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White House Spokesman Ari Fleischer Fields Questions Regarding Greenspan's Comments on Tax Cuts

Aired January 25, 2001 - 1:07 p.m. ET


LOU WATERS, CNN ANCHOR: We're going to head on over to the White House. Ari Fleischer, White House press secretary, is conducting his daily briefing. Let's listen what's new.



QUESTION: Ari, maybe I missed it, but where in his testimony did Chairman Greenspan talk about the importance of cutting taxes to help the economy?

FLEISCHER: He talked about during a soft economy...


QUESTION: ... there was room in the surplus for cutting taxes.

FLEISCHER: But he also talked about an economic softness.

QUESTION: But did he link the economic softness to the need for tax cuts?

FLEISCHER: I think he referred to the fact that in a time of economic softness tax cuts could be helpful.

QUESTION: But isn't the opposite...


FLEISCHER: I saw that actually on an AP wire story.

QUESTION: Well, but I'm looking at his testimony, Ari, and in fact he makes the point that -- as the president said, the president said more, as you know, than we need this as an insurance policy. He says we need a tax cut now more than ever as a stimulus. And what Greenspan is saying today, quote, "Such tax initiatives, however, historically have proved difficult to implement in the timeframe in which recessions have developed and ended." So how does that square with what the president thinks is necessary?

FLEISCHER: He also said -- and again, there are a series of reasons. Let me repeat the three reasons President Bush believes we should cut taxes.


QUESTION: But can you just get to this issue...


FLEISCHER: I will. I'm getting there.

The president believes we should cut taxes because, one, it's the people's money, they paid it into the government, they deserve it back.

They deserve it back.

Two, and Chairman Greenspan would agree with this, that if you don't cut taxes, the politicians will have more money to spend. And Chairman Greenspan did weigh in today about making certain that we don't spend the surplus.

And the president believes that we need to cut taxes to help protect the economy.

The chairman in his remarks did talk about the softness in the economy. And the chairman in his remarks did talk about -- and this is one of the chairman's reasons for cutting taxes -- he did talk about the fact there is room in the surplus, so the chairman did say that indeed.

QUESTION: Wait a second. He didn't answer the question.

The president has said that the tax cut is necessary now as a stimulus to the economy. Greenspan is saying, you know, it usually doesn't work out when you try to provide stimulus, because it takes too long both to phase in according to the president's plan, and by the time Congress gets done with it, especially in this kind of economy, that's gyrating the way it is, that it really won't work to provide a useful stimulus.

FLEISCHER: We've talked about this before. Economists do differ about the speed at which a tax cut can impact an economy, although I do believe Chairman Greenspan also did talk about accelerating the tax cut, if I read that -- I read it quickly on my way in here.

But there are a variety of reasons to cut taxes. And I've walked you through some of the president's reasons. And we're heartened to see -- go ahead.

QUESTION: (OFF-MIKE) disagreed with Greenspan on the ability of his tax cut to stimulate the economy in the short term?

FLEISCHER: I think there's plenty of room for agreement among economists or slight disagreement among economists about the speed at which a tax cut could help the economy.

But clearly Chairman Greenspan came out today and advocated that there is room for tax cuts and that Congress can cut taxes, given the budget restraints that we're all operating under, which are now an era of large surpluses. You know, and there was a final very interesting note in the testimony as well, which is an intriguing new reason that taxes need to be cut, and that is, if you don't cut taxes and if these surpluses continue to mount the way they will, the government will sit on excess accumulated cash. And under previous administrations, they were looking to buy stock as a government ownership of stock. Chairman Greenspan has warned against excessive buildups of this type of cash, and either it gets spent or it gets used to cut taxes. And clearly, nobody wants to spend that money on bigger government.

QUESTION: Ari, something else the chairman said was that he urged that a mechanism be devised to suspend the tax cut if the surplus projections did not come to pass and also suggested that any talk of front loading the tax cut should be put on the shelf, because he was saying that it needs to be phased in slowly.

And I know your plan is phased in at this point. But you've been talking about whether or not to front load it, and I'm wondering where you stand on those two ideas.

FLEISCHER: Right. On the question of a trigger, President Bush believes what's important is to enact the tax cut. We need to get it enacted; we need to get it on the books; we need to make it the permanent law of the land. And then as with any tax cut proposal, any spending proposal, every year Congress and the president will go back and review. And so, from the president's point of view, what's important is that Congress enact it.

QUESTION: Ari, you're talking about doing something that Congress has never been able to do, which is to undo tax cuts once they're in there. Isn't that Greenspan's fear that you...

FLEISCHER: Congress has nothing but a history of undoing tax cuts once they're in there. Congress has often raised taxes. Let me remind you that it was in 1993 that Congress raised taxes to 36 percent and to 39.6 percent. Those were increases from the rate which was established in 1986.

