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White House Spokesman Ari Fleischer Addresses Questions Regarding Bush Tax Cut Plan

Aired February 8, 2001 - 2:02 p.m. ET


JOIE CHEN, CNN ANCHOR: Several big stories are developing out of Washington at this hour. We'll give you a live picture now of the White House, where we expect any minute now the afternoon news briefing to occur with the White House spokesman Ari Fleischer coming up. We'll take that for you as soon as that happens.

President Bush's tax cuts are getting most of the attention today. He sent his plan to Capitol Hill today, drawing immediate fire from Democratic leaders who rolled out, of all things, a new Lexus, their way of showing how the wealthiest taxpayers might benefit from all this.

And a House panel is targeting the former president today. The government reform committee is questioning the ethics of Bill Clinton's pardon of billionaire Marc Rich, whose wife made -- ex-wife made major donations to Democrats.

NATALIE ALLEN, CNN ANCHOR: While we wait for the White House briefing to begin, we take a closer look now at the tax debate. Just hours ago, President Bush sent the outline of his heavily promoted tax cut proposal to Congress. In a Rose Garden ceremony, Mr. Bush stressed the urgent need for tax relief. Just how much you would get depends on several factors, including whether you are married or have children.

Under the president's plan, a married couple with two children, making $60,000 a year, would keep an extra $1,600 a year. A single person with no children and a $60,000 salary would save $1,116 a year.

As expected, lawmakers are either criticizing the president's tax cut plan or calling for changes. Some Democrats want to put it through the shredder. Some Republicans want an even bigger tax cut.

Sorting through it all, our senior White House correspondent John King, who joins us now -- John.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Natalie, remember the signature proposal of candidate George W. Bush was a $1.6 trillion tax cut. He has now put the details into this book which was sent up to Congress today.

As you mentioned, a divided reaction in an evenly divided Congress. Republicans say they welcome the president's plan, although Senate Majority Leader Trent Lott telling CNN while Republicans are happy to see the Bush tax cut plan, they might change it some.


SEN. TRENT LOTT (R-MS), MAJORITY LEADER: We see an opportunity to maybe use some of the money differently and put it in capital gains rate area. I would like to do that. But I commend him for what he's done. I understand, you know, you got to stick to your guns. And I predict, you know, that in the end it will be pretty close to what he set up here.


KING: Now, Democrats say a $1.6 trillion price tag over 10 years is too much. They also think the Bush plan is lopsided in favor of the rich. The Democratic leaders saying they propose about $850 billion over the next 10 years, essentially half what President Bush proposes.

One reason, they say, in the words of the Senate Democratic leader, Tom Daschle, they think that the president is basing his plans on projections of a budget surplus -- projections, they say, might prove false.


SEN. TOM DASCHLE (D-SD), MINORITY LEADER: I would like anybody to raise their hand if they know of a business that would give a dividend without knowing whether there are any profits? Whether you give a dividend before you even know what the budget was for the next 10 years, much less the first year? How many businesses give dividends without knowing budget, without knowing profit? But yet it's this business where that appears on the part of at least some in the Bush administration to be totally within the confines of acceptability. I don't think that is business practice at all. (END VIDEO CLIP)

KING: Now, during the campaign, Mr. Bush sold his tax cut as an issue of fairness. He said, with a big surplus, Washington should give some of that money back to the taxpayers.

Now, though, with mounting evidence of a slowing economy, his sales pitch is changed a little bit. He says Washington should act fast and follow his lead so that it can get a tax cut to American consumers before the end of the year -- Natalie.

ALLEN: And, John, we know that President Bush has invited many Democrats over to the White House to hear opposing views. Do the Democrats feel he's been receptive to any alternatives to his plan?

KING: Well, they say Mr. Bush has listened to them -- the Democrats say that. But the White House looking now slowly in the weeks ahead as this goes through the hearing process on Capitol Hill to pick up enough Democrats to drive the debate their way.

Already Zell Miller, a moderate Democratic senator from the state of Georgia, has endorsed a tax cut about the size of the Bush plan. Max Baucus, the ranking Democrat on the Finance Committee in the Senate, from a state Mr. Bush carried heavily: Montana. He under pressure as well to support a big, across-the-board tax cut.

So this is the period in time where everybody in each party will feel out where the support is. Mr. Bush won't get everything he wants, but the biggest White House concern actually now is not that the Democrats will bring down the price tag, but that many Republicans will try to bid it up.

ALLEN: Does he have -- does he really need many Democrats to cross over just for how it looks if this tax plan is approved, so he can say that he had Democrats onboard as well?

