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Special Event

Sen. Daschle, Rep. Gephardt Present Democrats' Budget Plan

Aired February 15, 2001 - 10:15 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: We want to go live now to the U.S. Capitol. Senate Minority Leader Tom Daschle talking about the Democratic proposal for tax cuts. Let's listen in.

(JOINED IN PROGRESS)

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: ... whatever's left, if there is anything left.

We start at the beginning. We're asking: What are our obligations? How much do we need to set aside to pay down the national debt, provide prescription drug coverage, strengthen our children's schools and do all the other things we have to do to help families and keep the economy strong? We need to figure that out first.

Whatever we don't need, to pay down the debt and pay the bills we know are coming, we ought to return as much as possible to the American people as quickly as we can. We've checked and rechecked the math. And today, we are announcing that the House and Senate Democrats are united behind the plan to divide the surplus 1/3, 1/3, 1/3 . Our plan is responsible. It's realistic, and it's fair.

We start by taking both the Social Security and Medicare surpluses off the table, as this chart would indicate. Then we take the remaining $2.7 trillion and set aside 1/3 of the tax cuts; that's $900 billion for tax cuts. We set aside another third to pay down the national debt and reform the Social Security and Medicare system.

And we set aside the final 1/3 to invest in critical priorities in education, prescription drugs, and defense and to respond to emergencies that we can't predict but that we know are coming.

Democrats are united in our support of this budget framework. We're also united in three fundamental principles. These are the principles we will follow in our negotiations with the president and our Republican colleagues.

First, the American people deserve a major tax cut this year. They also deserve an honest, responsible tax cut. The tax cut must be part of a balanced budget that protects Social Security and Medicare and invests in prescription drugs, education and other critical priorities. Second, the tax cut must be fair to all Americans. And third, it must permit us to pay down the debt and strengthen our economy, not weaken it.

So far, the president's plan fails to meet every one of those principles. Instead of strengthening Social Security and Medicare, the president's plan actually threatens those programs. It also uses up the resources -- which this chart depicts -- it uses up all the resources that are needed to provide a prescription drug benefit and improve the public schools. The entire tax cut virtually consumes the entire surplus, leaving 4 percent left, only 4 percent left for all other priorities.

The president's tax cut gives an unfair share of the benefits to the very wealthy at the expense of working families. The wealthiest 1 percent of Americans pay 21 percent of taxes, but they get 43 percent of the benefit under President Bush's plan.

Finally, the surplus is based on highly uncertain projections. In fact, about the only thing that is certain is that the projections will be wrong. Yet President Bush spends virtually every dollar of the projected surplus on his tax cut. If the projections are off by even a fraction, the president's plan will send us right back to the highest interest rates, highest unemployment, and high debt that we saw at the end of the Bush administration.

That is too risky a gamble to take, which is why we Democrats are united behind a fiscally conservative approach.

The good news is this: President Bush started at the end; we're going to start at the beginning. Maybe that means we can find common ground in the middle. We certainly hope so. The American people deserve a major cut, and we want to give it to them so long as it's fair, responsible and based on honest projections.

Now, it is my honor and privilege to introduce my colleague and friend, Dick Gephardt.

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: Thank you, Tom, very much.

Democrats want to do things that will help America's families succeed today and in the future. An important part of that is putting more money back into people's pockets through meaningful tax cuts. Democrats are committed to passing a tax cut that is fair to all Americans, that is part of a responsible, honest budget that balances all of the priorities that are important to America's families and a tax cut that will strengthen our economy, not weaken it. Democrats believe that can be done with a tax cut of around $900 billion over 10 years.

We support a budget that equally divides the available surplus between fair, responsible tax cuts debt reduction and extending the life of Social Security and Medicare and investments in public schools, Medicare prescription drugs, helping our military families and modern voting equipment. Our plan offers families more than a tax cut, but our tax cut is important.

I want to refer to this chart, and I want you to spend a moment with it. This is the Bush plan for the average family: modest tax cut relative to the wealthy; higher interest rates as markets react to mounting debt; insolvent Social Security at an earlier time; insolvent Medicare at an earlier time; and nothing for public schools or prescription medicine.

The Democratic plan: a fair tax cut for all families; lower interest rates because the deficit is not going to go up; secure Social Security through 2050; secure Medicare through 2030; and modern public schools; and a prescription medicine plan.

You have to look at the totality of these plans. You have to look at the totality of the budget. We should not just run to tax cuts, alone, especially those that are canted toward folks at the top, without looking at all of the other ramifications and consequences that come from making that tax cut decision.

