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President Bush Sends $1.6 Trillion, 10-Year Tax Cut Plan to CongressAired February 8, 2001 - 10:10 a.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: Now we focus on the White House, once again, where it is tax day, President Bush sending his $1.6 trillion tax-cut proposal to Congress. Some Democrats, though, want to put the tax-cut plan through the shredder, while some Republicans want an even bigger plan.
Let's bring in our Kate Snow, joining us live from Capitol Hill with more.
Kate, good morning again.
KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Good morning, Daryn.
Congress generally supportive this time around of a tax cut, both Republicans and Democrats supporting the idea, Democrats coming around and saying, yes, we can have a tax cut. But it's not quite that simple. They do disagree with the size of President Bush's proposal.
Joining me now is the leading Democrat on the Senate Finance Committee, Sen. Max Baucus from Montana.
Thanks for being with us this morning.
SEN. MAX BAUCUS (D), MONTANA: Hi, Kate.
SNOW: You have said that you think it's time for a timeout. There's been so much talk up here already about tax cuts, why do you -- why is it time for a timeout?
BAUCUS: Well, we're on the verge of a feeding frenzy. There are a lot of proposals of the president's. Then on top of that, the business community wants its big tax cut. There are some members of Congress who want a lot more than the president's.
And I think it's time for a timeout. Let's just cool it. Let's find out what makes most sense. Let's be responsible. Let's put the right tax together with other needs in the country, like Medicaid, Medicare, Education, Social Security. But I'm very worried that if we don't kind of slow down a bit and have some kind of a timeout that we're going to get into a bidding war that we'll not be able to reverse.
SNOW: President Bush said yesterday, though, that he -- his tax plan -- he said it's responsible, it will include enough money to cover the things you've mentioned -- Medicare, Social Security, reducing the national debt. He said there's going to be plenty of money for that. Do you not believe him?
BAUCUS: Well, I'm just concerned. Because if you look at the president's proposal and then look at the other needs, I, frankly, question whether the numbers really add up. But on top of that, there are a lot of others who want even more in tax cuts. And I'm afraid that the momentum for even addition tax cuts is going to get so far out of hand that we're not going to be able to deal with those other needs.
SNOW: One last question for you. Democrats seem to be united in opposing the tax cut, but there are some rifts among the Democrats, not united on how to do an alternative plan.
BAUCUS: Well, we -- look it, we need a tax cut. We need a significant cut -- significant, but there are other responsibilities. But there are lots of ways to do a tax cut, and we want to do it in a way that's fair and that makes the most sense, and a size which fits with other needs. And that's the responsible thing to do, and we just have to slow down, timeout, cool it till we get there.
SNOW: Sen. Max Baucus, thank you so much for joining us live from Capitol Hill here.
The senator says they hope to have a Democratic alternative by the end of this month. President Bush getting ready to send his version over to Capitol Hill.
KAGAN: Kate, thank you very much.
And with more developing news on this situation, let's go ahead and go to the White House and Major Garrett -- Major.
MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Good morning, Daryn.
The president will use this ceremony at the Rose Garden to lay out a broad economic defense for his tax cut. White House officials familiar with the president's speech say it will emphasize many parts of the economic landscape that the United States finds itself in right now, emphasizing the need not only for monetary policy, which is the recent Federal Reserve rate cuts, but also fiscal policy, meaning tax cuts.
The president will argue that putting those two things together will, by the end of this summer when the White House hopes this tax cut will be approved by Congress, you'll get the two of the things coming together to prevent a hard landing or even a recession.
There is growing fear not only at the White House and the Congress about a recession. This tax cut is meant to deal with that.
We see the president entering now. Let's turn to the president. LEON HARRIS, CNN ANCHOR: Major -- sorry to interrupt Major Garrett's report there. We're going to go now live to the White House there at the Rose Garden. President Bush now is out there beginning to make his remarks where he introduces his tax plan.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Please be seated.
Thank you very much for that warm welcome. It's good to see so many friends here in the Rose Garden. This is our first event in this beautiful spot, and it's appropriate we talk policy that will affect people's lives in a positive way in such a beautiful of our national -- really our national park system, I guess you would want to call it.
This is the land of economic miracles, and we are experiencing one here in our country. Latino businesses are growing faster than the government can count. Back in 1997, there were 1.4 million Latino-owned businesses. Since then, number has been growing by an estimate 25 percent.
No one is entirely sure of the total. Your success has left all statistics behind, and America is better off for it.
The businesses you have built prove the continuing power of the American ideal, a promise of advancement to men and women of every background. This country appreciates you. We appreciate your vision, your hard work, and I congratulate for your success.
To succeed, Latino-owned businesses need the same things all businesses need: moderate regulation, a sensible legal system and a growing economy.
For several months, however, our economic growth has been in doubt, and now it may be in danger. Americans are hearing and some feeling the economic slowdown. Americans hear about the news, many are beginning to actually feel what it means to be in an economic slowdown. Consumer confidence has slumped. Many business leaders are worried.
A warning light is flashing on the dashboard of our economy, and we just can't drive on and hope for the best. We must act without delay.
My job is to lead. A president should not wait on events. He must try to shape them. And the warning signs are clear: All of us here in Washington, the president and the Congress, are responsible to confront the danger of an economic slowdown and to blunt its effects.