KING: The president certainly would like bipartisan support, and early indications are that he will get some. Anytime you're debating taxes, not only is it a huge political issue, it is a very difficult, contentious legislative issue because of the very arcane budget rules they use in the Congress.

This bill will be split into pieces in the House, have to make its way through the very evenly divided congressional committees; only a six-seat Republican margin in the House. Then it goes to a 50/50 Senate. If the Democrats wanted to tie some things up in knots, they could do that as well.

So bipartisan support is critical. The issue will be, as you move those pieces through the House of Representatives, that will give the president a pretty good gauge of where the Democrats are on particular issues.

Again, they think the focus in this plan too tilted toward the rich. That's why you hear the president as he unveils his plan and as he has tried to sell it in this early week of the administration, he's saying, no, that's not the case, that this would actually help lower income families struggling to get into the middle class.

ALLEN: But the Democrats haven't unified on an alternative plan, have they?

KING: They have not unified around a single plan yet. Remember, there were disagreements among the Democrats even last year. The original Democratic plan was about $200 billion to $300 billion. Then Vice President Al Gore brought them up to about $500 billion.

The biggest change in this debate is that the Democrats now say they are open to some across-the-board rate cuts. That is the signature of the Bush proposal, and it is something the Democrats were widely critical of during the presidential campaign.

So the momentum has certainly moved the president's way. Now that he is the president and not the candidate any longer, the question now is, as they debate the details, will the Democrats be able to shift the plan a little bit more to their liking.

ALLEN: And, John, what do the nonpartisan experts on tax relief say about whether this country can afford a $1.6 trillion cut? KING: Well, it depends where -- those nonpartisan analysts tend to actually be conservative or liberals, they're just not members of Congress. But there is a great debate not only about the size of this, should we put stock in those surpluses? Because if the economy slowed down some, then government revenues would obviously drop, and then the surplus projections would obviously drop.

But there's no question right now that the government is running a pretty good surplus. One of the biggest debates is not so much over the price tag of the tax bill, but as to whether it would actually give a boost to the economy in the short term, as President Bush now argues. It will be several months at least before the bill would get to the president's desk. He would sign it into law, and then there could be a long -- for that to kick in.

Now we understand Ari Fleischer, the White House spokesman, is briefing inside.


ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: I have a few announcements to make and then I'd be pleased to take your questions.

Personnel: The president today is announcing his intention to nominate Michele Davis as assistant secretary of treasury for public affairs. We should have the paper on that out to everybody this afternoon. In addition, the president today is announcing his intention to nominate Senator Bill Frist of Tennessee to be the Senate representative to the 55th session of the General Assembly of the United Nations. As you know, there are two members of Congress that alternate between the House and the Senate who serve as members who participate in the proceedings at the UN General Assembly. They alternate from the House to the Senate. There is currently a vacancy with the seat that was previously held by Senator Rod Grams. And as a result, the president today is nominating Senator Bill Frist to serve on that position.

Finally, the president tomorrow will be visiting a school in Southeast Washington, the J.C. Nalle Elementary School, to mark Black History Month. He will be going there along with Secretary Paige, and he will also discuss the importance of reading while he is there.

And with that, pleased to take questions.

QUESTION: Coverage?

FLEISCHER: There will be a pool, and I'll have all the notification out on that.

QUESTION: Ari, could you tell us more about the president's phone call with Chairman Arafat this morning? Did it happen before or after the bombing? And what did he say?

FLEISCHER: It happened early this morning. It was prior to the bombing. The president made two calls today, one to Chairman Arafat and the other al-Sultan Qaboos of Oman. QUESTION: Do you know, did he use the phrase with Arafat, the United States is committed to a, quote, "just and lasting peace"?

FLEISCHER: He talked about promoting peace and stability in the region and bringing an end to the violence.

QUESTION: You can't say whether he used the phrase, just and lasting peace?

FLEISCHER: I'm not going to get into the specifics of a phone call the president made like that to a foreign leader. It would be a private conversation.

QUESTION: Can we revisit the defense budget, again, just for a moment? The secretary of defense reportedly told the Joint Chiefs that there will be no large edition to the defense budget for the next fiscal year. And Mary Ellen is quoted as saying that the budget that's going to go up will be President Clinton's budget of $310 billion, which, as you know, is $31 billion short of what the president advocated.

Two part question: One, if Congress adds on those $31 billion or even more billions, will the president sign the bill? And two, what happens if Congress tacks on weapons systems that the administration does not want, such as the F-22, the B-22, et cetera?