President Bush's plan gives an unfair share of those benefits to those who already have the most rather than those who most need the help. His plan is part of a budget that gives excessive priority to cutting tax rates for those at the top while we need critical investments in Social Security, education and health care. This plan will lead us back to deficits, high interest rates and the high burden of debt we faced at the end of the last Bush administration.

Based on 10-year surplus projections, which, as Tom pointed out, are just projections, usually wrong, the Bush plan makes little fiscal sense. We and many economists and business people believe do not believe the federal government should take such a huge gamble on tax cuts based on projections that even the Congressional Budget Office says are likely to change before the 10 years are out.

We base our plan on one simple principle: cut taxes but in the context of an overall budget that's good for all families. Instead of favoring those at the top as the Bush plan does, we want a plan that's fair to all Americans and a budget, again, that leaves room for Medicare, prescription drugs, paying off the debt by 2008, strengthening Social Security and Medicare, keeping them insolvent longer, keep interest rates low, our economy strong, put more cops on the beat, more quality teachers in our classrooms and a better future to every American because we made the right sensible, logical, cautious choices.

For the sake of America's families, we must act responsibly as well as act. Our budget and tax plan should lay the foundation for a strong economy that we have enjoyed these last eight years once we got our fiscal situation straightened out.

We're going to take this message to all of the American people all over this country. And we're going to have a full debate about these priorities, including a tax cut for the people that need it most.

It is now my pleasure to introduce Luawanna Adams, who has come here today to tell her story and to talk about what she thinks the plan put forward by President Bush would mean to her.

LUAWANNA ADAMS, MOTHER FROM PENNSYLVANIA: Thank you, Senator.

Good morning. My name is Luawanna Adams and I'm from Homestead, Pennsylvania. I have a son, Isaiah (ph), who is five years-old. I'm a very hard worker. I've worked since I was 17-years- old, and I've served in the Army for three years.

Currently, I work at Every Child, Inc. It's a non-profit agency that seeks to unify children with their families. Every morning, I leave my house at 7:45. I catch a 61-C bus to Oakland. From there, I catch a 54-C to Bloomfield (ph), where my son attends pre-school. I drop him off. I give him a quick hug, a kiss. And then I catch a 77- D to Neglee (ph). And then from Neglee (ph), I catch an 86 to my job.

I get to work about three minutes after 9:00. I work as a secretary. I type. I answer phones. I file. I get off at 5:00. I pick my son up. And we don't get home until 6:45. And I earn $20,400 a year before taxes. From what I've heard about President Bush's tax cut plan, I can expect to receive $117 a year. That comes to about $2 a week. It's good. And it's useful. But it really won't make a difference in my life.

I heard that people with much higher incomes will receive a much higher tax break, and that makes me mad. I'm still paying a lot of taxes that get withheld from my pay.

I think that if the government has extra money for tax cuts, that working people, such as me, should receive a much higher tax cut. Then maybe I would be able to purchase a used car to get back and forth to work in less than hour rather than the three hours that it takes me now. That would make a big difference in my life.

I thank you very much for the opportunity to speak.

Senator?

DASCHLE: I want to thank you.

I am moved by statements like that. She got up at 4:30 this morning in Pittsburgh to drive all the way to Washington so that she could share her personal experience with us this morning. So it means a lot to all of us that you're here.

We wouldn't even be talking about how to divide the budget surplus if Democrats hadn't had the courage and the foresight, back in 1993, to pass a budget plan to get rid of the deficits and restore the strength to our nation's economy. Not one Republican voted for this plan, and it would not have passed. And we would not have had this debate about tax cuts were it not for the leadership of so many of my colleagues, including Dick Gephardt.

When President Bush unveiled his list of tax cuts, he was joined by several people that he said his plan would help. Conspicuously absent were the people his tax cuts would help the most.

Being an inclusive party we've invited a representative of the wealthiest 1 percent to join us. (LAUGHTER)

We've got both ends of the spectrum here. Senator Jon Corzine is one 10 new Democratic senators this year. Before coming to the Senate, as most of you know, he was an extraordinarily successful business leader, one of the real leaders of Wall Street. He understands how important fiscal discipline is to a strong economy. He is one of the growing choruses of voices within the wealthiest 1 percent who oppose the Bush tax cut because of the way it shortchanges working families and because it underfunds America's future.

Senator Jon Corzine?

SEN. JON CORZINE (D), NEW JERSEY: Thank you, Leader Daschle and Leader Gephardt. I appreciate the opportunity to be here today.

As many of you know, I've spent most of my career at a Wall Street investment bank, where I worked up the ladder and eventually served as CEO. It was a terrific job and one for which I was well- paid. America has been good to me. I am very fortunate. I don't think I'm a better person or a worse person for that opportunity. In many ways, I was just lucky.