So Congress -- the issue that Congress was never able to do is undo spending increases. Spending increases once enacted seem to never get taken back. The problem with Washington is that once Congress and Washington spend the money, they don't stop spending it. The other problem with Washington is they try to keep raising taxes as solutions to problems. That's another reason we need to cut taxes. It's just the opposite.

QUESTION: Where are you on the second part of my question, though. The idea that you'll give up any talk of frontloading this tax cut?

FLEISCHER: Well, we're still looking at the exact speed at which it will be phased in and exact dates at which it will be phased in, the rates, et cetera, and the question of retroactivity. We're still looking at it. QUESTION: And based upon Mr. Greenspan's comments, would you be disinclined to do that?

FLEISCHER: No, we're still looking at that. That remains an option.

QUESTION: Ari, a question for you, when the Federal Reserve announced a rate hike a while ago, the president had commented and then after...

FLEISCHER: Rate cut.

QUESTION: Rate cut. He commented after saying that he decided he's not going to comment any more.

QUESTION: I'm wondering, you view the Federal Reserve as an independent body, do you not feel that you should not comment even on comments that the Federal Reserve chairman makes on tax cuts or any type of...

FLEISCHER: No, I think that when it comes to public testimony in a question-and-answer session with people on Capitol Hill it's appropriate to mark it and to note it. The president agrees, obviously.

QUESTION: You're planning on unveiling this tax cut proposal with all its details the week after next?

FLEISCHER: We'll keep you advised on the exact date. It's coming up.

QUESTION: But that's been the impression you've created, that it's going to be in the week after next.

FLEISCHER: I always like to leave a little flexibility in terms of the exact dates or weeks of an announcement. But it's coming up.

QUESTION: Democrats have been laying out the cost of your plan. On the Hill today, for instance, in the Greenspan hearing, Senator Conrad laid out his version, which is the same that Daschle laid out yesterday, which is $1.6 trillion, plus $400 billion in lost interest savings, plus $200 billion to fix the alternative minimum tax. Do you accept all of that as being the cost of the Bush tax cut?

FLEISCHER: Well, I can't help but notice this funny new standard that is trying to emerge from those who have historically been resistant to tax cuts. And that is, for the first time they are attaching the cost of interest expenses to the proposal without analyzing it as part of interest costs as opposed to tax cuts.

For years, people have made spending proposals and never attached interest costs to it. Many of the same people today who said you have to attach interest costs to tax cuts have never attached interest costs to spending increases for which they were generally known.

So it is a separate budgetary item. It is a legitimate item. Of course there are interest expenses that are incurred as a result of any decision, whether it's a spending increase or whether it's a tax cut. But to attach it to the cost of tax cuts is not valid, not valid at all. Because what they're suggesting is the tax cut is, and then they give a number. That's not the cost of the tax cut. QUESTION: Now, did President Bush, when he was campaigning, call for a fix in the alternative minimum tax and is $200 billion the figure you would accept for the cost of that?

In the president's tax plan, he addresses the complication created by the alternative minimum tax on the tax credit provisions that are part of his legislation. Under current law, and this was something that was really exasperated 1993 under the tax plan that was passed when the alternative minimum tax rates were increased and it was not indexed for inflation, the result of that was it has put millions of middle-income Americans at risk of paying the alternative minimum tax.

As a result of that action in 1993, we have protected the child credit doubling for $500 to $1,000 from the impact of the alternative minimum tax. So the new credits in the president's proposal are protected from the AMT. There is an additional AMT problem that is widely recognized that affects individuals. There is corporate AMT as well. And that is a worthy area to discuss with the Congress.

QUESTION: Ari, can I ask you a question about hiring practices? Is it this administration's policy that it is appropriate or inappropriate to ask a prospective employee his or her sexual orientation? And if it is inappropriate, would a department head who asked such a question face any sanctions?

FLEISCHER: That is not a question that we ask. And I'm not aware of anyone who has done such a thing.

QUESTION: Do you know if it is appropriate or inappropriate to ask such a question?

FLEISCHER: I would refer you to the law, and we do not ask that.

QUESTION: But, Ari, there is an allegation in The Washington Post today from a man who was interviewed by John Ashcroft who says that he asked that very question. And this is in fact corroborated by a contemporaneous witness. So there is someone in the administration or prospective administration...

FLEISCHER: And Mr. Ashcroft has said that he does not recall saying that or asking that.


QUESTION: ... possibility that it might have happened?

FLEISCHER: I refer you to what he said.

QUESTION: Ari, as we all know, President Clinton's pardons are quite controversial. Without addressing the specifics, is President Bush committed to following the established procedures, pardon procedures, including notifying the Justice Department?

FLEISCHER: I've not been part of any discussions on pardons. After three days or four days, I'm not aware that the president is moving to pardon anybody. But I'm not aware of any procedures. I think I'd refer you to the Department of Justice on that, and then check back later.