FLEISCHER: Well, I'm not going to discuss any hypotheticals. But the president's position is very clear, and this is exactly what he promised to do during the course of the campaign, and it's exactly what he and Secretary Rumsfeld are working shoulder-to-shoulder on right now, which is that the president has directed the secretary to begin a force structure review, which is now under way, and that will help determine what the shape of future spending decisions will be.

The president believes we need to rebuild our military, and the force structure review is a part of doing that.

In addition, the president's budget that he will submit will honor the campaign promises he made to increase pay for men and women who wear the uniform, as well as to improve the housing for the men and women who wear the uniform, and that will be an increase above and beyond what was spent previously.

QUESTION: OK. A follow-up, and there's a little confusion, I believe. If that restructure review is not completed by the time the budget goes up, what about the possibility of a supplemental?

FLEISCHER: The president has said he's for no immediate supplementals.

QUESTION: On the president's phone calls to foreign leaders, if the foreign leaders, themselves, quote the president in that phone call, can we get some help on this end in telling us whether or not that is accurate?

FLEISCHER: The president's intention when he has these conversations is he will treat them as private conversations. I would just urge you to be cautious with information you hear from others. We'll be happy to try to help you to the best degree we can, and you may want to discuss that following this.

QUESTION: What is the president's reaction to Prime Minister- elect Sharon's comments yesterday about Jerusalem? Did that come up in a conversation with Mr. Arafat? And does the White House have any reaction to this first episode of violence in the region, the car bombing this morning?

FLEISCHER: On the first question, the president is not going to react to every statement made by every foreign leader around the world. Secondly, on the car bombing, it's another reminder of the need to create a just and lasting peace in the Middle East, to bring an end to the cycle of violence.

QUESTION: Did the Sharon comments come in his conversation with...

FLEISCHER: I'm not going to get into what topics the two discussed, beyond what I've already indicated.

QUESTION: On the tax cut, the Democrat leaders are up on the Hill today with a car and an automobile part. And they're saying that millionaires under the Bush plan would get a tax cut sufficient to buy a Lexus and working people would get a tax cut sufficient to buy a muffler. Is their arithmetic wrong or do you disagree with their emphasis and argument?

FLEISCHER: Well, I think both their arithmetic and their emphasis is wrong. What the Democrats are proposing is to collect almost $1 trillion in higher taxes than President Bush has proposed. That way they can spend the money on bigger government.

Under the Democrat proposal, the government will get put in the driver's seat and the taxpayers get stuck in the back.

QUESTION: But their numbers are not wrong, are they? That a millionaire will get a $46,000 tax cut, and that's enough to buy a car.

FLEISCHER: The numbers are incomplete. The real numbers are that the biggest percentage gainers in this tax plan are people at the middle and the low end of the income scale. They will benefit the most from President Bush's proposed tax cut.

But what you have here is an old issue where there are some Democrats who want to keep taxes high; that way they can spend more money. But I think what you're going to really see is a growing group, a smaller group -- it won't be all the Democrats -- but there will be a smaller number of Democrats who want to work with us to cut taxes for all Americans. And that's how we're going to achieve a bipartisan governing coalition to get taxes cut.

QUESTION: One more question on this. This example has a kind of visceral appeal that people would get so much money, they could buy this luxury car. Is it a fair argument to make against the president's plan, to make an argument on that basis?

FLEISCHER: Well, I think the fair argument is that there are some tax-and-spend Democrats, who, every time they see a car, start thinking about building a toll booth, and that's how they collect all these taxes. So that's our point-of-view.

QUESTION: The president, two days ago, said categorically that President Clinton or whichever president has a constitutional right to pardon anyone. The Republicans today are holding a hearing on Capitol Hill about one of the pardons of President Clinton. Does the president have an opinion on that?

FLEISCHER: I think the Constitution is very clear that the president has the power to pardon. The Constitution is also clear that the Congress has the power to hold hearings.

QUESTION: Ari, on the tax plan, the one that was sent to Congress today does not include the education IRAs that were in the original tax proposal from the campaign. Have those been dropped or are they going to be sent up in another form?

FLEISCHER: I'd have to go back and look to see if that was part of the education package that was set up.

QUESTION: I think that was part of the original December '99 tax package.

FLEISCHER: Let me go back and take a look at that.

QUESTION: Also, I have a follow-up. There is some other tax break that's been proposed for health care and low-income housing.


QUESTION: Are those going to be sent in other proposals?

FLEISCHER: Well, as you know, during the course of the campaign, there were a series of provisions that the president announced that are fully built into our budget, such as health care tax provisions that allow, for example, people who don't have employer-provided insurance to get a tax credit of up to $2,000, so they can afford health insurance. Those were carried under a separate item in our budget. Those were not part of the original December 1999 tax plan.

