of our kids a world-class education; making sure when the baby boomers all retire and there are only two people working for every one person drawing Social Security and Medicare that Social Security and Medicare don't go broke and we don't bankrupt our kids or their ability to raise our grandkids; that we meet the big challenge of climate change and the other environmental challenges; that we stay on the forefront of science and technology; that we continue to be a force for peace and freedom around the world; that we bring prosperity to the people in America who still aren't part of it and give them a chance to work their way into a good life; and many other things.

Now in order to do that -- a pre-condition of doing all that, is keeping the prosperity going and continuing to expand opportunity. I believe that the only way to do that is to build on what has worked.

It's not as if we haven't had a test run here. We've seen now for almost eight years that the strategy we have pursued of investing in our people but continuing to pay this debt down and doing it within the framework of fiscal responsibility and trying to be fair in the way we invest money and allocate tax cuts works. It works. It's good economics and it's good social policy.

Now, I believe that this latest estate tax bill is another example where Congress comes up with something that sounds good and looks real good coming down the street on a tractor...

(LAUGHTER)

... but if you look at the merits, it basically would take us off the path that has brought us to this point over the last eight years. And I don't think we ought to be kicked off that path. I think we ought to think about how to accelerate our way down this road.

I believe that this latest bill, this estate tax bill, is part of a series of actions and commitments that, when you add it all up, would take us back to the bad old days of deficits, high interest rates and having no money to invest in our common future, the kind of things that our speakers talked about in their commitment to education.

Now, let me give you an example. Last year the Republicans passed a huge tax bill in one quick shot, and it was like a cannonball that was too heavy to fly, and so it went away, but they're still committed to it. In fact, an even bigger version of the bill that I vetoed last year.

This year they have a strategy that in a way is more clever. It's like a snowball, and every piece of it sounds good.

But when it keeps rolling, it just gets bigger and bigger and bigger. And unless someone stops it, the snowball will turn into a avalanche, and you'll have the same impact you had before.

Today, a few moments ago, this bill suffered the inevitable fate of a snowball in August.

(LAUGHTER)

(APPLAUSE)

I vetoed, not because I don't think there should be estate tax changes, I do believe there's going to be some changes; not because I think that United States government should never respond to legitimate concerns of people who happen to be in upper-income levels and have been successful, I think they're entitled to fairness just like all the rest of us; but because this particular bill is wrong for our families and wrong for our future. It fails the test of the future, both on grounds of fairness and fiscal responsibility. And I just like to lay out the facts in a little great detail.

The cost of their bill is $100 billion over 10 years. In the context of a $2 trillion surplus you may say, "We'll, that's not all that much." But to get it down to $100 trillion, they have to ever so gradually phase it in. And the second 10 years, when all the baby boomers retire and we need as much money as we can for Social Security and Medicare and to keep the burden of the baby boomers' retirement off the rest of you, the real cost of the bill appears; it's $750 billion.

Now, this is $750 billion for 54,000 families, 54,000 estates. Now, we'll come back to the smaller number, $100 billion for 54,000 estates. That's 2 percent of the estates.

Now, if it's a farm or a small business, that can be misleading, because they may employ lots and lots of people.

There may be a lot of people riding on the welfare or the success of the small business people and the farms. And I've talked to a number of people who say, "You know, I don't want to have to sell my business, or I don't want my daughter or my son to have to sell the business to pay the estate tax. Yes, they'll still have money, but the business won't be going. Somebody else will be running the business."

So, should something be done to help them? Of course. But keep in mind that there are millions of businesses in America. We're talking about 54,000 here. And it's very important to note that over half of the benefits to these 54,000 estates go to less than 6 percent of the estates, less than one-tenth of 1 percent...

WATERS: The efforts in Congress to repeal the estate tax run headlong into a veto in the East Room of the White House with the president concluding his remarks before his veto pen is applied to the bill.

He says it's wrong for families in the future. You have heard the discrepancy in the claims of how much money it would cost: 105 billion over 10 years say the Republican. The president said the real cost, 750 billion to benefit only 54,000 families.

The Republicans say, when Congress returns to work next week -- this is according to the speaker of the House -- the repeal of the estate tax will be the priority business before the Congress, although House Democrats are confident that the president's veto will be upheld.

So there's more on this story yet to come, and we'll be following -- following it.

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