QUESTION: Ari, as you know, on January 4, President Clinton renominated Roger Gregory for the 4th Circuit. Today, two Republican senators, Senator Warner and Allen, said that he should be confirmed. Does the administration favor a confirmation hearing or are you going to withdraw...

FLEISCHER: I Have not heard us weigh in on that.


QUESTION: Senator Daschle says he was misquoted here yesterday when you indicated to us that he had told the president that all of his nominees would be confirmed. What exactly is the truth here?

FLEISCHER: Well, the president received -- one of the reasons the president thought he had such good meetings yesterday, among a number of reasons, was he did receive assurances that all his nominees would be confirmed.

QUESTION: But, Daschle says you misquoted it.

FLEISCHER: I would differ.

QUESTION: He said that what he told the president was that there wouldn't be any parliamentary moves by Democrats to block the nominees...

FLEISCHER: That was also said.

QUESTION: ... but you'd have to be a clairvoyant to know exactly what the outcome was going to be.

FLEISCHER: I stand by what I said.

QUESTION: You disagree with him then?

QUESTION: On Greenspan, he also talked about energy supply. What do you read from what he said about the need to increase energy supplies, and also the risk to the national economy from what is happening in California?

FLEISCHER: Yes, well, let me remind you the looming energy problems that our nation faces have been long in the making. In fact, it was last fall of course when the administration -- previous administration thought the problems were so serious that they decided to tap the Strategic Petroleum Reserve. There were warnings at that time from President Clinton that the energy problems could cause a recession. So that is a very serious ongoing problem that we need to face. And I think there are two issues involved here. One is the nation's need to enact a long-term, comprehensive energy plan, which President Bush has proposed. The other is helping California with its energy problem which is of different nature. I think that it's safe to say even if no there was no national emergency problem, California would still be going through what it's going through.

Go ahead.

QUESTION: Did you read anything into what he was saying about drilling for more natural gas and the need to increase supplies? Do you draw any interpretations from that with regard to your policies?

FLEISCHER: Yes, the president does believe, as you've heard in the testimony as well, that we need to increase America's energy supplies, that we need to address the fundamental supply and demand imbalance by increasing America's supply.

QUESTION: Ari, the Utah legislature has reversed itself with regard to the electricity deregulation, and this measure was also given the OK by the Republican governor of Utah. Do you think that, in the light of what is going on in California there's a backlash against electricity deregulation and move towards more...

FLEISCHER: I have no information on Utah specifics. But, obviously, some states have moved ahead with it and are pleased with how it's worked. Other states enacted it differently and are not pleased with how it works.

QUESTION: Does the administration have any specific ideas about how to help California with its problem?

FLEISCHER: We're reviewing a number of options that may be helpful to California, and as events warrant, we may have something to add.

QUESTION: Can you be at all specific?

FLEISCHER: Not until they're -- they're not announceable yet. We're still reviewing.

QUESTION: I have two questions about the Andy Card memo on January 20 on regulations. Number one, one of the provisions in that talks about postponing for 60 days regulations that have already been published. I'd like to know what the legal authority is to allow the administration to do that.

And my second question deals with Andy Card and Congress. Do you know of any moves to go to go Congress to ask Congress to pass any legislation to actually rescind regulations, which Congress is allowed to do?

FLEISCHER: OK, on the question of the legal authority, of course, they're all done with the concurrence of White House legal counsel. They wouldn't be done otherwise. On the question of legislation, that is always possible. And often, it does take legislation to undo a regulation. You can also undo regulations through the regulatory process, but it is time consuming. So too, is, of course, the legislative process.

QUESTION: Well, as a follow-up, are you saying that if a lawyer advises a client -- in this case, the president -- that you can do something, that that's your legal authority, rather than pointing to something by statute? I'm asking you what statute not whether a lawyer...

FLEISCHER: I refer you to legal counsel.

I'm not a lawyer. We check these things thoroughly with legal counsel. Legal counsel reviewed it, and it's in full and proper keeping with legal counsel.

WATERS: Ari Fleischer at the White House, his daily briefing.

Topic A today across Washington: tax cuts. We heard Alan Greenspan earlier saying that tax reduction appears required, in any event, over the next several years to prevent the federal government from running up such big surpluses that it begins to accumulate too many assets.

It is on that point that Alan Greenspan, the Fed chairman and the White House agree, but there are a couple of other points to the Bush push for tax cuts, including it's the people's money, they should have it back.

But number three point from Ari Fleischer: that tax cuts would protect the economy. It's a point upon which the White House and Alan Greenspan differ. Greenspan says he downplayed the idea that tax cuts will provide an immediate boost to the economy, but agrees wholeheartedly that the surpluses keep growing and too much cash on the hands of the politicians in Washington will lead to more spending.

There were a couple of other points, one a the increase in the energy supply, which is necessary, but separated from the California problem right now. But most of the talk today in Washington is about tax cuts, and we'll continue talking more about that and what it means for all of us as we continue on.



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