QUESTION: So the president will propose additional tax cuts in the package that he's sending today.

FLEISCHER: He'll have additional initiatives that focus on health, that focus on housing, that focus on a series of items. And he'll lay it out just as he did during the course of the campaign.

For example, let me give you one specific: the charity tax deduction that the president's talked about. When the president announced his faith-based initiative, the proposal to allow 80 million Americans who were currently denied the right to receive a charitable deduction was carried as part of his faith-based initiative. In terms of the budgeting for it, the cost of the faith-based initiative carries that item.

QUESTION: Ari, why did the president decide it was a bad idea to use the general revenue surplus to deal with the long-term financing problems of Social Security and Medicare where there's a shortfall in revenues?

FLEISCHER: He has not said that about Social Security. What he has said is, before we spend more money from general revenues, or spend any money from general revenues, what's important is we focus on how to save and reform Social Security so it doesn't go broke.

So the president has expressed an openness to that idea. But in order to proceed, the first step the president believes we need to take is to focus on reforming the system itself.

QUESTION: But the reason for reform is the shortfall on the revenue...

FLEISCHER: No, the reason for reform is because the Social Security system, given the demographic changes our nation is going through or will shortly go through, will not be sustainable. And we need to have a system that will be able to honor the commitments made to our grandparents and to our grandchildren.

QUESTION: Wouldn't it be sustainable if you applied the surplus to the pot?

FLEISCHER: The solution is to reform the system, not just to throw more money into a system that is vital.

QUESTION: Ari, how committed is the president to holding a line on the size of his tax cut? Would he veto anything that went beyond $1.6 trillion?

FLEISCHER: It's just too soon to start talking about that type of language. The president has sent his plan up today, and we've seen nothing on the horizon that would indicate to us that we're going to be in that situation. And we'll just withhold and wait judgment.

But the plan went up today, and we're very encouraged, frankly, by the reaction that we're getting. I think that you're going to see a sea change in Washington, D.C., where tax relief is on its way to the American people.

QUESTION: He also suggested that people could use the money that they get back from their taxes to pay for their higher energy bills. It seems to suggest, because the effects of the tax cut won't be felt for some time to come, that these higher energy costs will be with us for some time.

FLEISCHER: And that's another reason the president supports any efforts that would make the tax cut retroactive. That would put money in people's hands immediately because they need it.

QUESTION: So is he saying that these high energy cost will be with us for some time to come? FLEISCHER: He's saying that people need to have money in their pockets to spend as they see fit. There will be some families who will use that money to pay for higher energy cost. Other families, like families we visited this week, who said they'll use it to educate their children. Other families have said they'll use it to take a vacation.

The point is, the money doesn't belong to the government, it belongs to those people who made it, and it should be their determination of how to spend it.

QUESTION: Ari, you said before that the president wants to stick to $1.6 trillion price tag on the tax plan, and that he also likes the details that he's outlined. Yet, today, again, he's strongly endorse this idea of retroactivity. Now, that's going to increase the price tag of his tax cut. Is he going to tell Congress which pieces he would like to have dropped out so he can afford that retroactivity?

FLEISCHER: It all depends on how the retroactivity is done, what the phase-ins are, what the effective dates are. But you can still adhere very close to the spending figures the president has said, while tweaking the tax cut on the retroactivity side.

It all depends on the final decisions that get made.

QUESTION: Do you have any costs estimates on retroactivity and how you can fit it in there without increasing the prices?

FLEISCHER: Again, it all depends on the decisions that are made, what the effective date would be, what the phase-in rate would be, whether it would be on the acceleration rate of the phase-in. It's a whole series of decisions that have yet to be made. They all do impact the costs of the tax cut and not to a substantial degree, but they do have a cost impact. I would acknowledge they have a cost impact, absolutely.

QUESTION: Is he feeling any pressure? You said he's committed to the size of the tax cut. But at these meetings with members of Congress, from Republican to business leaders, like the meeting he had yesterday, to look at things like reducing capital gains, or adding some more cuts for businesspeople...

FLEISCHER: Yes, I mean, that does come up. Frankly, in the meeting with Ways and Means members, the president was talking about the need to create capital in this country, capital formation. And he made the case for his marginal across-the-board income tax rate cut to create capital, and a member suggested to him that then we ought to cut capital gains taxes. And he said, "That's not what I'm going to do."

