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Special Event

Bush Touts $1.6 trillion Tax Cut

Aired February 5, 2001 - 10:16 a.m. ET

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

KYRA PHILLIPS, CNN ANCHOR: We're going to take you live to the White House now where President Bush is getting ready to tout his proposal of a $1.6 trillion across-the-board tax-cut plan.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm honored to host the Peterson (ph) family, the Claytor (ph) family and the Gordon (ph) family, and talk about the economic challenges they face.

Their circumstances are different, but I strongly believe they deserve to keep more of their own money, and so does every family in America deserve to keep their own money. And from talking to these families here, I think they like the idea.

Despite the prosperity of the past two decades, many America families feel squeezed. They sometimes carry a lot of consumer debt. In 1998, the average family credit card debt was more than $4,000. At the same time, every American family is facing higher energy costs.

Under the plan I'll be sending to Congress later this week, every American who pays income taxes will get tax relief and the average relief for a family of four with two children will be $1,600.

This is real and practical help when, at this time, many Americans need it. $1,600 will pay the average mortgage for a month; $1,600 will pay for a year's tuition at a community college; $1,600 will pay the average gasoline cost for two cars for a year; and $1,600 will buy the average California family 24 months' worth of electric power.

My plan addresses the struggles of American families and respects their judgment. It doesn't tell families how to spend their money. It doesn't single out some Americans for relief, while leaving others out. It's tax relief for everybody who pays taxes. That's what the times and basic fairness demand.

Here's how it will work: Under the existing law, Americans are grouped in five income tax brackets: 15 percent, 28 percent, 31 percent, 36 percent and nearly 40 percent. My plan will reduce that to four lower brackets: 10 percent, 15 percent, 25 percent and 33 percent. And others would begin the simplification of the code.

Each of the families with me today would benefit from these lower taxes. Most families will get a $1,000 per child tax credit. Everybody who pays income taxes will get some relief. But the biggest percentage cuts will go to the families who need it most.

The Peterson (ph) family, for example, will get a 100 percent cut in their income taxes, saving almost $1,100 a year. Paul and Debbie (ph) and their two beautiful girls would appreciate that.

All the income tax rates should be cut. Most families over a lifetime will move through a couple of different tax brackets. Many families will move through all four as they move up the ladder of economic success and then back down as they retire and leave the work force.

Our tax code should not punish success at any stage of life. With the top federal income tax rate at almost 40 percent, and with state income taxes on top of that, people can sometimes feel like the junior partner in their own lives, and that's why we set the top rate at 33 percent.

I believe it's an important principle that no American should pay more than a third of his or her income to the federal government in federal taxes. And government shouldn't block the way into the middle class for hard-working people who are trying to get there.

If a single mother earning $25,000 a year manages to earn a $1,000 by getting a promotion, the federal government takes about half of it away from her. That's a higher marginal tax rate than a lawyer earning $250,000. And that's not right. And that's wrong. And my plan addresses this inequity.

This is my approach: Tax relief for everybody in every bracket, averaging $1,600 per family, while still reducing our national debt and funding important priorities. I'm asking all Americans to examine this plan, and I'm asking for your support.

The Constitution charges the Congress with the responsibility to write our tax laws, and I respect that responsibility. But it is my obligation to lead, and that's what I'm going to do.

My plan is good for the long-term health of our economy. It is good for the businesses that create jobs. It is good for America and for the American families that make our country so unique and strong.

Thank you for coming.

QUESTION: Mr. President, do you think these tax cuts should be retroactive to the first of the year?

BUSH: A lot of members of Congress have talked to me about that, and I do. And we look forward to working with Congress to expedite money into the pockets of the American people.

I strongly believe that a tax relief plan is an important part of helping our country's economy recover. And I think expediting money into people's pockets is going to be a key ingredient. I look forward to working with Congress, members of both parties, to accommodate the budgetary needs and, at the same time, help get money into the people's pockets quicker. QUESTION: Mr. President, Democrats in Congress think that this plan, as it's structured now, is weighted too heavily to the higher income brackets. Are you willing to work with them to, perhaps, change the ratios a little bit, if that's what it takes to get their support?

BUSH: I strongly believe the plan that I have submitted is structured the right way. I've heard all the talk about class warfare and this is only benefiting the rich, but I think when people take a good, hard look at the rate reduction and who benefits, and the fact that our plan erases inequities in the tax code or eases inequities in the tax code, and that the bottom end of the economic ladder receives the biggest percentage cuts, people will come to realize it.