If President Bush's tax plan is approved, I'll be luckier still. The Bush plan would give me a tax break of close to $1 million a year, and applied to any of the previous five years, the cut would have been roughly $1.5 million. That's more than generous.

And maybe some of you will think that I'm crazy for protesting. But frankly, I don't think it's right. Our nation has higher priorities.

I don't need a break, but Luawanna does. I don't need a break, but Social Security does. Medicare does. I don't need a break, but our children and our schools do.

So I think Congress needs to rework the president's plan.

We should have a significant tax cut, but it should be focused on middle- and lower-income families. The fact is: While we're enjoying a period of great prosperity, our nation still faces a broad range of challenges. Social Security and Medicare will be under great pressure once the baby boomers begin to retire. Many of our schools are crumbling. Our seniors need access to prescription drug benefits. And while we've been able to eliminate about $600 billion of debt today, we still have a long, long way to go.

Many argue that there's plenty of money to give out tax breaks, but the truth is that many of these projected surpluses are based on questionable and, from a business perspective, an improbable set of numbers. The $5.6 trillion of projected surpluses include $2.5 trillion in Social Security trust funds and another $400 billion in Medicare trust funds.

Just as importantly, the plan assumes that Congress will freeze appropriated programs at current real levels, meaning the programs will shrink as a share of our economy. That flies in the face of what the Congress, a Republican Congress, has approved in recent years. And few believe it will happen in the years ahead.

By any objective analysis, therefore, the Bush tax cut will mean a probable raid on the Medicare trust fund and, perhaps, on the Social Security trust fund as well. That is unacceptable. So while the Bush plan would be a great windfall for me, it's wrong for our country. That's why I strongly oppose it. That's why I want to thank leaders Daschle and Gephardt for their outstanding leadership in reframing this issue for the American people. Let's give hardworking Americans a tax break, but let's be responsible. Let's pay down the debt and address our nation's most important priorities.

Thank you.

QUESTION: Senator Daschle, you told us how much you want to put into the tax cut, but you haven't told us what you want that tax cut to be. Would you tell us what you want to spend that money on?

DASCHLE: Well, I think we have said what we want it to be. We want it to be fair. We want it to be responsible. And we want it to be based on accurate projections.

Now, there are a lot of ways with which to fashion it. But before we get into the specifics of our tax cut, we want all the American people, we want the Congress, we want leaders in Washington to understand the framework of this debate.

This debate isn't a Democratic tax cut verses a Republican tax cut. This is a debate about Republican priorities verses Democratic priorities. The Republicans have said, unequivocally with their tax cut, they have one priority: a tax cut. What we're saying is that we have three priorities: We want to balance the budget, and we want to bring down the debt, number one; Number 2, we want a tax cut, a meaningful tax cut for people like Luawanna; and third, we want a commitment to education, to prescription drugs, to Medicare, to defense, to those things that are truly going to be priorities for this country in the next 10 years.

KAGAN: We've been listening to congressional leaders; Senate Minority Leader Tom Daschle there, and right behind him House Minority Leader Dick Gephardt there presenting the Democrats' proposal for a tax cut. Basically, they want to break it down into thirds of any government surplus: a third for tax cuts, a third to pay down the debt and then a third for what they are calling "critical priorities."

Let's go ahead and bring in our congressional correspondent Bob Franken, covering Congress for us today as he does so many days and does it so well.

Bob, interesting to hear the Democrats talk; but, really, do they have any power here, given the make-up of Congress and also that you have a Republican in the White House as well?

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Oh, they have quite a bit of power because, as you know, the Republican advantage in Congress is just very, very slim.

As a matter of fact, probably the key statement that was made during this whole news conference came from Daschle, who said President Bush started at the end, we're going to start at the beginning; maybe we can find common ground in the middle. If that's not an invitation to negotiate, I don't know what is.

Now, just to make sure that the other side is presented here, President Bush is offering a tax cut off $1.6 trillion over 10 years. The president is arguing that, as a matter of fact, that the money that was contributed by Americans in what amounts to overpayment of taxes should be returned. And, of course, he is reinforced by some support on this from Alan Greenspan, who is the chairman of the Federal Reserve, who is saying that, with the economy faltering right now a tax cut might be a necessary stimulus.

Of course, President Bush is also saying that he doesn't want to go overboard. He is telling some of his more zealous Republicans who want more of a tax cut that this is as about as far as he should go. But Bush is arguing that the tax cut is really the key to the rest of this. The Democrats are saying that, no, first let's find out exactly what is the amount of money we're dealing with, and then we'll parse it out one-third, one-third, one-third.

KAGAN: Bob Franken on Capitol Hill, thanks for that perspective.

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