Today, I am sending to Congress my plan to provide relief to all income-tax taxpayers, which I believe will help jump start the American economy. We must give overcharged taxpayers some of their own money back.
We must give low-income families fairer treatment. We must give small businesses a better chance to grow and to hire. For all these reasons, I urge Congress to help me strengthen our economy by lightening the tax load, the tax burden on the American people.
Here's how my tax-relief plan will work. We will simplify our tax code, reducing today's five brackets to four lower ones: 10 percent, 15 percent, 25 percent and 33 percent.
Families with children will also receive a tax credit of $1,000 per child. We will end the death tax, reduce the marriage penalty and expand tax incentives for charitable giving.
My plan is directed toward individuals and small businesses. It offers relief for everyone who pays income taxes, and it keeps our national commitments to Social Security and debt reduction.
These are the details, but it is the results that will matter most.
If we pass this tax relief plan in a timely manner, three important things will happen.
First, we will return $1,600 to the typical American family with two children. Working families earning between $35,000 and $75,000 will keep anywhere from $600 to $3,000 more each year. With this tax relief, families can save, or pay off debt, or pay for higher energy bills. This $1,600 is good for a family. Multiplied by millions of families, it is good for our nation's economy.
It means greater demand for your goods and your services at a time when demand may be slowing.
I'm committed to accelerating economic growth. Lower interest rates will certainly help, but they need to be reinforced with tax relief as well. There is talk in Congress of bringing this relief even quicker by making it retroactive to the beginning of this year. I strongly support that idea.
We need tax relief now. In fact, we need tax relief yesterday. And I will work with Congress to provide it.
Our economy faces this challenge: Investors and consumers have too little money and the U.S. Treasury is holding too much. The federal government is simply pulling too much money out of the private economy and this is a drag on our growth. Over the past six years, the federal share of our GDP has risen from 18 percent to 21 percent, about as much as our government took during World War II.
President John Kennedy faced a similar situation in the 1960s. He warned then against storing up dollars in Washington by taking away more than the government needed to pay its necessary expenses. High tax rates, he said, and I quote, "are no longer necessary. They are, in fact, harmful. These high tax rates do not leave enough money in private hands to keep this country's economy growing and healthy." Forty years later, our Treasury is full and our people are overcharged. Returning some of their money is right, and it is urgent.
The second effect of my plan is to substantially reduce the tax barriers that bar too many Americans from the middle class. Our new 10 percent rate, along with the child credit, will cut federal marginal tax rates by 40 percent on many struggling taxpayers.
I've talked about this problem for over a year, and I'll talk about it until we fix it.
Under current law, say a waitress, who's working hard to get ahead, and she may have two children, earning $25,000 a year, faces a higher marginal tax rate than a successful lawyer earning 10 times as much. That is not right, and that is not fair.
The government would take from her nearly one-half of every extra dollar she earns. Her hardest hours are taxed at the highest rates.
Today, our tax codes this message to this woman: Stay where you are. You'll never get ahead.
But that is not the message of America, as far as I'm concerned. And it must not be the message of our tax code. Our tax system must reward the dreams of a better life.
My plan dramatically reduces the marginal rate on many low-income earners, rewarding overtime or a hard-won raise, encouraging Americans on their path to the middle class.
Six million families, one out of every five families with children, will no longer pay federal income taxes at all under our plan. This country has prospered mightily over the last 20 years. But a lot of folks feel as if they've been looking at somebody else's party, that they've been looking from the outside. It's time to open the door and welcome everyone in.
And finally, this tax-relief plan will be good not just for the short- term needs of our country and for our economy, but for the long-term health of our nation.
Every big business began as a small business. Many of the great companies of our time were founded when the maximum tax rate on small businesses was only 28 percent. Today, many small businesses are paying a tax rate as high as 40 percent. Thousands of sole proprietors, people with dreams, pay high, high rates. That's not how one encourages innovation or job creation or expansion.
My tax-relief plan reduces the marginal rates that many small businesses pay. We want you to have a fighting chance in a difficult economy.
We also want people to have more funds to reinvest and to grow their businesses. We want to make to make sure that the next generation of success stories continues far into the future. I hope all of you will help me in this task. We have minds to change, and we've got some laws to pass. Our course is set, and I believe our case is strong.
This week I've been meeting with Americans of all backgrounds: young families, leaders of large companies, entrepreneurs, single moms. All are worried about the direction of our economy. All are agreed that action is needed. And today I'm acting for your sake.
I urge the Congress to pass my tax relief plan with the swiftness these uncertain times demand.
I will now sign a letter of transmittal, and soon hope I'll be signing the needed tax relief.
Thank you for coming.
KAGAN: And with this signature, President Bush sends his $1.6 trillion tax proposal to Congress. He says it should mean -- it would mean a tax relief of about $1,600 a year for a family of four. He said it would -- he's also trying to end the death tax and the marriage penalty as well. And he insists, despite what his critics say, that this can all be done and still have the commitment to debt reduction and also to Social Security as well.
We should be hearing from the Democrats and their response about 15 minutes from now at 10:45 a.m. Eastern. And we'll bring that to you live as well.
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