BUSH: I think it's important to cut all tax rates.

QUESTION: Mr. President, in addition to making the tax cut retroactive, your economic adviser said yesterday you would also support bringing more of the benefits forward to the first year of the plan. Is that correct?

BUSH: What I'm referring to is enhancing the cash flow of the taxpayer as quickly as possible, and that's what we're going to work on.

I also saw some comments which I thought made a lot of sense, that some in Congress view this as an opportunity to load up the tax relief plan with their own vision of tax relief. And I want the members of Congress and the American people to hear loud and clear: This is the right-sized plan, it is the right approach, and I'm going to defend it mightily.

QUESTION: There is no family, sir, representing the last tax bracket, the bracket that would get the highest dollar return. Why is that?

BUSH: Well, I beg your pardon. I'm representing...

(LAUGHTER)

I got a little pay raise coming to Washington from Austin. I'll be in the top bracket.

QUESTION: Other than that, sir, it appears the Clintons may have taken some gifts that were actually given to the White House. Do you feel that they should return any of these gifts?

BUSH: I think, you know, it's important for all of the facts to be laid out on the table. And I'm confident that the former president and first lady will make the right decision.

Thank you all.

PHILLIPS: President George Bush touting his new proposal, his $1.6 trillion across-the-board tax-cut plan with a couple -- or a few families by his side, that he says this new relief would help benefit an average of $1600 a month for four -- a year, rather, for a four- member family.

We're going to go to our Major Garrett live at the White House with more of a wrap on this plan.

Helping families squeeze by debt and higher energy cost, yes, Major?

MAJOR GARRETT, CNN CORRESPONDENT: That's right.

There's a couple of important points that the president made in selling this plan to Congress. Emphasizing higher energy cost, an issue that's much on the mind of this White House, as it's seen what's happened in California. It's received reports that there could higher energy cost this summer -- and parts of Northeast and Midwest. They want to drive that message home to Congress. This cut is meant to deal with folks who are going to be dealing with higher energy cost now and in the future.

Also an interesting back-and-forth there at the end of the question-and-answer session. A reporter pointed out that no one represented in this presentation that the White House put forward the highest tax bracket in America. Those who earn -- rather who pay 39.6 percent in federal income taxes. That's anyone earning more than $283,000 per year.

The president said, Hey, wait a minute I represent that higher tax bracket. And so he said there's no need to have a family there.

Clearly, the White House wants to emphasize the middle class benefits to this $1.6 trillion tax cut over 10 years.

Let's go over a couple of the specifics involved.

If you are in the lowest tax rate in this country, paying 15 percent currently in federal income taxes, the Bush plan would cut those taxes to 10 percent. Who would fall into that category? Well, a married couple earning more than $32,000 per year. And a single tax filer earning 19,450.

The plan would also shrink the highest federal income tax rate from 39.6 percent to 33 percent. Again, the income category there, more than $283,000 per year.

Also, the Bush plan asks Congress to make these tax cuts retroactive. What does that mean? That means making them effective January 1st of this year. That would mean at least as soon as the president signed the tax legislation, the Treasury Department would set about the task of sending a refund check to American taxpayers for overtaxes they paid this year. The bush team believes that would give a kick-start to the economy and perhaps ward off a recession -- Kyra.

PHILLIPS: I understand the president is also going to be -- has scheduled a number of events throughout the week. Is he planning on visiting small business within the week to talk about this plan for them?

GARRETT: Actually, the president's schedule has several tax- related items on it this week.

The plan will be sent formerly to Congress on Thursday.

And there's also a very important statement the president made, Kyra, that deals with this idea of small businesses and other potential tax breaks.

The president and his advisers have already determined from Capitol Hill that many Republicans and Democrats, knowing full well that a tax cut is going to be passed this year, are going to try to add their own special tax-cut provisions, and perhaps help a certain constituency that they represent.

The White House fear now is not that this tax cut will not be the president's size of 1.6 trillion over 10 years, but that because of all these other suggested tax cuts, it can grow much larger. That's become a real fear at the White House. Not that the president won't get what he wants, but he will get too much of what he wants.

And the president drew a very firm line, saying, It will be this plan I will defend, it will grow no larger. So be on notice, members of Congress, it's these sets of tax cuts and no other -- Kyra.

PHILLIPS: All right, Major Garrett, live from the White House, thanks so much.

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