At the meeting today with some of the high-tech leaders, they talked about whether or not corporate taxes should be cut. And the president said, "I'm not going to push for that. We don't need to do that." And in fact, the reaction was rather strong. People said, "What we really want is for our customers to have more money in their hands. That way they can come out and buy our products." So we do expect to hear that. We expected to hear from the Republican side, that we need to do more business provisions. We expect the Democrat side to say don't cut taxes as much as you want to cut taxes, leave taxes higher.

And the president is going to adhere right to the ground that he has established and fight for the tax cut that he ran on.

QUESTION: In the Ways and Means meeting last night, did one of the Democrats tell him if a vote were held today that it would be along party lines?

FLEISCHER: I'm not going to characterize things that were said by any of the members.

QUESTION: Ari, on racial profiling, I heard a report that in fact the White House is going to set up a panel to look at the racial profiling issue. There is a meeting scheduled next week. Can you describe what the White House can and should do on issues like racial profiling and other issues that go to the trust that Americans have in the police forces around this country?

FLEISCHER: We'll be working with other people and listening to the law enforcement community, listening to people who are involved in this very important and sensitive issue to hear their ideas and concerns, working with other relevant government agencies and Cabinet departments.

It is an important issue. It's something the president had talked about during the campaign, and we're open to ideas.

QUESTION: Well, what are his ideas?

FLEISCHER: It's a little preliminary right now. That's one of the reasons we're going to hold meetings with relevant groups. And as soon as we have more to indicate, we will.

QUESTION: Would you remind us what he talked about during the campaign?

FLEISCHER: He talked during the campaign about the need to make sure that people aren't pulled over because of the color of their skin or because of their ethnic background or their race. And he said we need to be careful and cognizant of that. And that's something that government has been wrestling with for many a year, and we're going to be sensitive to it and work with the law enforcement community and others involved to help address it.

QUESTION: Is there a trust problem?

FLEISCHER: Is there what?

QUESTION: Is there a trust problem, do you think, for the police, a credibility problem for the police around this country?

FLEISCHER: Well, I think we're going to have some meetings and listen to people from all sides of the issue.

QUESTION: Some black law enforcement organizations are somewhat upset because they feel that they should be involved in this initial meeting. What is the White House saying to those groups that are saying this?

FLEISCHER: We're going to continue to have a series of meetings with many different people to discuss issues, and this will be part of an ongoing series of meetings.

QUESTION: Ari, House Republicans tell the Wall Street Journal today that the White House has privately promised to block states from using sample numbers in redrawing congressional districts.

QUESTION: Have they been given this reassurance? And how did the White House reach that decision?

FLEISCHER: As far as the information that I have, Mike, that is under review right now, about the final determination of will be happening at the Census Department. The Census Department has more information to be released later on dealing with this issue, and is under review by Census. And if we have anything to announce we'll let you know.

QUESTION: What guidance have you given the Commerce Department about how they should proceed? And what's the timeframe?

FLEISCHER: The Commerce Department is proceeding as it sees fit, and we'll work with the Commerce Department.

QUESTION: Are House Republicans wrong, therefore, when they say and are quoted as they were today in the Wall Street Journal? They believe there is no way the president will reverse his original intention and allow for sampling.

FLEISCHER: I'll have to take a look at that story specifically. I'll have to take a look at that story specifically before I comment on that.

QUESTION: Ari, the president's been arguing, in his tax cut events, that the high credit card debt is one reason that people's taxes should be cut. But does really believe that the government's responsible for bailing out people who run up their credit cards?

FLEISCHER: It's not a question of bailing anybody out. The taxpayers have been bailing out the government. This money does not belong to the government. It belongs to the taxpayers, and it should be theirs to spend as they see fit. That's the president's view.

QUESTION: Ari, why send up a proposal or a tax plan today, as opposed to formal legislation? And what's the strategy behind that?

FLEISCHER: Well, again, on a host of initiatives traditionally done from the executive in conveyance of legislation up to the legislature, it's the exception when you have bill language sent from the executive to the legislature. Typically, what are sent up are a set of specific proposals, which is what you saw today. And today's proposals are indeed very, very specific: double the child credit for

ALLEN: Ari Fleischer taking many questions today in his regular briefing, but many of the questions surrounding the tax cut plan that is now officially on Capitol Hill. They'll be setting up that legislation and all the details in the future.

We heard Ari Fleischer say that, in defense of the tax cut plan, as you know, Democrats saying that it benefits the wealthy more than those who aren't. Ari Fleischer saying, however, the biggest tax gainers are in the middle and low incomes. The Democrats brought out a Lexus today on Capitol Hill, saying, actually, the rich could buy a new fully-loaded Lexus with this tax cut they'll be getting.

So we'll continue to follow that debate as it progresses, which it will.



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